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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 11/01/2011 - ITEMS RELATING TO ELECTRIC RATES, FEES AND CHARGESDATE: November 1, 2011 STAFF: Brian Janonis Ellen Switzer AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 29 SUBJECT Items Relating to Electric Rates, Fees and Charges for 2012. A. Second Reading of Ordinance No. 142, 2011, Amending Chapter 26 of the City Code to Revise Electric Rates, Fees and Charges. B. Second Reading of Ordinance No. 143, 2011, Amending Chapter 26 of the City Code to Revise Electric Development Fees and Charges. EXECUTIVE SUMMARY Ordinance No. 142, 2011, will increase the electric rate by 8.3% for 2012. This Ordinance does not contain any changes to the RESR, the rate applicable to the majority of residential customers. The changes to the RESR will be presented in a separate ordinance on November 15, 2011. Ordinance No. 143, 2011, 2012 will increase some electric development fees slightly for some developments (1%-3%) and decrease slightly for others. Ordinance Nos. 142 and 143, 2011, were adopted on First Reading on October 18, 2011, by a vote of 6-1 (Nays: Kottwitz). City staff has worked with Platte River Power Authority staff to address comments received regarding language found in Sections 1 and 3 of Ordinance No. 142, 2011. Council asked to be provided with additional explanation and graphics for the monthly electric rate increase on Second Reading. This requested information is provided in Attachment 2. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. Copy of First Reading Agenda Item Summary - October 18, 2011 (w/o attachments) 2. Additional Explanation and Graphics For the Monthly Electric Rate Increase 3. Powerpoint presentation COPY COPY COPY COPY ATTACHMENT 1 DATE: October 4, 2011 STAFF: Brian Janonis Ellen Switzer AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 20 SUBJECT Items Relating to Utility Rates, Fees and Charges for 2012. A. First Reading of Ordinance No. 138, 2011, Amending Chapter 26 of the City Code to Revise Water Rates and Charges. B. First Reading of Ordinance No. 139, 2011, Amending Chapter 26 of the City Code to Revise Water Plant Investment Fees. C. First Reading of Ordinance No. 140, 2011, Amending Chapter 26 of the City Code to Revise Wastewater Rates, Fees and Charges. D. First Reading of Ordinance No. 141, 2011, Amending Chapter 26 of the City Code to Revise Sewer Plant Investment Fees. E. First Reading of Ordinance No. 142, 2011, Amending Chapter 26 of the City Code to Revise Electric Rates, Fees and Charges. F. First Reading of Ordinance No. 143, 2011, Amending Chapter 26 of the City Code to Revise Electric Development Fees and Charges. G. First Reading of Ordinance No. 144, 2011, Amending Chapter 26 of the City Code to Revise Stormwater Plant Investment Fees. EXECUTIVE SUMMARY The following overall monthly rate increases are recommended for 2012. % Increase Water 6.0% Wastewater 8.0% Electric 8.3% The water and wastewater rate increases are across the board to all customer classes. There is no change in the monthly rate for stormwater. City Council has requested additional data and time to study proposed changes to the electric residential energy service rate (hereafter referred to as “RESR”). Staff will return to Council on November 15, 2011, to recommend changes to the RESR. All other electric rates are included in the electric rate increase referenced above. The electric rate increases are proposed to vary by customer class from 3.9% to 15.9%. The proposed changes will impact individual electric customers more or less than the customer class averages. With the water and wastewater rate changes contained in the proposed ordinances, a typical single family customer’s monthly bill will increase $4.44 from $138.66 to $143.10 or 3.2%. If revisions to the RESR are approved by Council at a later date, the typical residential customer will likely see an additional increase in costs. The later change will depend on the rate form option preferred by City Council. Changes to the water and wastewater plant investment fees and electric development fees will also go into effect if the proposed ordinances are approved. A 4.7% increase in water plant investment fees (PIFs) and a 1.2% increase in stormwater PIFs are proposed. A 3% reduction in wastewater PIFs is recommended. On average, electric development fees will increase from 1% - 3.5% for residential and decrease less than 1% for commercial. Several additional Code modifications and clarifications are also contained in the ordinances above. COPY COPY COPY COPY October 18, 2011 -2- ITEM 20 BACKGROUND / DISCUSSION Monthly Utility Rates The recommended 2012 rate increases differ from the rates that were proposed in the original 2011-2012 Budget. The changes are summarized in Attachment 1 and further explained by the staff memos included as Attachments 2 and 3. All proposed rates would be effective for meter readings on or after January 1, 2012. A. Monthly Water Rates (Ordinance No. 138, 2011, Amending Chapter 26 of the City Code to Revise Water Rates and Charges.) Staff proposes a 6% water rate increase. The increase is across the board and applies to all rate classes. With the proposed rate, a typical single family residential customer’s monthly bill will increase 6% as shown in the following table: Single Family Typical Use 2011 Monthly Water Bill Proposed 2012 Monthly Water Bill $ Increase % Increase January 5000 gallons $24.13 $25.58 $1.45 6% July 21,000 gallons $65.11 $69.04 $3.93 6% Monthly Average* $35.87 $38.05 $2.18 6% *Average based on seasonal use of 117,131 gallons per year Although water rates were increased 3% in 2007, 2010 and in 2011, total Water Fund revenues decreased 23% between 2006 and 2010. The reduction in use is thought to be a combination of conservation, weather and economic factors. While water use is down, the vast majority of the costs of operating the water system are fixed and do not vary based on customer use. The proposed 2012 rate increase is required to fund operations, capital improvements and maintain debt service coverage. Staff has increased projections for Water Fund capital projects needs between 2013 and 2020 by $33 million. Most of this increase is for distribution system replacement ($22 million). The distribution system project increase is a result of the preliminary data from the asset management program. The increase is not related to Halligan Reservoir which is to be funded from the Water Rights Reserve. The Water Rights Reserve is funded by developers’ cash-in-lieu-of water rights payments and is restricted to the purchase of water rights and water storage only. See Attachment 2 for additional detailed explanation of the water rate increase. In addition, staff is proposing to eliminate unmetered construction water for customers with planned water services with meters greater than 1-inch. Staff is also recommending a monthly charge for 3/4-inch and 1-inch construction water service. Construction water will remain unmetered for 3/4-inch and 1-inch services but instead of a flat one time fee on the building permit (equivalent to 1.5 times the base charge for the future account), a monthly account will be established and billed a flat charge based on estimated construction use of 7000 gallons per month. Monthly billing will continue until the permanent meter is set. These changes are proposed to eliminate, or at least reduce, the extended over use of the unmetered construction service and will better reflect the cost of the water provided. Construction Water Frequency of Billing 3/4-inch Meter 1-inch Meter Current 2011 One time charge $ 20.40 $ 50.93 Proposed 2012 Monthly charge $ 25.46 $ 48.55 Includes PILOTs COPY COPY COPY COPY October 18, 2011 -3- ITEM 20 B. Monthly Wastewater Rates (Ordinance No. 140, 2011, Amending Chapter 26 of the City Code to Revise Wastewater Rates, Fees and Charges.) Staff proposes an 8% wastewater rate increase for 2012. The increase is across the board and applies to all rate classes. With the proposed increase, a typical residential customer’s bill will increase from $28.59 to $30.88 or $2.29 per month. The typical customer is based on 4,800 gallons of winter quarter water use. Council previously approved a series of annual wastewater rate increases starting in 2008. The prior rate increases, as well as the proposed 2012 increase, are necessary to fund wastewater operations and meet the increase in long term debt service obligations for the now completed capital project which replaced the trickling filter, made odor control improvements and prepared for future regulatory requirements at the Mulberry Water Reclamation Facility. C. Monthly Electric Rates (Ordinance No. 142, 2011, Amending Chapter 26 of the City Code to Revise Electric Rates, Fees and Charges.) Based on Council response at the September 13, 2011 Work Session, the electric rate ordinance does not contain any changes to the RESR, the rate applicable to the majority of residential customers. The changes to the RESR will be presented in a separate ordinance on November 15, 2011 and will contain several rate form alternatives. The ordinance for consideration at this meeting pertains only to the Residential Demand, Commercial (General Service, General Service 25, General Service 50), Industrial (General Service 750) and Traffic rates. Fort Collins’ wholesale and retail electric rates are among the lowest in the region and nation. This will continue to be true following the 8.3% electric rate increase proposed for 2012. The 8.3% increase is the system average and will not be equally applied to all customer rate classes. Based on a cost-of-service study, the proposed rates vary by rate class as follows: Proposed Rate Class Increases for 2012 Individual customers will vary from the class average. Summer increases (June, July and August) will be greater than average. RESR – Not included in Ordinance No. 142, 2011 6.0% Residential Demand Rate 15.9% 1. General Service (small commercial less than 25 kW) 3.9% 1. General Service 25 (small commercial between 25-49 kW) 15.5% General Service 50 (medium commercial between 50-749 kW) 8.7% General Service 750 (large com/industrial greater than 749kW) 11.0% Traffic Signals 11.3% Floodlights 0.0% Average System Increase 8.3% 1. New rate classes proposed for 2012 4.8% of the 8.3% system-wide increase is due to a 6.4% increase in Platte River Power Authority’s purchase power rates. In addition, Platte River’s wholesale rate will be seasonal, with higher rates in June, July and August. Platte River’s 2012 purchase power rate increase is due to several key factors: • Reduced surplus sales • Increased operating and maintenance costs • Increased financing and depreciation costs as new projects are placed into service • Reduced interest income – due to low interest rates and lower cash reserves The remaining 3.5% of the 8.3% is required to reduce the use of Light and Power’s reserves to cover the cost of system improvements and replacements. While the reduction of reserves has been intentional, expenditures in the Light and Power Fund have exceeded revenues each year since 2007. Even following the proposed 3.5% increase, expenditures are projected to exceed revenues for 2012. COPY COPY COPY COPY October 18, 2011 -4- ITEM 20 The larger commercial classes are experiencing a greater than average increase due to the shift of purchase power costs from demand charges to energy charges in Platte River’s new rate form. Those customers with larger load factors, typically larger commercial and industrial customers and also the traffic signal system, will have larger than average increases in the purchase power components of their rates. (Load factor measures the consistency of power use over time.) Although the last cost-of-service study showed that the residential demand (“RD”) rate was 18% under cost-of-service, all rate classes were limited to a 10% increase in 2011. The 2012 increase brings the RD rate class up to full cost-of- service. The rate has traditionally been selected by high-use customers such as those who exclusively heat their homes with electricity. The increase to this rate will make the RESR more economical for many of the existing RD customers in 2012. Staff is also recommending that the RD rate be available only to those customers providing documentation that their home is heated entirely with electric energy. These changes will begin a phase-out of the RD rate. Electric Rate Form Changes Changes in the electric rate forms are necessary to align rates in support of the City’s Energy Policy and Climate Action Plan goals. By adopting rate forms to incentivize customers to conserve and use energy more efficiently and by providing energy conservation assistance and programs to our customers, the City will more likely be able to achieve its policy goals. In addition, successful implementation of these tools will delay or defer the expense of constructing additional generation resources. Rate form changes are also needed to pass through the seasonal cost differentials that will be charged by Platte River Power Authority beginning in 2012. All rates will have higher costs in the summer (June, July and August) than during the remaining nine “non-summer” months. Consistent with Platte River, the recommended rates also shift a greater proportion of the rate from the demand charges to energy charges. Rate form options were presented to the Council Finance Committee on August 15, 2011 and to the full Council at work sessions on September 13, 2011 and October 11, 2011. Based on Council’s responses to the questions posed at the work sessions, there is a delay in the ordinance making changes to the RESR until November 15, 2011. Several options for the RESR ordinance will be presented at that time. The changes recommended for the RD and Commercial/Industrial rates seemed to have wide-spread support at the September 13 Work Session. The following summarizes changes to the electric rate forms that are included in the proposed electric rate ordinance. • Residential Demand: The residential demand rate will be increased to the cost-of-service and energy charges will reflect the seasonal differential. The rate will be available only to customers who heat their residences exclusively with electricity. • Small /Medium Commercial: The General Service rate is currently one rate class serving all commercial customers with average monthly demands of less than 50 kW. Staff is proposing that it be split into two rate classes beginning in 2012. N General Service - energy-only seasonal rate for customers with average monthly demands of less than 25 kW N General Service 25 - energy/demand seasonal rate for customers with average monthly demands of between 25 and 49kW • Large Commercial / Industrial: The recommended rate form changes for the GS50 and GS750 rate classes are due to Platte River’s seasonal wholesale rate. N General Service 50 – add seasonal energy and coincident demand components for customers with average demands of between 50-749 kW N General Service 750 – add seasonal energy and coincident demand components for customers with average demands of 750 kW and greater Additional Amendments to Electric Article and Rates • Wholesale Transactions: Staff is recommending the addition of a Code section and definition to clarify terms of wholesale transactions and to specify that the retail rates, requirements and electric development fees do not apply to wholesale purchases. COPY COPY COPY COPY October 18, 2011 -5- ITEM 20 • Clarification of Net Metering Credit: Staff is recommending that the rate schedule specify that credits for net excess generation due to net metering will be based on the summer season retail energy charge as reflected in the new rate structure. • Clarification of Parallel Generation Credit: Staff is recommending that the rate tariff schedule specify that credits for parallel generation delivered to the utility will be based on Platte River Power Authority’s avoided cost rate. • Clarification of Distribution Facilities Demand: The proposed change more fully defines distribution facilities demand for the large commercial and industrial rate classes and permits the Utilities Executive Director to use an alternative method to recover a customer’s cost-of-service share of distribution demand if the costs associated with serving a customer are not fully recovered by the standard rate. Monthly Rate Increase Summary The following chart summarizes the impact of the proposed rate changes on a typical single family residential customer: Typical Residential Customer – Monthly Utility Bill Current 2011 Estimated 2012 $ Increase % Increase Electric 700 kWh/mo $59.94 $59.94 * * Wastewater 4,800 gal/mo WQA $28.59 $30.88 $2.29 8.0% Stormwater 8,600 sq.ft. lot, light runoff $14.26 $14.26 $0.00 0.0% Water 117,131 gal/yr $35.87 $38.03 $2.15 6.0% Total Estimated Average Monthly Utility Bill $138.66 $143.10 $4.44 3.2% * The 2012 electric RESR will not be considered by Council until a later Council meeting and therefore will not be effective as of January 1, 2012. A change, averaging 6% is expected to be effective February 1, 2012. COPY COPY COPY COPY October 18, 2011 -6- ITEM 20 The following charts compare Fort Collins Utilities’ monthly rates to others along the Front Range. The electric rate shown for Fort Collins for 2012 is the current 2011 rate. A change to the RESR is expected to be effective in February. The average change to the residential energy rate class is projected to be 6%. 2011 Residential Rate Comparison January Water Use - 5,000 Gallons $- $20 $40 $60 $80 $100 $120 $140 $160 Stormwater $7.13 $10.39 $8.89 $7.10 $14.26 $5.63 $14.26 $- $8.16 Wastewater $20.38 $18.11 $15.83 $20.32 $28.59 $20.48 $30.88 $31.27 $16.72 Water $13.96 $13.19 $18.05 $18.85 $24.13 $26.70 $25.58 $25.26 $38.41 Electric $51.65 $55.37 $76.21 $76.21 $59.94 $76.21 $59.94 $77.47 $76.21 Longmont Loveland Denver Boulder Ft. Collins Greeley Ft. Collins '12 Co.Sprs Aurora 2011 Residential Rate Comparison July Water Use 21,000 Gallons $- $50 $100 $150 $200 $250 Stormwater $10.39 $7.13 $14.26 $7.10 $14.26 $8.89 $5.63 $8.16 $- Wastewater $18.11 $20.38 $28.59 $20.32 $30.88 $15.83 $20.48 $16.72 $31.27 Water $40.71 $59.18 $65.11 $60.14 $69.04 $80.71 $80.14 $123.46 $128.10 Electric $55.37 $51.65 $59.94 $85.16 $59.94 $85.16 $85.16 $85.16 $77.47 Loveland Longmont Ft. Collins Boulder Ft. Collins '12 Denver Greeley Aurora Co.Sprs COPY COPY COPY COPY October 18, 2011 -7- ITEM 20 Plant Investment Fees (PIFs) and Electric Development Fees City Code requires staff to present water, wastewater and stormwater plant investment fees to Council for approval no less than every other year. These fees were last changed in 2009 effective on January 1, 2010. Staff is recommending changes to each of the wet utility PIFs. Water and Stormwater PIFs are increasing 4.7% and 1.2% respectively. Wastewater PIFs are recommended to decrease 3%. Electric development fees are also required to be approved by City Council no less than every second year, although historically staff has recommended annual changes. The current electric development fees were approved by Council in 2010 and were effective January 1, 2011. Staff is recommending the following changes to be effective on January 1, 2012. A. Water Plant Investment Fees (Ordinance No. 139, 2011, Amending Chapter 26 of the City Code to Revise Water Plant Investment Fees.) The water plant investment fees were developed to recover the current value of past investment and the current value of future growth-related investment through 2040. This method includes calculating net water system equity, capacity units and determining the net system equity per unit. The Water PIFs are calculated to increase an average of 4.7% for 2012. There are two major factors influencing the increase. First, projected capital improvements related to regulatory requirements have been allocated to the PIF for that portion of the improvements that will serve new growth. Other revisions have been made to the long range capital improvement plan which also impacted the Water PIF calculations. Together, these capital changes have increased the PIF requirement. The second factor offsets the increase. In 2009, detailed information was not available to classify the construction work in progress. The decision was made to treat it all as backbone related capital additions. This overstated the 2010 PIF requirement. Since that time, additional reporting is available to clearly classify the work in progress. This resulted in a reduction in equity of the backbone system. Water PIF charges for a typical single family lot (8600 sq ft) would increase from $3,826 to $4,084 or $258. The following table shows the proposed increases for water PIFs. Water Plant Investment Fees 2011 2012 Existing Proposed % Change Single Family Residential: Domestic Interior Use - Flat Charge $ 730 $ 730 0.0% Exterior Use - $/Sq ft $ 0.36 $ 0.39 8.3% Duplex and Multi Family: Domestic Interior Use - Charge per Unit $ 490 $ 510 4.1% Exterior Use - $/Sq ft $ 0.27 $ 0.27 0.0% Non-Residential by Meter Size 3/4" $ 7,530 $ 7,880 4.6% 1" $ 21,730 $ 22,750 4.7% 1-1/2" $ 45,300 $ 47,410 4.7% 2" $ 69,070 $ 72,290 4.7% 3" $ 157,920 $ 165,290 4.7% 4" and above assessed on individual basis COPY COPY COPY COPY October 18, 2011 -8- ITEM 20 B. Wastewater/Sewer Plant Investment Fees (Ordinance No. 141, 2011, Amending Chapter 26 of the City Code to Revise Sewer Plant Investment Fees.) The wastewater plant investment fees were developed to recover the current value of past investment and the current value of future growth-related investment through 2040. This method includes calculating net wastewater system equity, capacity units and determining the net system equity per unit. The Wastewater PIFs are calculated to decrease 3% for 2012. Like the Water PIF, this reduction is in part due to a change in the basis for calculating construction work in progress. Other recent revisions to the long range capital improvement plan have reduced the Wastewater PIF calculations. Wastewater PIF charges for a single family lot would decrease from $3,550 to $3,440, a reduction of $110. The following table shows the proposed changes. Wastewater Plant Investment Fees 2011 2012 Existing Proposed % Change Single Family Residential $ 3,550 $ 3,440 -3% Duplex and Multi Family, per unit $ 2,490 $ 2,410 -3% Non-Residential by Water Meter Size 3/4" $ 7,100 $ 6,880 -3% 1" $ 17,880 $ 17,300 -3% 1-1/2" $ 31,490 $ 30,480 -3% 2" $ 55,290 $ 53,520 -3% 3" $ 150,130 $ 145,310 -3% 4" and above assessed on individual basis C. Electric Development Fees (Ordinance No. 143, 2011, Amending Chapter 26 of the City Code to Revise Electric Development Fees and Charges.) Electric development fees recover both actual on-site costs (building site charges) and allocated off-site costs (electric capacity charges) to serve commercial or residential development. These fees are typically adjusted annually to reflect changes in costs. Proposed 2012 fees will increase slightly for some developments (1%-3%) and decrease slightly for others. The table below shows the changes for a typical single family lot and a model commercial development. Typical Single Family Lot 8600 square feet, 70 foot of street frontage, 150 amp service, 4/0 secondary service Current 2011 Proposed 2012 $ Change % Change $3,139 $3,233 $94 3.0% Model Commercial Development 82,000 sq ft, 1900 ft street frontage, 250 ft primary srv, 600 amps, 208Volt, 3-phase, 1-transformer Current 2011 Proposed 2012 $ Change % Change $31,076 $30,981 -$95 -0.3% D. Stormwater Plant Investment Fees (Ordinance No. 144, 2011, Amending Chapter 26 of the City Code to Revise Stormwater Plant Investment Fees) The Stormwater PIFs are recommended to increase 1.2% in 2012. The increase represents a $7.3 million increase in capital facilities added since the last study. However, annexation has caused an increase in total developed and developable acres which results in an increased divisor in the calculation. The two changes result in a modest increase of 1.2%. The PIF will increase from $6,313 per acre to $6,390 per acre. Stormwater PIF charges for a typical single family lot would increase from $1,069 to $1,082, an increase of $13. COPY COPY COPY COPY October 18, 2011 -9- ITEM 20 PIF Change Summary The following chart summarizes the impact of the proposed PIF and development fee changes on a typical residential lot: PIF Changes for Typical Single Family Current 2011 Proposed 2012 Change % Change $ Water1 Raw Water2 Wastewater Stormwater3 Electric1 Total $3,826 $5,203 $3,550 $1,069 $3,139 787 $4,084 $5,203 $3,440 $1,082 $3,233 $17,042 6.7% 0.0% -3.1% 1.2% 3.0% 1.5% $258 $0 (-$110) $13 $94 $255 1Typical, based on lot size of 8,600 sq. ft.; 70-foot street frontage 2 No increase for Raw Water 3 8,600 sq. ft. lot plus estimated 6,156 sq. ft common area and right-of-way; .5 run off coefficient Next Steps: November 1, 2011 City Council Meeting • Second Reading of these seven Ordinances November 15, 2011 City Council Meeting • First Reading of Residential Energy Service Rate Ordinance with seasonal and seasonal-tiered options • First Reading of Service Charges Ordinance with increases for after-hours service charges and a monthly fee for manual meter reading for customers who opt out of the Advanced Meter Fort Collins project. December 6, 2011 City Council Agenda • Second Reading of Residential Energy Service Rate Ordinance COPY COPY COPY COPY October 18, 2011 -10- ITEM 20 the total increase. That amount will depend on the rate form option selected by Council at the November 15, 2011 Council meeting. Utility programs can help customers to reduce their water and electric use and to lessen the financial impact of the rate increases. ENVIRONMENTAL IMPACTS Funding from the proposed electric rate increase will allow the Utilities to continue programs and services aimed at meeting the goals and objectives of the Energy Policy and Climate Action Plan. Accurate seasonal price signals may delay/ avoid the need for additional peak electric generation. Water and wastewater rates provide funding for conservation programs and environmental regulatory compliance. STAFF RECOMMENDATION Staff recommends adoption of the Ordinances on First Reading. BOARD / COMMISSION RECOMMENDATION At its September 15, 2011 meeting the Water Board recommended approval of the proposed 2012 water and wastewater monthly rates and the plant investment fees for 2012. At its October 6, 2011 meeting, the Electric Board voted to recommend approval of the proposed 2012 electric rates (exclusive of the Residential Energy Services Rate) and the proposed 2012 electric development fees. PUBLIC OUTREACH Notice of the proposed electric rate changes was published in the Coloradoan on October 2, 2011 and a mailing was sent to City electric customers outside of the city limits in accordance with PUC requirements. Electric rate forms were discussed at the Council Finance Committee on August 15, 2011 and at a Council Work Session on September 13. A written review of all the rates was included in the October 10, 2011, Council Finance Committee Agenda; however, discussion of the item was postponed until October 17, 2011. Staff plans to conduct outreach to all customers following adoption of the Ordinances. ATTACHMENTS 1. 2012 Utility Rate Increases – Explanation of Change 2. Staff memo to Council related to water rate increase, September 19, 2011 3. Staff memo to Council related to electric rate increase, September 19, 2011 4. Staff memo to Council related to plant investment fees, September 19, 2011 5. Council Work Session Summary September 13, 2011 6. Council Finance Committee, August 15, 2011 7. Water Board minutes, September 15, 2011 8. Electric Board minutes, October 6, 2011 9. Power Point Presentation ATTACHMENT 2 Light and Power Average Rate Increase 8.3% Capital 3.5% Platte River Rate Increase 4.8% The Platte River rate increase is seasonal and increases the charges for energy by 47% and reduces the charges for peak demand by 33%. The shift of purchase power rates from peak demand charges to energy charges results in larger increases for large commercial and industrial customers than for residential customers. This is because the larger customers tend to have better load factors and use more energy per kW of peak demand. Capital additions have been funded in part by reserves since 2007, since total expenditures have exceeded total revenues. The draw down of reserves was intentional since reserves had been greater than policy levels. This was a temporary and unsustainable situation that was hastened by the reduction in non-operating revenue mainly interest and development fees. The electric rates must now be ramped up over the next few years to begin to cover more of the capital costs needed for new capital improvements and to rebuild aging infrastructure necessary to serve customers. Even with the proposed 3.5% increase, reserves will still be utilized to fund a portion of the capital needs for 2012 as shown below. Light and Power - Total Expenditures $- $20 $40 $60 $80 $100 $120 2005 2006 2007 2008 2009 2010 Budget 2011 Budget 2012 Millions Purchase Power Debt Service PILOTs Energy Services O&M Other/Grants Customer Service & Admin Capital & System Add/Replace Total Revenue Attachment 3 – Electric Rates 1 1 2012 Electric Rates & Development Fees Second Reading November 1, 2011 2 Monthly Electric Rates Effective for Meter Readings on or after 1/1/2012 • 8.3% Average system increase • Ord. 142 excludes Residential Energy Rate – 56,000 residential customers – Staff will be back to Council 11/15/12 with options • Increase varies by customer rate class & customers within class • Increase varies seasonally • Clarification of terms for wholesale transactions, net metering & parallel generation credits, & facilities demand Attachment 3 – Electric Rates 2 3 8.3% Electric Rate Increase (including Residential Energy) • Two factors in 8.3% increase +4.8% retail impact from Platte River’s 6.4% rate increase +3.5% needed to slow the use of L&P reserves for capital additions Light and Power Average Rate Increase 8.3% Platte River Rate Increase 4.8% Capital 3.5% 4 Light and Power - Total Expenditures $- $20 $40 $60 $80 $100 $120 2006 2007 2008 2009 2010 Budget 2011 Budget 2012 Millions Purchase Power Debt Service PILOTs Energy Services O&M Other/Grants Customer Service & Admin Capital & System Add/Replace Total Revenue Attachment 3 – Electric Rates 3 5 Rate Increase Varies by Customer Class & Season Industrial - GS 750 20.7% 7.6% 11.0% 16.8% 2.0% 6.0% Residential Energy (56,000 customers not inc. in Ord.142) System Average 19.2% 4.4% 8.3% Large Commercial - GS50 20.0% 4.7% 8.7% Medium Commercial - GS25 27.0% 10.9% 15.5% Small Commercial - GS 18.1% -1.6% 3.9% 19.6% 15.1% 15.9% Residential Demand (Optional for electric heat only) Customer Rate Class Summer Non-Summer Average Summer: June, July and August Non Summer: Remaining 9 months 6 Electric Development Fees • One-time charge – installation of on-site electric system – share of off-site distribution & substation facilities • By Code, Electric Development Fees are adjusted at least biennially but are usually revised each year • Proposed changes for 2012 for typical developments: – Residential +3.0% – Commercial -0.3% Attachment 3 – Electric Rates 4 7 Electric rates are among the lowest in the state & country. Small Commercial Colorado Association of Municipal Utilities Small Commercial Rate Survey January 2011 --- Cost for 2,000 kWh and 10 kW per Month $155 $166 $178 $147 GUNNISON FORT MORGAN LONGMONT LOVELAND FC Non Summer 2012 FC Average2012 GLENWOOD SPRINGS COLORADO SPRINGS WRAY FORT COLLINS 2011 FLEMING HIGHLINE EA LYONS JULESBURG FC Summer 2012 HOLY CROSS EA XCEL ENERGY FOUNTAIN DELTA ASPEN Y-W ELECTRIC ASSN ESTES PARK YUMA POUDRE VALLEY EA WHITE RIVER EA OAK CREEK YAMPA VALLEY EA HAXTUN MOUNTAIN PARKS EI LA PLATA DELTA-MONTROSE EA HIGH WEST ENERGY MORGAN COUNTY REA EMPIRE EA UNITED POWER GRAND VALLEY RPL FREDERICK GUNNISON COUNTY EA TRI-COUNTY RATON WHEATLAND SAN LUIS VALLEY REA INTERMOUNTAIN REA LAMAR BLACK HILLS ENERGY SAN ISABEL HOLLY LAS ANIMAS LA JUNTA ORDINANCE NO. 142, 2011 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 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, Platte River Power Authority (“Platte River”) costs are increasing due to reduced surplus sales, increased operating costs for aging plants and environmental mitigation, increased financing costs, and continuing capital investment; and WHEREAS, Platte River will increase the City’s wholesale cost of power approximately 6.4% in 2012; and WHEREAS, the increased wholesale power costs will require a 4.8% increase in the City’s electric rates; and WHEREAS, the revenues in the Light and Power Fund have not been sufficient to fund capital projects and system replacements and reserves have been utilized to make up for the short fall; and WHEREAS, the reduction in reserves was accelerated due to reductions in interest revenue and development fee revenue; and WHEREAS, without additional rate increases, reserves are projected to fall below minimum policy levels as early as 2013; and WHEREAS, a 3.5% rate increase will begin to fund the necessary capital improvements and system replacements and will also begin to stem the decline in reserves; and WHEREAS, City Council desires to enact rate structures to encourage additional energy conservation measures in order to meet Energy Policy and Climate Action Plan goals; and WHEREAS, in order to further encourage energy conservation, the recommended adjustments to the electric rates include an amendment to the residential demand service rate schedule limiting participation to those customers who establish to the satisfaction of the Utility that their residences are heated entirely by electric energy; and WHEREAS, City Council has requested an additional work session to review and study the rate form options for the residential energy service rate class and will defer making a decision related to changes for the 2012 residential energy service rate until that review is completed later in 2011 or early 2012; and WHEREAS, the City Manager and staff have recommended to City Council the following adjustments to the existing residential demand, general service, general service 50, general service 750 and traffic signal electric rates for all billings issued with meter readings on or after January 1, 2012; and WHEREAS, the City Manager and staff have recommended to City Council the creation of a new rate class, general service 25; 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. 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 “Wholesale energy” which reads in its entirety as follows: Wholesale energy, as used in this Article, shall mean that energy generated within the City’s service territory and sold to Platte River Power Authority.sold to the City or to Platte River Power Authority by negotiated contract to be sold by the City or Platte River Power Authority to others. Section 2. That Sections 26-446 and 26-447 of the Code of the City of Fort Collins shall be renumbered as Sections 26-447 and 26-448 respectively. Section 3. That the Code of the City of Fort Collins is hereby amended by the addition of a new Section 26-447 which reads in its entirety as follows: Sec. 26-446. Wholesale transactions. The sale of wholesale energy, as defined in this Article, will not be governed by the electric rate schedules or electric development fees or charges set out in this Article, but shall be subject to requirements for interconnection to the City’s electric system, if applicable. and requirements for sales to the City, if applicable, will not be governed by the electric rate schedules or electric development fees and charges set out in this Article. Section 4. That Section 26-465(a), (c), (k) and (q) of the Code of the City of Fort Collins are hereby amended to read as follows: (a) Availability. The residential demand service rate, schedule RD, shall be available within the corporate limits of the City and the suburban fringe. Service under this rate class is available only to customers who establish to the satisfaction of the utility, by providing to the utility such documentation as the utility may deem appropriate, that the residence served is heated entirely by electric energy. Such -2- documentation must be submitted by April 1, 2012. At such time that the utility implements a time-of-use rate, this rate schedule will no longer be available. . . . (c) Monthly rate. The monthly rates are as follows: (1) fixed charge, per account: seven dollars and twenty-four cents ($7.24). (2) demand charge, per kilowatt: two dollars and forty-three cents ($2.43). (3) distribution facilities charge, per kilowatt-hour: two and eighty-eight one-hundredths cents ($0.0288). (4) energy charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: three and seventy-two one-hundredths cents ($0.0372). b. during the non-summer season billing months of January through May and September through December: three and fifty-five one-hundredths cents ($0.0355). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (5) in lieu of taxes and franchise: A charge at the rate of six and zero- tenths (6.0) percent of monthly service charges billed pursuant to this Section. . . . (k) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (q) below, and the credit for energy delivered to the electric utility shall be calculated as described in that Subsection. -3- . . . (q) Net metering. . . . (5) The customer-generator's consumption of energy from the utility 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 Subsection (c). Section 5. That Section 26-466(b), (c), (m) and (r) of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-466. General service, schedule GS. . . . (b) Applicability. This schedule applies to individual commercial and industrial services, served at the established secondary voltage of the City's distribution system; and optionally, for apartments and multiple dwellings in existence prior to January 1, 1980, where more than one (1) dwelling or single living quarters are served through one (1) meter. Single-phase motors from one (1) to five (5) horsepower may be connected with the approval of the utility. This schedule applies to an individual single or three-phase service with an energy-only meter and for demand metered services with an average metered demand of not greater than twenty-five (25) kilowatts. (c) Monthly rate. The monthly rates for this schedule are as follows: (1) fixed charge, per account: a. single-phase, two-hundred-ampere service: three dollars and sixty-eight cents ($3.68). b. single-phase, above two-hundred-ampere service: ten dollars and eighty-three cents ($10.83). c. three-phase, two-hundred-ampere service: five dollars and fifty-nine cents ($5.59). -4- d. three-phase, above two-hundred-ampere service: thirteen dollars and twenty-four cents ($13.24). (2) demand charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: two and sixty-seven one-hundredths cents ($0.0267). b. during the non-summer season billing months of January through May and September through December: one and thirty-nine one-hundredths cents ($0.0139). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (3) distribution facilities charge, per kilowatt-hour: one and eighty-one one-hundredths cents ($0.0181). (4) energy charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: three and seventy-two one-hundredths cents ($0.0372). b. during the non-summer season billing months of January through May and September through December: three and fifty-five one-hundredths cents ($0.0355). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (5) in lieu of taxes and franchise: A charge at the rate of six and zero- tenths (6.0) percent of all monthly service charges billed pursuant to this Section. . . . (m) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power -5- Authority avoided cost rates. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (r) below, and the credit for energy delivered to the electric utility shall be calculated as described in that Subsection. . . . (r) Net metering. . . . (5) The customer-generator's consumption of energy from the utility 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 Subsection (c). Section 6. That Section 26-466 (f) of the Code of the City of Fort Collins is hereby deleted and the remaining sections 26-466 (g) through 26-466 (r) are renumbered 26-466 (f) through 26-466 (q) respectively. Section 7. That currently numbered Sections 26-467 through 26-473 are renumbered as Sections 26-468 through 26-474 respectively and that an entirely new Section 26-467 General service 25, schedule GS25, is hereby inserted to read as follows: Sec. 26-467. General service 25, schedule GS25. (a) Availability. The schedule GS shall be available within the corporate limits of the City and the suburban fringe. (b) Applicability. This schedule applies to individual commercial and industrial services, served at the established secondary voltage of the City's distribution system; and optionally, for apartments and multiple dwellings in existence prior to January 1, 1980, where more than one (1) dwelling or single living quarters are served through one (1) meter. Single-phase motors from one (1) to five (5) horsepower may be connected with the approval of the utility. This schedule applies to an individual single or three-phase service with an average metered demand of not less than (25) kilowatts or greater than fifty (50) kilowatts. (c) Monthly rate. The monthly rates for this schedule are as follows: -6- (1) fixed charge, per account: a. single-phase, two-hundred-ampere service: three dollars and sixty-eight cents ($3.68). b. single-phase, above two-hundred-ampere service: ten dollars and eighty-three cents ($10.83). c. three-phase, two-hundred-ampere service: five dollars and fifty-nine cents ($5.59). d. three-phase, above two-hundred-ampere service: thirteen dollars and twenty-four cents ($13.24). (2) demand charge, per kilowatt: a. during the summer season billing months of June, July and August: seven dollars and seven cents ($7.07). b. during the non-summer season billing months of January through May and September through December: four dollars and thirty- six cents ($4.36). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (3) distribution facilities charge, per kilowatt-hour: one and eighty-one one-hundredths cents ($0.0181). (4) energy charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: three and seventy-two one-hundredths cents ($0.0372). b. during the non-summer season billing months of January through May and September through December: three and fifty-five one-hundredths cents ($0.0355). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. -7- (5) in lieu of taxes and franchise: a charge at the rate of six and zero- tenths (6.0) percent of all monthly service charges billed pursuant to this Section. (d) Renewable resource. Renewable energy resources, including but not limited to energy generated by the power of wind, may be offered on a voluntary basis to customers at a premium of one and nine-tenths cents ($.019) per kilowatt hour. The utility may establish and offer voluntary programs designed to increase and enhance the use of energy generated by renewable energy resources in support of Council- adopted policy applicable to the utility. (e) Excess capacity charge. A monthly capacity charge of two dollars ($2.) per kilowatt may be added to the above charges for service to intermittent loads in accordance with the provisions of the electric service rules and regulations. (f) Standby service charges. Standby service, if available, will be provided on an annual contract basis at a level at least sufficient to meet probable service demand (in kilowatts) as determined by the customer and approved by the utility according to the following: (1) the monthly standby distribution charge shall be four dollars and twenty-seven cents ($4.27) per kilowatt of contracted standby service. This charge shall be in lieu of the distribution facilities charge. For all metered kilowatts in excess of the contracted amount, the standby distribution charge shall be twelve dollars and eighty-one cents ($12.81) per kilowatt. (2) in the event the contractual kilowatt amount is exceeded, the beginning date of the contract period will be reset. The first month of the new contract period will become the current billing month and such month's metered demand shall become the minimum allowable contract demand for the standby service. Requests for standby service may be subject to a waiting period. An operation and maintenance charge may be added for special facilities required to provide standby service. (g) Service charge. Service charges and connection fees shall be as set forth in Subsection 26-712(b). (h) Conservation assistance, rebates and incentives. The utility may establish programs to assist customers or provide incentives to customers in order to reduce energy consumption or system peak demands consistent with Council-adopted policy applicable to the utility. Such programs may include financial or technical assistance, incentives or rebates and shall be consistent with program objectives approved by the Utilities Executive Director. -8- (i) Billing demand. The billing demand shall be determined for each point of delivery by suitable meter measurement of the highest fifteen-minute integrated demand occurring during the billing period. (j) Power factor shall be determined by using watt and volt-ampere measurements collected by the electric meter at the point of service. The power factor calculated from such measurements shall be the basis of billing adjustment until satisfactory correction has been made. Review shall be conducted on a monthly basis by the utility. If the power factor falls below ninety-percent lagging, a power factor adjustment may be made by increasing the billing demand by one (1) percent for each one (1) percent or fraction thereof by which the power factor is less than ninety-percent lagging. This adjustment shall be based on the power factor at the time of maximum demand as recorded during the billing period. (k) Service rights fee in certain annexed areas. A fee for defraying the cost of acquisition of service rights from Poudre Valley Rural Electric Association (PVREA) shall be charged for each service in areas annexed into the City after April 22, 1989, if such area was previously served by PVREA. The service rights will be collected monthly for a period of ten (10) consecutive years following the date of acquisition by the City of electric facilities in such area from PVREA. If service was previously provided by PVREA, the fee shall be twenty-five (25) percent of charges for electric power service. For services that come into existence in the affected area after date of acquisition, the fee shall be five (5) percent of charges for electric power service. In the event that the City Council has determined that a reduction of the service rights fee is justified in order to mitigate the economic impacts to a lot or parcel of land at the time of annexation of said lot or parcel of land, the service rights fee charged pursuant to this Subsection may be reduced by the City Council pursuant to a schedule set forth in the ordinance annexing said parcel or lot. The service rights fee charged pursuant to this Subsection shall not be subject to a charge in lieu of taxes and franchise otherwise required in this Section. (l) Special services. Special services or complex service arrangements that are beyond those required for service under this rate schedule may be arranged by a written services agreement that the Utilities Executive Director may negotiate and enter into on behalf of the utility. Said agreement shall establish the terms and conditions for any special services or arrangements and shall incorporate by reference the requirements of this Chapter, as applicable. Any special services agreement modifying the rates, fees or charges for said services from those set forth in this Article shall be subject to approval by the City Council in accordance with Section 6 of Article XII of the Charter. (m) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the -9- electric service rules and regulations. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (r) below, and the credit for energy delivered to the electric utility shall be calculated as described in the Subsection. (n) Commodity delivery. If the electric utility authorizes the delivery of electric capacity or energy utilizing the utility's distribution system under mandatory provisions of state or federal law, a credit will be applied to the customer's monthly electric bill based upon the electric utility's displaced costs as credited to the utility by its supplier of electric energy. Capacity, energy, standby capacity, backup capacity and special services shall be delivered, metered, billed, dispatched and controlled in accordance with a special services agreement with the electric utility. (o) Payment of charges. The foregoing rates are net. Payment becomes delinquent twenty-five (25) days after the billing date. (p) Contract period. The applicant shall take electric service under this or any other applicable schedule which is in effect during the term of the contract subject to adjustment from time to time by the City Council. All contracts under this schedule shall be for twelve (12) months and shall be automatically renewed annually. The contract may be terminated at the end of the term upon the giving of ten (10) days' advance written notice to the City or may be terminated upon the giving of ten (10) days' advance written notice to the City in the event of vacation of the premises or a change in ownership or tenant occupancy status. (q) Rules and regulations. Service supplied under this schedule is subject to the terms and conditions set forth in the electric utility rules and regulations as approved by the City Council. Copies may be obtained from the Utility's Customer Service Office. (r) Net metering. (1) Net metering service is available to a customer-generator producing electric energy exclusively with a qualifying facility 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 -10- 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 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 Subsection (c). Section 8. That renumbered Sections 26-468(c), (f), (g), (k), (p) and (u) of the Code of the City of Fort Collins are hereby amended to read as follows: Sec. 26-468. General service 50, schedule GS50. . . . (c) Monthly rate. The monthly rates for this schedule are as follows: (1) fixed charge, per account: twenty-one dollars and two cents ($21.02). An additional charge of forty dollars and zero cents ($40.) may be assessed if telephone communication service is not provided by the customer. (2) coincident demand charge, per kilowatt: -11- a. during the summer season billing months of June, July and August: ten dollars and thirty-six cents ($10.36). b. during the non-summer season billing months of January through May and September through December: seven dollars and seventy-six cents ($7.76). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (3) distribution facilities demand charge, per kilowatt: five dollars and fifty-two cents ($5.52). (4) energy charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: three and seventy-two one-hundredths cents ($0.0372). b. during the non-summer season billing months of January through May and September through December: three and fifty-five one-hundredths cents ($0.0355). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (5) in lieu of taxes and franchise: A charge at the rate of six and zero- tenths (6.0) percent of all monthly service charges billed pursuant to this Section. . . . (f) Standby service charges. Standby service, if available, will be provided on an annual contract basis at a level at least sufficient to meet probable service demand (in kilowatts) as determined by the customer and approved by the utility according to the following: (1) standby distribution charge. a. the monthly standby distribution charge shall be four dollars and forty-eight cents ($4.48) per kilowatt of contracted standby service. This charge shall be in lieu of the distribution facilities charge. For all metered kilowatts in excess of the contracted amount, the standby distribution -12- charge shall be thirteen dollars and forty-four cents ($13.44) per kilowatt. b. in the event the contractual kilowatt amount is exceeded, the beginning date of the contract period will be reset. The first month of the new contract period will become the current billing month and such month's metered demand shall become the minimum allowable contract demand for the standby service. Requests for standby service may be subject to a waiting period. An operation and maintenance charge may be added for special facilities required to provide standby service. (2) standby generation and transmission charge. All charges incurred by the utility under Platte River Power Authority's applicable tariffs, as may be amended from time to time, will be billed to the customer as a standby generation and transmission charge. (g) Excess circuit charge. In the event a utility customer in this rate class desires excess circuit capacity for the purpose of controlling the available electric capacity of a backup circuit connection, this service, if available, will be provided on an annual contract basis at a level at least sufficient to meet probable backup demand (in kilowatts) as determined by the customer and approved by the utility according to the following: (1) the excess circuit charge shall be ninety-five cents ($0.95) per contracted kilowatt of backup capacity per month. For any metered kilowatts in excess of the contracted amount, the excess circuit charge shall be two dollars and eighty-five cents ($2.85) per kilowatt. (2) in the event the contractual kilowatt limit is exceeded, a new annual contract period will automatically begin as of the month the limit is exceeded. The metered demand in the month of exceedance shall become the minimum contracted demand level for the excess circuit charge. . . . (k) Distribution facilities demand. The distribution facility demand charge used by the utility is designed to recover the costs of operating and maintaining the electric distribution system and it is based on a per unit rate tied to the peak demand (kW) of a customer’s monthly electric use. Under the utility’s billing system, cost recovery is based on a twelve month model. Monthly billing is one-twelfth (1/12) of the annual cost recovery required for given service and the twelve-month use patterns serve as the reference base for monthly billings. -13- (1) The distribution facilities demand shall be determined for each point of delivery by suitable meter measurement of the highest one-hour integrated demand occurring during the billing period and shall not be less than seventy (70) percent of the highest distribution facilities demand (in kilowatts) occurring in any of the preceding eleven (11) months. (2) If the Utilities Executive Director determines the calculation described in (1) above does not recover the customer’s share of the actual distribution facilities costs, the customer’s distribution facilities demand charge may be determined according to a billing calendar designed to fully recover said customer’s share of the distribution facilities costs. . . . (p) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. Parallel generation will be provided consistent with all of the requirements contained in Platte River Power Authority's Tariff Schedule 3: Parallel Generation Purchases, as may be amended from time to time. All charges incurred by the utility under this tariff will be billed to the customer. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (q) below, and the credit for energy delivered to the electric utility shall be calculated as described in that Subsection. (u) Net metering. . . . (5) The customer-generator's consumption of energy from the utility 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 Subsection (c). -14- Section 9. That renumbered Sections 26-469(c), (f), (g), (k), (q) and (v) of the Code of the City of Fort Collins are hereby amended to read as follows: Sec. 26-469. General service 750, schedule GS750. . . . (c) Monthly rate. The monthly rates for this schedule are as follows: (1) fixed charge, per account: sixty-one dollars and ninety-six cents ($61.96). a. additional charge for each additional metering point: fifty- four dollars and seventy-four cents ($54.74). b. an additional charge of forty dollars and zero cents ($40.) for each metering point may be assessed if telephone communication service is not provided by the customer. (2) coincident demand charge, per kilowatt: a. during the summer season billing months of June, July and August: ten dollars and twenty cents ($10.20). b. during the non-summer season billing months of January through May and September through December: seven dollars and sixty-four cents ($7.64). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (3) distribution facilities demand charge, per kilowatt: a. first seven hundred fifty (750) kilowatts: five dollars and forty-four cents ($5.44). b. all additional kilowatts: three dollars and twenty-five cents ($3.25). (4) energy charge, per kilowatt-hour: a. during the summer season billing months of June, July and August: three and sixty-seven one-hundredths cents ($0.0367). -15- b. during the non-summer season billing months of January through May and September through December: three and forty-nine one-hundredths cents ($0.0349). c. the meter reading date shall generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rate. (5) in lieu of taxes and franchise: A charge at the rate of six and zero- tenths (6.0) percent of all monthly service charges billed pursuant to this Section. . . . (f) Standby service charges. Standby service, if available, will be provided on an annual contract basis at a level at least sufficient to meet probable service demand (in kilowatts) as determined by the customer and approved by the utility according to the following: (1) standby distribution charge. a. the monthly standby distribution charge shall be three dollars and forty cents ($3.40) per kilowatt of contracted standby service. This charge shall be in lieu of the distribution facilities charge. For all metered kilowatts in excess of the contracted amount, the standby distribution charge shall be ten dollars and twenty cents ($10.20) per kilowatt. b. in the event the contractual kilowatt amount is exceeded, the beginning date of the contract period will be reset. The first month of the new contract period will become the current billing month and such month's metered demand shall become the minimum allowable contract demand for the standby service. Requests for standby service may be subject to a waiting period. An operation and maintenance charge may be added for special facilities required to provide standby service. (2) standby generation and transmission charge. All charges incurred by the utility under the Platte River Power Authority's applicable tariffs, as may be amended from time to time, will be billed to the customer as a standby generation and transmission charge. (g) Excess circuit charge. In the event a utility customer in this rate class desires excess circuit capacity for the purpose of controlling the available electric capacity of a backup circuit connection, this service, if available, will be provided on an -16- annual contract basis at a level at least sufficient to meet probable backup demand (in kilowatts) as determined by the customer and approved by the utility according to the following: (1) the excess circuit charge shall be seventy-two cents ($0.72) per contracted kilowatt of backup capacity per month. For any metered kilowatts in excess of the contracted amount, the excess circuit charge shall be two dollars and seventeen cents ($2.17) per kilowatt. (2) in the event the contractual kilowatt limit is exceeded, a new annual contract period will automatically begin as of the month the limit is exceeded. The metered demand in the month of exceedance shall become the minimum contracted demand level for the excess circuit charge. . . . (k) Distribution facilities demand. The distribution facilities demand charge used by the utility is designed to recover the costs of operating and maintaining the electric distribution system and it is based on a per unit rate tied to the peak demand (kW) of a customer’s monthly electric use. Under the utility’s billing system, cost recovery is based on a twelve month model. Monthly billing is one-twelfth (1/12) of the annual cost recovery required for given service and the twelve month use patterns serve as the reference base for monthly billings. (1) The distribution facilities demand shall be determined for each point of delivery by suitable meter measurement of the highest one-hour integrated demand occurring during the billing period and shall not be less than seventy-five (75) percent of the highest distribution facilities demand (in kilowatts) occurring in any of the preceding eleven (11) months. (2) If the Utilities Executive Director determines the calculation described in (1) above does not recover the customer’s share of the actual distribution facilities costs, the customer’s distribution facilities demand charge may be determined according to a billing calendar designed to fully recover the customer’s share of the distribution facilities costs. (q) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. Parallel generation will be provided consistent with all -17- of the requirements contained in Platte River Power Authority's Tariff Schedule 3: Parallel Generation Purchases, as may be amended from time to time. All charges incurred by the utility under this tariff will be billed to the customer. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (q) below, and the credit for energy delivered to the electric utility shall be calculated as described in that Subsection. . . . (v) Net metering. . . . (5) The customer-generator's consumption of energy from the utility 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 Subsection (c). Section 10. That renumbered Section 26-471 (c) of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-471. Traffic signal service, schedule T. . . . (c) Monthly rate. The monthly rates (including a six-and-zero-tenths-percent charge in lieu of taxes and franchise) are as follows: (1) fixed charge, per account: seventy-three dollars and sixteen cents ($73.16). (2) charge, per kilowatt-hour: six and eighteen one-hundredths cents ($0.0618). (3) service extensions and signal installations made by the utility shall be paid for by the City General Fund, subject to material and installation costs at the time of installation. -18- Section 11. That the amendments to Chapter 26 of the City Code contained herein shall go into effect for all bills issued based on meter readings on or after January 1, 2012. Introduced, considered favorably on first reading, and ordered published this 18th day of October, A.D. 2011, and to be presented for final passage on the 1st day of November, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 1st day of November, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk -19- ORDINANCE NO. 143, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS TO REVISE ELECTRIC DEVELOPMENT FEES AND CHARGES 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, the City Council has determined that it is appropriate for new development to contribute its proportionate share of providing capital improvements; and WHEREAS, Section 26-471 of the City Code requires the City Manager and staff to annually consider the parameters and rates related to setting electric development fees and charges; and WHEREAS, Section 26-471 of the City Code requires that the electric development fees be presented to the City Council for approval no less frequently than biennially; and WHEREAS, on November 16, 2010 the City Council adopted Ordinance No. 115, 2010, which established the electric development fees now in effect; and WHEREAS, the City Manager and staff have recommended to the City Council the following adjustments to the electric development fees and charges for all invoices paid on or after January 1, 2012; 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 development fees and charges. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Section 26-471 the Code of the City of Fort Collins is hereby amended by the addition of a new subsection (e) which reads in its entirety as follows: (e) This Section does not apply to wholesale energy transactions, as defined in this Article. Any applicable fees and charges will be addressed in a written services agreement subject to approval by City Council in accordance with Section 6 of Article XII of the Charter, if applicable. Section 2. That Section 26-472(b) and (c) of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-472. Residential electric development fees and charges. . . . (b) The ECF shall be the total of the site footage charge, dwelling charge and systems modification charge, to be determined as follows: (1) the site footage charge shall be the combined total of: a. four and nine hundred fifty thousandths cents ($0.04950) per square foot of developed site square footage, including all applicable tracts but excluding the area dedicated public rights-of-way; and b. ten dollars and eight cents ($10.08) per lineal foot of the developed site abutting a dedicated street or roadway. (2) the dwelling unit charge shall be as follows: a. for a single-family panel size with one-hundred-fifty-amp service (nonelectric heat), one thousand two hundred eighty-one dollars ($1,281.) per dwelling unit; b. for a single-family panel size with two-hundred-amp service or with one-hundred-fifty-amp service (electric heat), two thousand one hundred sixty-five dollars ($2,165.) per dwelling unit; c. for a multi-family panel size with one-hundred-fifty-amp service (nonelectric heat), eight hundred fifty-four dollars ($854.) per dwelling unit; d. for a multi-family panel size with two-hundred-amp service or with one-hundred-fifty-amp service (electric heat), one thousand five hundred nineteen dollars ($1,519.) per dwelling unit. (3) a system modifications charge will apply when a new or modified service will require infrastructure in addition to or different from the standard base electrical system model. The differential costs associated with such system modifications will be included in the calculated ECF. (c) A Building Site Charge ("BSC") for any new or modified residential service shall be paid prior to issuance of a building permit for the related construction or modification. The BSC shall be based upon the current rates as of the time of issuance of the building permit. The BSC shall be the total of the secondary service charges, and any additional charges, determined as follows: (1) the secondary service charge shall be as follows: -2- Secondary Service Size Charge (up to 65 feet) Plus Per Foot Charge For Each Foot Over 65 1/0 service $642.00 $4.65/Foot 4/0 service $821.00 $5.82/Foot 350 kCM Service $818.00 $6.54/Foot 1/0 Mobile Home Service $503.00 N/A 4/0 Mobile Home Service $646.00 N/A (2) actual special costs to the utility of installation of secondary service resulting from site conditions shall be included in the BSC as additional charges. Such conditions may include, but are not limited to, frozen or rocky soil, concrete cutting and asphalt replacement. Section 3. That Section 26-473(b) and (c) of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-473. Nonresidential electric development fees and charges. . . . (b) The ECF shall be the total of the site footage charge, kVA service charge and systems modification charge, to be determined as follows: (1) the site footage charge shall be the combined total of: a. four and nine hundred fifty thousandths cents ($0.04950) per square foot of developed site square footage, including all applicable tracts but excluding the area of dedicated public rights-of-way; and b. thirty-eight dollars and thirty cents ($38.30) per lineal foot of the developed site abutting a dedicated street or roadway. (2) the kVA service charge shall be determined as follows: a. for customer electric loads served by the utility the kVA service charge shall be: i. utility owned transformers: the kVA service charge shall be fifty-nine dollars and four cents ($59.04) per kilovolt-amp (kVA) of service load rating. -3- ii. customer owned transformers: the kVA service charge shall be forty-eight dollars and fifty-nine cents ($48.59) per kilovolt-amp (kVA) of service load rating. b. for the utility to receive customer generation in excess of the customer’s electric service provided by the utility, the following KVA service charge will also apply: i. utility owned transformers: the kVA service charge shall be forty-eight dollars and fifty-nine cents ($48.59) per kilovolt- amp (kVA) of generation service rating in excess of the service load rating as paid per subparagraph (2)a.i. above. Such ratings shall be determined by the Utilities Executive Director. ii. customer owned transformers: the kVA service charge shall be thirty-eight dollars and nine cents ($38.09) per kilovolt- amp (kVA) of generation service rating in excess of the service load rating paid per subparagraph (2)a.ii.above. Such ratings shall be determined by the Utilities Executive Director. (3) a system modifications charge will apply when a new or modified service will require infrastructure in addition to or different from the standard base electrical system model. The differential costs associated with such system modifications will be included in the calculated ECF. (c) A Building Site Charge ("BSC") for extending primary circuitry to the transformer for any new or modified nonresidential service shall be invoiced and paid in the same manner and at the same time as the ECF is invoiced and paid pursuant to Subsection (a) of this Section. The BSC shall be the total of the primary circuit charge, transformer installation charge and any additional charges, determined as follows: (1) the primary circuit charge for service from the utility source to the transformer shall be as follows: a. for single-phase service, a charge of nine dollars and fifteen cents ($9.15) per foot of primary circuit; b. for three-phase service, a charge of eighteen dollars and zero cents ($18.00) per foot of primary circuit. (2) the transformer installation charge shall be as follows: -4- a. for single-phase service, a charge of one thousand two hundred seventy-eight dollars ( $1,278.) per transformer; b. for three-phase service, a charge of two thousand three hundred eighty-five dollars ( $2,385.) per transformer. (3) actual special costs to the utility of installation of service resulting from site conditions shall be included in the BSC as additional charges. Such conditions may include, but are not limited to, frozen or rocky soil, concrete cutting and asphalt replacement. Section 4. That the amendments to Chapter 26 of the City Code contained herein shall go into effect as of January 1, 2012. Introduced, considered favorably on first reading, and ordered published this 18th day of October, A.D. 2011, and to be presented for final passage on the 1st day of November, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 1st day of November, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk -5- SAN MIGUEL PA TRINIDAD SE COLORADO PA SPRINGFIELD $- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 FORT COLLINS REA/CO-OP INVESTOR OWNED MUNICIPAL 8 Colorado Association of Municipal Utilities Industrial Rate Survey January 2011 --- Cost for 1,900,000 kWh and 3000 KW per month $90,827 $101,138 $104,260 $113,626 $0 $25,000 $50,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 FORT COLLINS 2011 TRI-COUNTY LONGMONT LOVELAND COLORADO SPRINGS FC Non-Summer 2012 FC Average 2012 FC Summer 2012 XCEL ENERGY SAN ISABEL EMPIRE EA DELTA-MONTROSE EA LA PLATA GRAND VALLEY RPL FOUNTAIN Y-W ELECTRIC ASSN SAN LUIS VALLEY REA MOUNTAIN PARKS EI GUNNISON COUNTY EA HIGHLINE EA HIGH WEST ENERGY WHITE RIVER EA UNITED POWER INTERMOUNTAIN REA MORGAN COUNTY REA FREDERICK FORT MORGAN BLACK HILLS ENERGY POUDRE VALLEY EA YAMPA VALLEY EA RATON Cost per Month FORT COLLINS MUNICIPAL REA/CO-OP INVESTOR OWNED Industrial • Second Reading of Service Charges Ordinance January 1, 2012 • Effective date of the seven Ordinances included in this agenda item summary and for changes in service charges. (Monthly rate ordinances are effective for billings with meter readings on or after this date.) February 1, 2012 • Proposed effective date of Residential Energy Service Rate Ordinance. (Effective for billings with meter readings on or after this date.) FINANCIAL / ECONOMIC IMPACTS The rates are projected to increase 2012 annual operating revenues of the Water Fund by 6%, the Wastewater Fund by 8% and the Light and Power Fund by 8.3%. (The short delay in adopting the RESR increase will slightly reduce the increase for Light and Power.) The projected revenue from the rate increases is included in the revised 2012 budget projections. The increases are necessary to fund purchase power, operations and system additions and replacements and to meet debt service requirements. The proposed water and wastewater rate ordinances will increase costs for a typical residential customer by $4.47 per month if such customer’s water use remains unchanged. An additional change to the RESR at a later date will change