HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/21/2020 - SECOND READING OF ORDINANCE NO. 006, 2020, MAKINGAgenda Item 5
Item # 5 Page 1
AGENDA ITEM SUMMARY January 21, 2020
City Council
STAFF
John Phelan, Energy Services Manager
Tim McCollough, Deputy Director, Utilities Light and Power
Cyril Vidergar, Legal
SUBJECT
Second Reading of Ordinance No. 006, 2020, Making Appropriations for the 2020 Climate Action Plan
Mitigation and Resilience Projects and Related Art in Public Places.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on January 7, 2020 appropriates off-cycle funds to
address existing and emerging infrastructure demands and refocused investments in Energy Services
programs. This package supports resilience by improving electric system reliability and grid flexibility with
additional Distributed Energy Resource (DER) program elements and improving carbon mitigation by directing
additional support for commercial-scale solar. The Energy Services elements are a realignment of existing
budget, while the Electric Utility distribution system elements can be funded from unspent 2019 reserves. The
package focuses on “no regrets” acceleration of planned activities of the Electric Utility Capital Improvement
Plan and 2030 climate and energy objectives.
The package’s reliability scope also supports broadband services (3.7 Deploy reliable, high-speed internet)
because the work is aligned with FC Connexion deployment as it creates new markets via annexations or
pathways via spare conduits to deploy fiber in the electric system. Accelerating this investment is also aligned
with the recently published Electric Utility 2019 Capital Improvement Plan and the FC Connexion deployment
schedule.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, January 7, 2020 (w/o attachments) (PDF)
2. Ordinance No. 006, 2020 (PDF)
Agenda Item 10
Item # 10 Page 1
AGENDA ITEM SUMMARY January 7, 2020
City Council
STAFF
John Phelan, Energy Services Manager
Cyril Vidergar, Legal
SUBJECT
First Reading of Ordinance No. 006, 2020, Making Appropriations for the 2020 Climate Action Plan Mitigation
and Resilience Projects and Related Art in Public Places.
EXECUTIVE SUMMARY
The purpose of this item is to approve an off-cycle appropriation package to address existing and emerging
infrastructure demands and refocused investments in Energy Services programs. This package supports
resilience by improving electric system reliability and grid flexibility with additional Distributed Energy Resource
(DER) program elements and improving carbon mitigation by directing additional support for commercial-scale
solar. The Energy Services elements are a realignment of existing budget, while the Electric Utility distribution
system elements can be funded from unspent 2019 reserves. The package focuses on “no regrets” acceleration
of planned activities of the Electric Utility Capital Improvement Plan and 2030 climate and energy objectives.
The package’s reliability scope also supports broadband services (3.7 Deploy reliable, high-speed internet)
because the work is aligned with FC Connexion deployment as it creates new markets via annexations or
pathways via spare conduits to deploy fiber in the electric system. Accelerating this investment is also aligned
with the recently published Electric Utility 2019 Capital Improvement Plan and the FC Connexion deployment
schedule.
STAFF RECOMMENDATION
Staff recommends approval of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
Coordinated Planning and Implementation
The electric industry is facing rapid change. Market disruption is happening at a pace not experienced before.
Solar photovoltaics (PV) are commonplace and growing at increasing rates each year, battery storage is no
longer a thought experiment, and the fastest production car on earth is fully electric and has the capability to
drive itself. The City can no longer plan in the traditional way because our former load growth models no longer
hold true.
Fort Collins Electric Utility and Energy Services teams are collaborating closer than ever before on planning,
implementation and operations in support of the community’s goals of 100% renewable electricity (100RE) in
just ten years while maintaining historic reliability and affordability.
This off-cycle budget proposal is a concrete example of this coordination. By bringing forward both customer
program and distribution system investment funding proposals together, Utilities is presenting an optimal short-
term mix of investment which supports electric system resilience and carbon mitigation. The proposed package
focuses on acceleration of planned activities of the Electric Utility 2019 Capital Improvement Plan and 2030
ATTACHMENT 1
Agenda Item 10
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climate and energy objectives as described below.
Electric Utility Proposed 2020 Scope
During the Budgeting for Outcomes (BFO) process for the FY2019/20 budget, there were revisions made in the
City Manager’s recommended budget to enable the Climate Action Plan (CAP) opportunity package. One area
of budget reduction was in the “distribution transformer” BFO offer (offer 8.70) in the amount of $318,000. As a
result, the ability to purchase transformers necessary to support system improvements was suspended by the
end of the second quarter of 2019. As part of this appropriation, the request is to first restore the funding to
support distribution transformer purchases in 2020, which also supports system replacement projects and
proactive outage mitigation activities. Capital projects in the following categories also directly benefit from the
proposed appropriation of funds
High priority electric distribution cable system replacement areas aimed at improving distribution system
reliability: As the electric distribution system ages, cable and cable accessory failure rates have increased.
Specific areas have been identified for replacement based on probability of future failures, risk, and several
other factors. Some of the identified replacement areas that do not have a spare conduit for fiber optic cables
offer a synergistic benefit between the Electric Utility and FC Connexion if fiber is pulled in with the
replacement power cables.
Cable diagnostic testing equipment purchase: Thus far, our cable system prioritization efforts have been
making use of statistical analysis drawn from past reliability and failure information. With the support from
this off-cycle appropriation, we can purchase a cable diagnostic system that has the proven ability to assess
the health of an existing circuit. Installed in a proper vehicle that allows access and effective application of
the equipment, we can focus our cable system replacement investment based on forward-looking leading
predictive maintenance indicators to supplement our statistical predictive failure models.
Electric distribution system connection for annexation areas: Connecting the electric distribution system to
annexed areas also provides an opportunity for FC Connexion to serve those customers via cooperative
installation of conduit pathways that must be installed for electric service. These areas include Mail Creek
Crossing, Strauss Cabin, Fox Hills, and Blehm Annexations.
Conversion of overhead electric distribution system areas to underground: Consistent with Fort Collins’
legacy and with the City Council’s current priority to convert overhead electric lines to underground electric
lines, there are nine projects that will replace the remaining overhead distribution lines in the Electric Utility’s
service territory with underground infrastructure. Work to convert overhead electric distribution areas not
only improves electric system reliability, but also allows cooperative installation of conduit pathways for future
FC Connexion customers.
A GIS map with details of the Electric Utility projects can be viewed at <https://arcg.is/SS9ma>
Following the completion of capital projects in the 2019 Light & Power fund, unspent resources in the associated
capital accounts have been identified which can be returned to the fund and be appropriated to support additional
projects in 2020. Similarly, underspend in system additions and operations and maintenance (O&M) accounts
that would otherwise be returned to the electric fund reserves can also be appropriated to support electric system
reliability and resiliency. The projects detailed above total $6.22 million, with currently budgeted and appropriated
funds providing for all but a $3.10 million gap.
Appropriating funds for the identified capital projects allows for better definition of the offers for the 2021/2022
BFO process. If funds returned to reserves are not appropriated, staff must prioritize the projects, putting the
higher priority replacement projects completed under funds already appropriated for 2020 and the remaining
projects identified for funding in the 2021/2022 BFO cycle. As the unspent amounts in the Electric Utility and
Energy Services accounts represents enough to support all projects described here, this proposal truly does
represent a “no regrets” opportunity to support system reliability and resilience.
Energy Services 2020 Funding Summary
Agenda Item 10
Item # 10 Page 3
During the BFO process for the FY2019/20 budget, there were revisions made in the City Manager’s
recommended budget to enable a scaled-down Climate Action Plan (CAP) opportunity package. In this package,
“commercial solar rebates” (Offer 9.92) was funded at $125,000 annually (25% of the original offer amount). As
part of this proposed appropriation, the 2020 commercial solar funding would be 73% of the original 2019/20
BFO offer amount.
The following summarizes the external factors which drive the opportunity for maximizing benefit in 2020 with
changes in Energy Services programs.
Increase in energy efficiency funding from Platte River ($390k); Platte River’s proposed 2020 budget for
efficiency and demand side management is increasing to reflect their commitment to reach higher levels of
savings. Fort Collins Utilities receives the load ratio share of these funds. This budget will result in an
increase of approximately $390k for Fort Collins common efficiency programs. This increase in Platte River
2020 funding will “offset” an equivalent amount of funds from the approved 2020 budget (offers 9.80 and
9.90).
Large-scale solar projects not moving forward ($240k): Several incentives for large scale commercial solar
projects were committed in 2018 and carried over into 2019 via purchase order. Customers have recently
notified Utilities that these projects are not moving forward due to various issues. The total incentive amount
is $240k. At the same time, staff has committed all of the 2019 funding and is tracking pending applications
which will exceed current 2020 funding.
Solar Power Purchase Program (SP3) ($150k): 2019 funding for the SP3 included a mid-year anticipated
start date of a new large system. Due to solar module federal tariffs and related delivery issues, the system
was commissioned in mid-November. As a result, approximately $150k of scheduled expenditures did not
occur in 2019.
Overall efficiency programs ($1.5M): 2019 efficiency programs are on track for achieving savings targets but
are currently forecast to meet the annual goals with a financial balance of approximately $1.5M. This is
primarily due to lower participation in business efficiency and shifts in 2019 funding under Efficiency Works
with Platte River.
Energy Services 2020 Proposed Scope
Priorities for Energy Services with regards to 2020 are to leverage customer interest in distributed solar to meet
the 2020 Energy Policy local renewable energy target and to lay the groundwork for 2030 energy and climate
goals with customer offers related to grid flexibility and beneficial electrification.
The following projects are proposed for implementation in 2020.
Appropriation of 2019 commercial solar funds for 2020 commercial solar projects, $240k. This would bring
the 2020 commercial solar incentive budget up to $365k. The 2019 commercial solar incentives budget
($125k) is fully committed to customer projects. Staff has project intent affidavits from multiple customers for
2020 for a total of $180k of incentives and active inquiries from an additional eight customers which could
total over $360k in incentives.
These solar projects will add approximately one megawatt of solar capacity, directly reduce carbon
emissions by up to 800 metric tons starting in 2021 and support reaching the Energy Policy 2020 renewable
energy target of 20 megawatts of local solar.
Realignment of 2020 activities under existing Offers 9.80 and 9.90. Approved 2019/20 BFO offers 9.80 and
9.90 included incentives which will receive additional support from Platte River in 2020. The new funding
from Platte River allows for the redeployment of 2020 resources without changing Utilities funding levels.
The following projects will be included for 2020 and any ongoing costs will be incorporated into existing
funding levels for 2021/2022:
o Addition of Ecobee thermostats to the Bring Your Own Thermostat (BYOT) offer under the Peak
Agenda Item 10
Item # 10 Page 4
Partners program. This will add the third most popular installed thermostat brand to the BYOT
program (complementing Nest and Honeywell). 150 units would be added with a first-year cost
of $65,000 through the existing vendor Itron. Ongoing costs will be incorporated into the
2021/2022 demand energy resources management offer.
o Demonstration of Grid Interactive Water Heaters (GIWH). Up to 20 GIWH would be installed in
low income customer premises at no cost to the customer. The units will prioritize heat pump
water heater technology wherever possible but may include some resistance units based on
customer home characteristics. This project will test options for transitioning 3G cellular
communications, streamline the business processes needed for the field deployment of future
units, provide a storage platform for storing excess renewable electricity and demonstration of
optimal control strategies. This project will be delivered in partnership with Itron for a cost of
$130k.
o Residential Battery Storage Demonstration. This project will engage existing battery customers
with incentives for allowing utility monitoring and potentially control of behind the meter battery
asset, install several residential behind the meter batteries for management by Utilities and pilot
an incentive for combining batteries with solar. This project will be delivered by existing Energy
Services staff with a budget in 2020 of $100k.
o Development of Carbon-Based Incentive Structure. This project will provide funding for a
collaborative effort with Sacramento Municipal Utilities District (SMUD) to customize a
framework for carbon-based incentives for efficiency, distributed generation and electrification.
This framework will support the transition of incentives for reducing loads, increasing loads and
shaping loads to a common carbon metric. A preliminary cost estimate for this project is $25k.
o Expansion and coordination of Beneficial Electrification Incentives. This project will provide initial
funding to expand and coordinate beneficial electrification incentives, specifically targeting
customer and trade ally requirements to advance installation of heat pumps for space and water
heating to reduce both natural gas and electric resistance use. This project will be delivered by
existing Energy Services staff with a budget in 2020 of $70k.
Redeployment of approved 2020 Energy Services funds and appropriation of commercial solar funds allows for
improved definition of offers for the 2021/2022 BFO process. Without this realignment, it is likely that existing
efficiency funds will not be fully utilized in 2020 and that priority changes towards grid flexibility and beneficial
electrification requests will be postponed to 2021.
CITY FINANCIAL IMPACTS
The source funding is described in Attachment One and includes the remaining balance from several completed
capital projects and 2019 underspend in operations for the Electric Utility and Energy Services. During the
previous Budgeting for Outcomes process, the forecasted Electric Utility available reserves at the end of 2019
was $5.5M. The projected level of Electric Utility available reserves is $10.5M. This appropriation and
redeployment of funds totals $3.73M. As such, the Electric Utility reserves will remain at a higher level than
originally forecast.
The funding described above results in the following specific items in the Ordinance:
Increase in System Improvements and Replacements (parent account 501012) by $1,921,249.
Increase in Annexations (parent account 501004) by $268,585.
Increase in System Conversions (parent account 501601) by $909,925.
Net reduction in Energy Services efficiency funding (business unit 13000000) by $295,000. This will be offset
by increased funding from Platte River.
Increase in Community Renewables funding for commercial solar incentives and for battery storage
demonstration (business unit 11110000) by $340,000. This is funded from expiring purchase orders for past
solar projects and from associated reductions in Energy Services.
Agenda Item 10
Item # 10 Page 5
Increase in Demand Response funding for thermostats and grid interactive water heaters (business unit
135000000) by $195,000. This is funded from associated reductions in Energy Services.
In addition to the financial impacts of the Electric Utility and Energy Services projects described above, some
parts of this appropriation request meet the eligibility requirements for a 1% contribution to the City’s Art in Public
Places (APP) program. Of the $3.73M being requested for appropriation, $1,637,759 is eligible for the 1%
contribution to APP, increasing the total appropriation request by $16,379. The portion of the $3.73M that is not
eligible for an APP contribution ($2,092,000) is made up of the Energy Services programs ($630,000), and 3 of
the ‘System Improvements & Replacements’ related expenditures proposed by the Electric Utility ($1,462,000).
The total appropriation requested, including the APP contribution, is $3,746,137. See below for the financial
impact of the APP contribution.
Total Appropriation Request for Electric Utility & Energy Services Projects: $3,729,759
Less: Projects Ineligible for an APP Contribution*: $2,092,000
Energy Services (All Projects Ineligible) $630,000
Distribution Transformer Replacements $318,000
Distribution Transformer Purchases for Off-Cycle Projects $1,002,000
Cable System Diagnostic Test Equipment with Vehicle $142,000
Remaining Amount Eligible for an APP Contribution: $1,637,759
Total APP (Artwork, Operations, & Maintenance) – 1% of Eligible Amount $16,379
Total Appropriation (Including APP Contribution): $3,746,138
*These projects do not constitute “Capital Construction” under the City Code.
BOARD / COMMISSION RECOMMENDATION
At its December 12, 2019 meeting, the Energy Board unanimously supported this proposed set of projects and
funding levels.
ATTACHMENTS
1. Financial Summary (PDF)
2. Energy Board Minutes, December 12, 2019 (draft) (PDF)
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ORDINANCE NO. 006, 2020
OF THE COUNCIL OF THE CITY OF FORT COLLINS
MAKING APPROPRIATIONS FOR THE 2020 CLIMATE
ACTION PLAN MITIGATION AND RESILIENCE PROJECTS
AND RELATED ART IN PUBLIC PLACES
WHEREAS, Fort Collins Electric Utility and Energy Services teams collaborate closely on
planning, implementation and operations in support of community Climate Action Plan (CAP)
goals, including 100% renewable electricity (100RE) in ten years, while maintaining the City’s
historic reliability and affordability; and
WHEREAS, during the 2019/20 Budgeting for Outcomes (BFO) process, portions of the
CAP opportunity package were revised, including reduction to the “distribution transformer” offer
(Offer 8.70), which required deferment of certain planned Electric Utility transformers purchases,
and reduction of “commercial solar rebates” (Offer 9.92), which limited the rebates to 25% of
program forecasts; and
WHEREAS, Electric Utility staff has identified unspent resources in the Light & Power
fund following completion of 2019 capital projects, which monies are available for redeployment
to support projects in 2020, including accelerating transformer replacement deferred after revision
of Offer 8.70 and issuing additional commercial solar rebates curtailed after revision of Offer 9.92;
and
WHEREAS, staff similarly has identified unspent resources in system additions and
operations and maintenance (O&M) accounts that are also available for appropriations to support
electric system reliability and resiliency; and
WHEREAS, staff has identified over $6,000,000 in electric system improvements that can
be completed in 2020 through redeployment of $3,729,759 of unspent 2019 Light & Power
reserves, the locations for which are depicted on a GIS map posted on the Utility Services website,
including the following:
electric distribution cable system replacements to improve distribution system reliability;
cable diagnostic testing equipment;
electric distribution system connection for Mail Creek Crossing, Strauss Cabin, Fox Hills,
and Blehm annexation areas; and
conversion of overhead electric distribution system areas; and
WHEREAS, staff also recommends appropriating a portion of the unspent funds toward
Energy Services projects that advance the City’s 2020 Energy Policy, including the following:
enhancing the commercial solar incentive budget (bringing the total to $365,000), to
address received 2020 project affidavits and develop eight additional sites, adding up to
one megawatt (MW) of capacity toward the 2020 Energy Policy 20 MW local solar target;
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realigning 2020 activities to leverage Platte River Power Authority funding to enhance
Bring Your Own Thermostat offers, installing Grid Interactive Water Heaters in low
income customer premises, engaging battery customers, collaborating with peer utilities to
customize carbon-based incentives, and expanding electrification incentives; and
WHEREAS, the proposed redeployment of 2019 Light & Power Fund reserves benefits
Electric Utility ratepayers, as required by Article XII, Section 6 of the City Charter, by leveraging
existing resources to complete distribution system renewals and replacements to improve overall
system reliability and resiliency in the current budget cycle, rather than postponing such system
enhancements; and
WHEREAS, this appropriation further benefits Electric Utility ratepayers, as required by
the City Charter, and serves the utility purpose of enabling distribution system enlargements and
betterments to improve overall grid flexibility and beneficial electrification for all customer rate
classes, in tandem with the public purpose of retiring carbon-based energy reliance in alignment
with community CAP goals; and
WHEREAS, in 1995, the City Council adopted Article XII of City Code Chapter 23 to
establish a program to acquire, exhibit and maintain art in public places, to be funded by
contributions in Council appropriations for capital projects, including those by its utilities, equal
to 1% of project construction costs; for the City’s utilities this contribution is capped at a total of
.5% of each utility’s “budgeted operating revenue” (the “APP Ordinance”); and
WHEREAS, this project involves construction estimated to cost more than $250,000, as
such, Section 23-304 of the City Code requires one percent of the eligible appropriations to be
transferred to the Cultural Services and Facilities Fund for a contribution to the Art in Public Places
(APP) program; and
WHEREAS, contributions to Art in Public Places for each Utility is kept and spent in such
Utility’s own fund, except for maintenance, administration, repair and display costs pursuant to
City Code Section 23-303; and
WHEREAS, the APP Ordinance requires this appropriation to include a 1% contribution
for Art in Public Places on only the eligible portion ($1,637,759) of the total appropriated amount
($3,729,759) resulting in a total APP appropriation of $16,379, allocated between artwork and
operation and maintenance; 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, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light &
Power Fund and will not cause the total amount appropriated in the Light & Power Fund to exceed
the current estimate of actual and anticipated revenues to be received in that fund during any fiscal
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year; 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
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, in accordance with Article V, Section 10 of the City Charter, the appropriation
of reserves for the Project from the Light & Power Fund and the transfer of a portion of those
unexpended and unencumbered appropriated funds to the APP program established by City Code
Section 23-304(a) will be used for Light & Power purposes and improvements in connection with
the Project.
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 for expenditure from prior year reserves
in the Light & Power Fund the sum of THREE MILLION SEVEN HUNDRED FOURTY-SIX
THOUSAND ONE HUNDRED THIRTY-EIGHT DOLLARS ($3,746,138) for 2020 Climate
Action Plan Mitigation and Resilience Projects and appropriated therein as follows:
Climate Action Plan Mitigation & Resilience Projects $3,729,759
Art in Public Places Project (Artwork) 12,775
Art in Public Places Project (transfer to Cultural Services
Fund for APP Operations)
3,276
Art in Public Places Project (transfer to Cultural Services
Fund for APP Maintenance)
328
TOTAL $3,746,138
Section 3. That the unexpended appropriated amount of THREE THOUSAND TWO
HUNDRED SEVENTY-SIX DOLLARS ($3,276) in the Light & Power Fund is authorized for
transfer to the Cultural Services and Facilities Fund and appropriated therein for the Art in Public
Places Program Operations.
Section 4. That the unexpended appropriated amount of THREE HUNDRED
TWENTY-EIGHT DOLLARS ($328) in the Light & Power Fund is authorized for transfer to the
Cultural Services and Facilities Fund and appropriated therein for the Art in Public Places Program
Maintenance.
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Introduced, considered favorably on first reading, and ordered published this 7th day of
January, A.D. 2020, and to be presented for final passage on the 21st day of January, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 21st day of January, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk