HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/05/2018 - FIRST READING OF ORDINANCE NO. 069, 2018, APPROPRIAgenda Item 6
Item # 6 Page 1
AGENDA ITEM SUMMARY June 5, 2018
City Council
STAFF
Randy Reuscher, Utility Rate Analyst
Lance Smith, Utilities Strategic Finance Director
Tim McCollough, Light and Power Operations Manager
Cyril Vidergar, Legal
SUBJECT
First Reading of Ordinance No. 069, 2018, Appropriating Prior Year Reserves in the Light and Power Fund for
the Light and Power New Circuits Project.
EXECUTIVE SUMMARY
The purpose of this item is to appropriate funds from Light & Power Reserves to serve the newly annexed
Water Treatment Facility ($1,300,000) and to meet capacity needs at the East Harmony Industrial Park
($480,000) and the Southwest Residential Area ($230,000). The appropriation also includes $7,100 for Art in
Public Places (APP). The previous $1.3M appropriation from the Water Fund also included the associated
$13,000 for APP. The total amount being requested is $2,017,100, which will leave $3.2M available and
unappropriated in the Light & Power Reserves.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
This appropriation request was reviewed at the Council Finance Committee (CFC) on May 21, 2018.
Feedback from CFC has been incorporated into this Agenda Item Summary.
The project areas can be viewed here: https://arcg.is/1Of1HL
Water Treatment Facility
After experiencing several unscheduled outages in the last few years, the Water Treatment Facility was
annexed into the City earlier this year to allow Fort Collins Light & Power to provide more reliable electric
service to the facility. Offer 6.26 in the 2017/18 Budget appropriated $1.3M in the Water Fund for this purpose.
Offer 43.1 in the Water Fund included the associated 1% appropriation for APP. An identical appropriation is
now needed in the Light & Power Fund for the Electric Utility to spend service fees and Plant Investment Fees
(PIFs) to build the infrastructure to serve the facility. Unanticipated revenues in the Light & Power (501) Fund
will be provided by billing the Water Fund for actual charges associated with providing the necessary
infrastructure to serve the facility (not to exceed $1,300,000).
Although the primary purpose and justification of this budget offer from 2017/18 is for electric service reliability
improvements, the Water Treatment Facility’s annual electric service cost will decrease approximately 3.5%
when transferred from Xcel Energy to Fort Collins Utilities Light & Power. This outcome creates additional
benefits for ratepayers by lowering the associated service costs.
Agenda Item 6
Item # 6 Page 2
East Harmony Industrial Park
Light & Power has capacity contracts with three large industrial customers in the East Harmony Industrial Park
area.
Customer Capacity Contract Amount [MVA]
Customer #1 20.0
Customer #2 27.2
Customer #3 10.6
Total 57.8
Although there are contracts in place for 57.8 MVA of electric capacity, Light & Power has installed only 37.5
MVA of capacity to date. This has been adequate to meet demands by these customers historically. In 2017,
due to load growth, the customer load demand in this industrial complex exceeded the installed circuit
capacity. In addition, these customers have indicated additional load growth projections through 2021. These
historic loads and future load projections are detailed in Table 1.
Two additional circuits are needed now to fulfill the capacity obligations in this area. These circuits were not
anticipated in 2018 in the Light & Power Capital Improvement Plan (CIP) and need to be accelerated and
constructed in 2018 to meet the customer requests. There are currently available prior appropriations to fund
one of the two circuits. An additional appropriation of $484,800.00 is required from Reserves to fund the
second of the two required circuits ($480,000 for the circuit and $4,800 for APP).
As these are already established capacity contracts, Light & Power will not receive new Plant Improvement
Fees (PIFs) to build the infrastructure.
Table 1: East Harmony Industrial Park Load and Circuit Capacity
Circuit
Number
Current
Installed
Capacity
2016
Loads
2017
Loads
2018 Loads
(Projected)
2019 Loads
(Projected)
2021 Loads
(Projected)
Future
Capacity
502 6,000 5,923 6,403 6,523 6,643 6,883 6,000
516 6,000 5,066 6,411 7,411 7,411 7,411 6,000
522 6,000 6,655 6,128 6,258 6,388 6,648 6,000
532 6,000 5,459 6,545 7,545 7,545 7,545 6,000
536 1,500 1,305 4,043 4,279 4,515 4,987 -
542 6,000 5,317 5,176 5,373 5,570 5,964 6,000
562 6,000 5,640 4,761 4,997 5,233 5,705 6,000
552 6,000
572 6,000
Total 37,500 35,365 39,467 42,386 43,305 45,143 48,000
Light & Power has been constructing new underground duct banks to the East Harmony Industrial Complex in
2017 and 2018 in anticipation of these future circuit needs.
Southwest Residential Circuit
Recent residential load growth in the southwest area of Fort Collins is creating overload conditions on the
existing circuits out of the substations serving this area. Four existing circuits serving this area were loaded to
full capacity during the peak summer season in 2017.
Constructing a new circuit (828) to serve this area will provide load relief to the existing circuits. This project
was planned and budgeted for construction in 2017, but the original budget estimates in the 2016 20-year
Capital Improvement Plan underestimated the costs of this circuit. Design is now complete and an additional
appropriation is necessary to complete the circuit. The original budget was identified as $0.26M and final
Agenda Item 6
Item # 6 Page 3
design estimates the construction to cost $0.49M. An additional appropriation of $232,300 is required from
Reserves to fund the circuit ($230,000 for the circuit and $2,300 for APP).
CITY FINANCIAL IMPACTS
These circuits will be funded from Available Reserves in the Light & Power Enterprise Fund. The Water Fund
will be invoiced for actual charges which will be paid through the associated appropriation made in the 2017-18
Budget.
Reserve Balance
Available Reserves $9.5M
Anticipated Revenue $1.3M
Available $10.8M
Less:
2010 Bond Defeasance $4.0M
Billing System $1.6M
Available $5.2M
Less Requested:
Water Treatment Facility $1.30M
East Harmony Industrial Park $0.48M
Southwest Residential Circuit $0.23M
Remaining Available Fund Balance $3.2M
BOARD / COMMISSION RECOMMENDATION
This will be presented to the Energy Board at its next regular meeting on June 16, 2018.
PUBLIC OUTREACH
Light & Power staff have been in communication with the affected customers. No other public outreach has
been done. The circuit to the Water Treatment Facility will be installed in an existing right-of-way and existing
utility easements. The circuit on Harmony will be installed through the new duct bank that was just installed
under the railroad and along Harmony Road.
ATTACHMENTS
1. Council Finance Committee Agenda Item Summary, May 2, 2018 (PDF)
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Lance Smith, Director, FP&A - Utilities
Tim McCollough, Deputy Director, Utilities - Light & Power
SUBJECT FOR DISCUSSION – Light & Power Mid-year Appropriation Request
EXECUTIVE SUMMARY
The purpose of this agenda item is to provide the Council Finance Committee with an overview of a mid-
year appropriation request that Utilities intends to bring before Council in June 2018. The appropriation
consists of a request for $1.3M for the Water Treatment Facility underground circuit and a request for
$0.71M for the addition of circuits to meet customer demands in the East Harmony Industrial Park and the
Southwest residential area of Fort Collins.
The project areas can be viewed here: https://arcg.is/1Of1HL
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Council Finance Committee support the Light & Power mid-year appropriation request?
BACKGROUND/DISCUSSION
Water Treatment Facility
The Water Treatment Facility was annexed into the City to allow Fort Collins Light & Power to provide
electric service to the facility. Offer 6.26 in the 2017/18 Budget appropriated $1.3M in the Water Fund for
this purpose. An identical appropriation is now needed in the Light & Power Fund so the infrastructure
built to the facility is owned and maintained by Light & Power and not the Water Fund. Unanticipated
revenues in the Light & Power (501) Fund will be provided by billing the Water Fund for actual charges
associated with providing the necessary infrastructure to serve the facility.
East Harmony Industrial Park
Light & Power has capacity contracts with three large industrial customers in the East Harmony Industrial
Park area. The earliest of these capacity contracts were signed in 1977.
Customer Capacity Contract Amount [MVA]
Customer #1 20.0
Customer #2 27.2
Customer #3 10.6
Total 57.8
Although there are contracts in place for 57.8 MVA of electric capacity, Light & Power has installed only
37.5 MVA of capacity to date. This has been adequate to meet demands by these customers historically.
In 2017 due to load growth, the customer load in this industrial complex exceeded the installed circuit
capacity. In addition, these customers have indicated additional load growth projections through 2021.
These historic loads and future load projections are detailed in Table 1.
Two additional circuits are needed now to fulfill the capacity obligations in this area. These circuits were
not anticipated in 2018 in the Light & Power Capital Improvement Plan (CIP) and need to be accelerated
and constructed in 2018 to meet the customer requests. There are currently available prior
appropriations to fund one of the two circuits. An additional appropriation of $0.48M is required from
Reserves to fund the second of the two required circuits.
ATTACHMENT 1
As these are already established capacity contracts, Light & Power will not charge new Plant
Improvement Fees (PIFs) to build the infrastructure.
Table 1: East Harmony Industrial Park Load and Circuit Capacity
Circuit Number Current
Installed
Capacity
2016 Loads 2017
Loads
2018
Loads
(Projected)
2019
Loads
(Projected)
2021
Loads
(Projected)
Future
Capacity
502 6,000 5,923 6,403 6,523 6,643 6,883 6,000
516 6,000 5,066 6,411 7,411 7,411 7,411 6,000
522 6,000 6,655 6,128 6,258 6,388 6,648 6,000
532 6,000 5,459 6,545 7,545 7,545 7,545 6,000
536 1,500 1,305 4,043 4,279 4,515 4,987 -
542 6,000 5,317 5,176 5,373 5,570 5,964 6,000
562 6,000 5,640 4,761 4,997 5,233 5,705 6,000
552
6,000
572
6,000
Total 37,500 35,365 39,467 42,386 43,305 45,143 48,000
Light & Power has been constructing new underground duct banks to the East Harmony Industrial
Complex in 2017 and 2018 in anticipation of these future circuit needs.
Southwest Residential Circuit
Recent residential load growth in the southwest area of Fort Collins is creating overload conditions on the
existing circuits out of the substations serving this area. Four existing circuits serving this area were
loaded to 100%, 112%, 97% and 112% during the peak summer season in 2017.
Constructing a new circuit (828) to serve this area will provide load relief to the existing circuits. This
project was planned for construction in 2017, but the original budget estimates in the 2016 20-year
Capital Improvement Plan underestimated the costs of this circuit. Design is now complete and an
additional appropriation is necessary to complete the circuit. The original budget was identified as
$0.26M and final design estimates the construction to cost $0.49M. An additional $0.23M is needed to
complete the project.
Reserve Balance
Available Reserves $9.5M
Anticipated Revenue $1.3M
Available $10.8M
Less:
2010 Bond Defeasance $4.0M
Billing System $1.6M
Available $5.2M
Less Requested:
Water Treatment Facility $1.30M
East Harmony Industrial Park $0.48M
Southwest Residential Circuit $0.23M
Remaining Available Fund Balance $3.2M
Conclusion
Light & Power is seeking support from Council Finance Committee for a mid-year appropriation request to
be brought to City Council in June 2018 to accommodate these additional circuits during the 2018
construction season.
-1-
ORDINANCE NO. 069, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PRIOR YEAR RESERVES IN THE LIGHT AND
POWER FUND FOR THE LIGHT AND POWER NEW CIRCUITS PROJECT
WHEREAS, the City’s Electric Utility is preparing to complete construction of three new
service connections and capacity upgrades to accommodate a recent annexation and customer
load growth, referred to as the “Light and Power New Circuit Project”; and
WHEREAS, on February 20, 2018, the City Council approved annexation of the City’s
water treatment facility into the City’s municipal boundaries through Ordinance Nos. 023, 025,
027, and 029, 2018, which was needed for the City’s Electric Utility to establish a connection
and improve the reliability of electric service to the facility; and
WHEREAS, the 2017/2018 budget included appropriation of $1.3 million in the Water
Utility Enterprise Fund to cover service fees and the cost to build the new electric service
connection to the Water Treatment facility; and
WHEREAS, Utility Services staff recommends appropriating $1.3 million in the Electric
Utility Enterprise Fund (Light and Power Fund) to allow the Electric Utility to spend service fees
received from the Water Utility and to construct the new service connection to the Water
Treatment facility; and
WHEREAS, Utility Services staff further recommends appropriating $480,000 in the
Light and Power Fund to build additional electric circuit capacity to satisfy current commitments
to deliver electric service capacity under agreements with industrial customers in the East
Harmony Industrial Park; and
WHEREAS, Utility Services staff further recommends appropriating an additional
$230,000 in the Light and Power fund to cover increased costs associated with improving
electric circuit capacity in substations experiencing accelerated residential load growth in
southwest Fort Collins (the “Southwest Residential Area Project”); and
WHEREAS, prior to completion of the design for the Southwest Residential Area
Project, the 2017 budget estimate was $260,000; final design estimates are currently $490,000,
requiring appropriation of an additional $230,000 to complete the project; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council to
appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be
available from reserves accumulated in prior years, notwithstanding that such reserves were not
previously appropriated; and
WHEREAS, Article V, Section 10, of the City Charter authorizes the City Council to
transfer by ordinance any unexpended and unencumbered appropriated amount or portion thereof
from one fund or capital project to another fund or capital project, provided that the purpose for
which the transferred funds are to be expended remains unchanged; the purpose for which the
-2-
funds were initially appropriated no longer exists; or the proposed transfer is from a fund or
capital project in which the amount appropriated exceeds the amount needed to accomplish the
purpose specified in the appropriation ordinance; and
WHEREAS, the Light and Power New Circuit Project involves total estimated
construction cost of more than $250,000, as such, Section 23-304 of the City Code requires one
percent of these qualified appropriations (qualified appropriation amount is equal to $710,000
since APP was previously appropriated and transferred on the $1.3M in the 2017/18 Budget) to
be transferred to the Cultural Services and Facilities Fund for a contribution to the Art in Public
Places (APP) program; and
WHEREAS, this appropriation benefits public health, safety, and welfare of the citizens
and ratepayers of Fort Collins and serves the utility purpose of improving water and electric
service reliability and controlling cost of service increases; and
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light and
Power Fund and will not cause the total amount appropriated in the Light and Power Fund to
exceed the current estimate of actual and anticipated revenues to be received in that fund during
any fiscal year.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from prior year reserves in the Light and
Power Fund the sum of TWO MILLION SEVENTEEN THOUSAND ONE HUNDRED
DOLLARS ($2,017,100) as follows:
•Water Treatment Facility Project $1,300,000
•East Harmony Industrial Park Project 480,000
•Southwest Residential Area 230,000
•Art in Public Places Project (Artwork) 5,538
•Art in Public Places Project (transfer to Cultural Services
Fund for APP Maintenance & Operations)
1,562
TOTAL $2,017,100
Section 3. That the unexpended appropriated amount of ONE THOUSAND FIVE
HUNDRED SIXTY-TWO DOLLARS ($1,562) is authorized for transfer to the Art in Public
Places Projects from the Light and Power Fund to the Cultural Services and Facilities Fund and
appropriated therein for the Art in Public Places Program Maintenance and Operations.
-3-
Introduced, considered favorably on first reading, and ordered published this 5th day of
June, A.D. 2018, and to be presented for final passage on the 19th day of June, A.D. 2018.
__________________________________
Mayor Pro Tem
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 19th day of June, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk