HomeMy WebLinkAboutReport - Mail Packet - 12/27/2016 - Platte River Power Authority Strategic Plan 2017-2027Strategic Plan
2017-2027
The Energy We Live By™
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PLATTE RIVER POWER AUTHORITY
2017-27 STRATEGIC PLAN
Table of Contents
Message from Chairman and General Manager 4-5
Mission, Vision & Values 8-9
Board of Directors 10-11
Senior Management Team 12-13
Strategic Initiatives 14
SWOT Analysis 15
Key Operational Goals & Activities 16-19
Overviews
Resource Planning 20-21
2016 IRP Action Plan 21
Schedule 21
Risk Management 22
Financial Management 23
Environmental Management 24
Legislative and Regulatory Planning 25
Municipal Planning
Town of Estes Park 28-29
City of Fort Collins 30-31
City of Longmont 32-33
City of Loveland 34-35
Appendices
Appendix A. Resource Planning Update 37-47
Appendix B. Risk Management Plan 48-58
Appendix C. Strategic Financial Plan 59-60
Appendix D. Environmental Regulation Issues and Positions 61-64
Appendix E. Legislative and Regulatory Issues and Positions 65-67
Acronyms 68-69
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PLATTE RIVER POWER AUTHORITY
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From the General Manager and CEO
From the Chairman of the Board and
Platte River Power Authority’s
General Manager / CEO
The electric power industry is in
the midst of great change. Change
is being driven by new economic
paradigms, such as lower natural
gas prices and the price trends
of renewable resources, an
uncertain regulatory future and the
constant evolution of customer
expectations. In the face of change
our commitment is two-fold – to
proactively embrace the future
while also leveraging on our strong
foundation in order that we can
continue to provide safe, reliable,
environmentally responsible and
competitively priced energy services.
We can accomplish this through
employee engagement, an emphasis
on rigorous planning and budgeting,
risk management and community
collaboration, along with the
engaged guidance from our Board
of Directors – all of which you
will see reflected throughout this
latest edition of Platte River Power
Authority’s 2017-2027 Strategic Plan.
Safety is paramount in all that
we do. A safe work environment
requires an ongoing investment in
training and equipment, as well as a
visible commitment from our senior
leadership and all employees.
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Safety ranks as the first order priority because our employees
are the cornerstone of this organization and are essential
to successfully executing our goals. The importance of our
employees is also reflected through the investment we make
in our employees. Platte River’s leadership actively encourages
employee development, engagement, training, and succession
planning - all themes that permeate the strategic plan. Our
employees’ engagement is crucial as they are tasked with
transforming our plans into reality while at the same time
planning and preparing for the future.
The key operational goals we’ve identified continue to provide
clear focus and a strategic direction for the organization moving
forward. New goals include physical security, emergency
management, policy governance and the leveraging of
system assets for the benefit of our community owners. As
goals are met or become integral to our operations they are
removed from the strategic plan. An example of this is the
project management initiative. The concepts underlying
project management have been successfully integrated in our
operations and are no longer a planning focus.
Leveraging our strengths - strong financial position, operational
expertise, industry reputation, and reliable infrastructure -
will positively influence our ability to capitalize on future
opportunities such as increased community involvement,
regional collaboration, and deployment of innovative
technologies. These strengths have already paid dividends on
important regional initiatives, such as the Windy Gap Firming
Project and the formation of the Mountain West transmission
and wholesale market structure.
Resource planning and portfolio diversification continue to be
foundational elements of our long range planning. A new 30
mw solar facility became operational in 2016, and we continue
to pursue additional community solar resources. Non-carbon
resources will provide approximately one third of our 2017
generation. We are also pleased that Western Area Power
Administration (WAPA) approved our new five year Integrated
Resource Plan (IRP). You can find details on the IRP action plan
contained within this document.
Our strategic plan also captures municipal planning highlights
from our owner communities, resource planning updates,
risk management plan summaries, and further detail on
environmental, legislative and regulatory issues.
The future is sure to contain many opportunities and challenges,
including new market dispatch options, regionalization of fiber
assets, distributed generation resources, expanded community
involvement and future compliance requirements. As we move
forward we remain adaptable and responsive to our owner
communities while leveraging our values to guide future
decisions.
It is an exciting time to be in our industry, and our commitment
will ensure Platte River Power Authority remains a customer-
focused, sustainable and innovative energy provider for our
owner communities of Estes Park, Fort Collins, Longmont, and
Loveland, Colorado. Many thanks to our employees, the staff
of our owner communities, and our Board of Directors for their
ongoing support and engagement.
Sincerely,
Tom Roiniotis and Jason Frsibie
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PLATTE RIVER POWER AUTHORITY
2017-27 STRATEGIC PLAN
Introduction
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PLATTE RIVER POWER AUTHORITY
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Platte River Power Authority delivers safe, reliable, environmentally responsible, and competitively
priced energy and services to its owner municipalities of Estes Park, Fort Collins, Longmont, and
Loveland, Colorado for their utility customers.
Headquarters:
Fort Collins, Colorado
Began Operations:
1973
Governance:
Platte River is governed by an eight-
member board of directors comprised
of each mayor or designee and a
person appointed by each municipality’s
governing body.
The Organization:
Platte River is a political subdivision of
the State of Colorado.
Employees (Dec. 31, 2015):
237
Historical Peak Municipal Demand:
659 MW on June 21, 2016
Transmission System:
Equipment in 26 substations, 258 miles
of wholly owned and operated high-
voltage lines, 511 miles of high-voltage
lines jointly owned with other utilities.
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Mission, Vision & Values
MISSION
VALUES VISION
MISSION:
Provide safe, reliable, environmentally responsible, and competitively-
priced energy services
VISION:
As a respected leader and responsible energy partner, improve the
quality of life for the citizens served by our owner communities
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Safety
What is non-negotiable?
Working safely to protect the public, our employees, and the assets we manage.
Integrity
What is at the core of what we do?
Being ethical and holding ourselves accountable to conduct business in a fair, honest, open, compliant, and
environmentally responsible manner.
Customer Service
What creates added value and improves customer satisfaction?
Providing quality service at a competitive price while being responsive to our owners’ needs.
Respect
What leads us to optimal solutions for even the most difficult challenges?
Encouraging constructive dialogue that promotes a culture of inclusiveness, recognizes our differences, and accepts
varying viewpoints.
Operational Excellence
How do we provide reliable service while managing costs and creating a rewarding work environment?
By engaging employees to strive for excellence and continuous improvement.
Sustainability
How do we ensure long-term viability of the organization and communities we serve?
By maintaining financial integrity, minimizing our environmental impact, and supporting responsible economic
development in our owner communities.
Innovation
How do we mitigate risk and create opportunities?
By becoming an early adopter of technologies proven to improve electric efficiency, protecting the environment, and
creating a diversified energy supply portfolio.
Values
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Wade Troxell
Mayor
City of Fort Collins
Dennis Coombs
Mayor
City of Longmont
Cecil Gutierrez
Mayor
City of Loveland
Gerry Horak
Mayor Pro Tem
City of Fort Collins
Reuben Bergsten
Vice Chairman
Director of Utilities
Town of Estes Park
Todd Jirsa
Mayor
Town of Estes Park
Tom Roiniotis
Chairman of the Board
General Manager
Longmont Power &
Communications
City of Longmont
Steve Adams
City Manager
City of Loveland
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Board of Directors
Platte River is governed by an eight-person board of directors uniquely designed to bring relevant expertise to
the decision-making process. The board includes the mayor (or a designee of the mayor) from each of the owner
municipalities. The other four directors are appointed to four-year staggered terms by the governing bodies of the
owner municipalities.
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Senior Management Team
Platte River operates under the direction of a general manager who serves at the pleasure of the board of
directors. The general manager is the principal executive officer with full responsibility for planning, operations,
and the administrative affairs of Platte River.
Joe Wilson
General Counsel
Karin Hollohan
Chief Administrative
Services Officer
Pete Hoelscher
Chief External Affairs and
Customer Relations Officer
Dave Smalley
Chief Financial &
Risk Officer
Angela Walsh
Executive Assistant to the
General Manager / CEO
Jason Frisbie
General Manager / CEO
Andy Cofas
Plant Manager
Heather Banks
Fuels & Water Manager
Andy Butcher
Vice President of
Power Delivery
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Strategic Initiatives
Safety
Promote a culture where no job is so important and no service
so critical that employees must compromise their own safety to
perform their job.
Compliance
Promote a culture of compliance where all employees conduct
business with the highest standards of ethics and integrity. Meet
or exceed all policy and regulatory requirements.
Financial Stability
Generate adequate cash flows, maintain access to low-cost
capital, provide stable and competitive wholesale rates, and
effectively manage financial risks, all with a focus on continually
improving our financial processes.
Operational Excellence
Design, construct, operate, and maintain safe, reliable, and
environmentally-responsible generation and transmission assets
in a cost-effective manner.
Exceptional Customer Service
Provide exceptional service for internal and external customers
with a focus on continuous improvement through relationships,
knowledge of customer needs and preferences, key
performance metrics, and future program development.
Employee Engagement
Create a work environment that encourages employee
engagement at all levels through a framework of effective
communication. Make investments to leverage diversity, grow
internal talent, develop innovative skills, and maintain high
standards.
Resource Management
Employ an adaptive strategy to cost-effectively maintain
reliability, manage risks, and ensure regulatory compliance.
Collaboration and Communication
Continuously improve collaboration and communication
internally and externally to enable successful projects and
services, build stakeholder relationships, and articulate value.
Technological Innovation and Sustainability
Actively monitor and adopt new, proven technologies that cost-
effectively enhance performance and promote the long-term
viability of Platte River, the municipalities, and their customers.
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SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats
S W O T
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
• Financial position
• Environmental
compliance
• Technical and operational
expertise
• Station generation
and transmission
infrastructure
• Competitive wholesale
rates
• Industry reputation
• Dedication to operational
excellence
• Commitment to safety
• Diversity in electricity
resources
• Succession planning and
knowledge transfer
• Leadership development
• Operational experience
in potential structured
energy markets
• Alignment between
culture and strategic
direction
• Community involvement
• Optimization of physical
assets and market
operations
• Communication and
educational outreach
• Collaboration with
municipal owners and
other regional entities
• Deployment of
innovative technologies
• Resource diversification
• Regulatory and legislative
uncertainties
• Potential loss of tax
exempt financing
• Litigation
• Operational market
uncertainties
• Physical and
cybersecurity risks
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Key Operational Goals & Activities
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EPA Clean Power Plan
Actively engage in Colorado’s stakeholder process to help
shape the State Compliance Plan so it aligns with Platte
River’s strategic direction.
Rate Planning and Coordination
Continue collaborating with the owner municipalities,
including exploring long-term rate development and potential
changes to rate structure.
Regional Wholesale Market Initiatives
Proactively engage in the design and development of
organized markets in the Rocky Mountain region to
help ensure that the market structure is workable for all
participants.
Legislative Policy Engagement
Establish core messaging and an engagement plan at both
the state and federal levels to encourage a favorable political
climate for our continued operations.
Renewable Energy Supply Integration
Ensure effective integration of all renewable generation
resources into Platte River’s operations.
Water Resource Management
Use board-adopted policy as guideline to increase
participation in the Windy Gap Firming Project, and manage
water resources as an asset.
Debt Financing
Plan and analyze debt financing structures to support long-
term capital improvements and manage debt portfolio based
on market conditions and opportunities.
Resource Planning
Implement a strategy that includes:
• Decommissioning Craig Unit 1
• Expanding energy efficiency programs
• Implementing a system-wide demand response
technology pilot
• Developing a distributed resource strategy
• Ensuring system resiliency
• Preparing for risks related to climate change
• Continuing generation diversification
Cybersecurity
Build our cybersecurity culture by promoting greater risk
awareness and behavioral changes upon a foundation of
compliance. Continue to build in infrastructure hardening, use
external resources to evaluate the cybersecurity program and
risk, and document programs and policies.
Talent Management
Ensure availability of appropriate tools, technology, training,
and resources for optimal work effectiveness; develop
programs focused on succession planning, employee
development, knowledge transfer, and attracting and
retaining top talent.
Headquarters Campus Design and Engineering
Select a cost-effective, energy-efficient, and viable
headquarters campus space alternative that will meet the
long-term projected space needs for staff, technology, and
equipment; initiate permitting, design, engineering, and
construction.
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Policy Governance and Board Procedures
Review existing and identify new board-approved policies and
procedures that help staff manage day-to-day operations.
Physical Security
Strengthen physical security plans, practices, and infrastructure for all
facilities with a key focus on substations and generation assets.
Emergency Management
Improve response plans and conduct cross-functional exercises to
ensure a pro-active approach and better preparation for disaster
recovery.
System Assets
Add value for our member owners by leveraging assets such as
a Customer Information System, Supervisory Control and Data
Aquisition system, and the fiber optic system.
Key Operational Goals & Activities
Continued
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Resource Planning
”
Resource planning and management is a cross-functional activity
involving many departments throughout the organization. This effort
is continuous and ever-changing as market, regulatory, and other
planning variables evolve.
This section provides a high-level overview of resource management.
Details on resource planning activities and insights appear in Appendix
A—Resource Planning Update. More details can be found in Platte
River’s 2016 Integrated Resource Plan.
Platte River’s resource planning efforts follow a simple statement of
direction:
• Platte River Power Authority employs an adaptive strategy to cost-
effectively maintain reliability, manage risks, and ensure regulatory
compliance.
This statement of direction provides staff the flexibility needed to
recommend future resource actions, and also enables Platte River to
position itself for compliance with the Clean Power Plan (CPP) and the
individual needs of our owner-municipalities, with the potential to go
beyond CPP requirements if cost effective.
Future Resource Management
Platte River faces future resource management decisions from a
position of strength. Generation and transmission facilities owned
and operated by Platte River have performed well historically. Platte
River has significant surplus capacity based on updated load forecasts
and continues to expand energy efficiency and other demand-side
programs to manage growth and provide services to customers in our
owner communities.
Renewable energy supply to the municipalities already exceeds the
Colorado Renewable Energy Standard and 30 MW of new renewable
supply will come from the Rawhide Flats Solar facility during 2016.
Given its favorable geographic location Platte River and its owner
municipalities can select from a variety of renewable resource options
going forward.
The board of directors has provided support for multiple activities
related to Platter River’s resource management, including:
• Continued focus on diversification of Platte River’s generation and
fuel portfolios
• Further expansion of energy efficiency programs
• Integration of significant wind and solar resource additions
(increased from 18 MW in 2013 to 108 MW by 2016)
• Development of a strategy for exiting ownership of Craig Unit 1
• Development of a demand response pilot program
• Several collaborative efforts related to distributed resources
• Consideration of membership in an organized regional
transmission market
These activities will continue to be a focus during 2017 and over the
short-term planning horizon, through 2020. Fortunately, Platte River
does not need to make short-term decisions regarding new resources
to meet peak capacity needs.
We can plan capacity additions as part of a broader long-term
resource strategy that integrates positioning for CPP compliance.
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Formal IRP
In June 2016, Platte River filed an Integrated Resource Plan (IRP) with
the Western Area Power Administration (Western), as required every
five years by Western of its federal hydropower customers. Platte
River’s IRP marks the culmination of an extensive planning effort, and
provides recommendations and actions for changes to Platte River’s
existing operations in preparation of long-run energy industry
changes arising from technological progress, consumer preferences,
and regulatory mandates.
The IRP identifies an action plan for Platte River in the coming years,
as shown in the exhibit below. Western’s response to Platte River’s IRP
filing is expected in mid-summer 2017.
2016 IRP Action Plan Schedule
Continue to diversify the portfolio to prepare for long-run CO2 reductions
► Immediately pursue a diversification strategy to exit Platte River’s share of Craig Unit 1 2016-17
► Integrate 30 MW of new solar generation into the portfolio beginning in 2016 2016-17
► Evaluate the acquisition of additional renewables generation Ongoing
Prepare for business structures, products, and programs preferred by our member-owners
► Work with member communities to develop customized future supply portfolios 2016-17
► Continue expansion of cost-effective energy efficiency programs Ongoing
► Continue development and implementation of a demand response pilot 2016-17
► Participate with member-owners in the development of distributed technologies such as community solar and combined
heat-and-power applications
Ongoing
Continue to implement ways to maintain the high reliability of Platte River’s power system
► Look to secure affordable ways of balancing expected long-term growth in renewables generation through contracted
tariff services or future services markets
2016-2020
► Manage unit outage risk through mutual support agreements, use of peaking resources, or other market opportunities for
capacity
Ongoing
► Actively monitor regional markets to understand options for cost-effective reliability products Ongoing
► Provide direction to influence the development of regional energy and ancillary services markets 2016-17
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Risk Management
The Risk Oversight Committee (ROC) consists of the general
manager, senior management, and key staff members. It is charged
with managing Platte River’s risks and the Risk Management Plan.
The Risk Management Plan (see Appendix B) is a summary of Platte
River’s proactive efforts to identify, evaluate, rank, and mitigate risks
significant to Platte River. These are risks that could negatively impact
electric supply, finances, reputation, and safety.
Using a bottom-up approach, Platte River’s risk management process
provides the framework to identify and assess specific risks by
soliciting input directly from subject matter experts (SMEs) throughout
the organization and developing mitigation strategies. This approach
has increased employee engagement, resulting in more accurate risk
assessment and mitigation development.
For example, perspectives from SMEs resulted in expanding
cybersecurity assessments. This expansion included identifying risks
specific to separate facilities and areas of operation, and subsequent
mitigations related to each respective area. SMEs also refined the
risk assessments for increasing fuel costs, focusing on the combined
impact of all commodities on Platte River finances.
Proactive efforts to improve Platte River’s risk management are
continuous. A third-party review of the Risk Management Plan and
associated activities was conducted in late 2015, concluding in 2016.
The review provided valuable feedback, summarizing strengths and
potential areas for improvement. Project planning to implement the
initial phase of improvement began in 2016
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Financial Management
Platte River’s Strategic Financial Plan (SFP, see Appendix C)
provides direction for creating long-term financial stability.
The SFP’s priorities include generating adequate cash flows,
maintaining access to low-cost capital, providing stable and
competitive wholesale rates, and effectively managing financial
risk. The board of directors reviews the SFP annually.
Many of the SFP goals establish targets used in setting municipal
wholesale rates. The SFP is designed to maintain Platte River’s
current AA senior lien debt credit rating by all three rating
agencies: Fitch Ratings (AA), Moody’s Rating Service (Aa2), and
Standard & Poor’s Rating Service (AA).
The SFP policies and goals are interrelated. Achieving the targets
for debt service, net income, and days of unrestricted cash on
hand should result in adequate cash flows to meet liquidity targets,
exceed the debt-to-capitalization goal, and maintain access to
low-cost capital.
Maintaining the minimum unrestricted days cash-on-hand ensures
a strong cash position, significantly enhancing future operating
and financing flexibility. The Rate Stabilization Fund is available
if an unforeseen event were to occur, such as an extended
unplanned Rawhide outage. The remaining financial goals focus
on providing competitive wholesale rates to the municipalities,
prudently investing capital, and establishing appropriate and cost-
effective programs to manage Platte River’s business risks.
10-Year Rate Projections
To continue meeting SFP goals, Platte River’s board of directors
increases rates when necessary. Currently, wholesale rates are
projected to increase approximately 30 percent from 2016 to
2026. Projections could change significantly depending on
the CPP implementation and other factors including capacity
expansion plans beyond the current 10-year horizon. To minimize
single-year rate impacts, Platte River will continue rate-smoothing
strategies; currently, a 3.0 percent rate increase is planned for
2017; from 2018 through 2026, 2.5 percent annual increases are
projected.
Platte River will review and revise rate projections and smoothing
strategies, at least annually, based on the financial forecasts and
the latest information including the impacts and timing of the CPP.
Platte River
Power Authority
Tri-State Xcel Arkansas River
Power Authority
$54.98
$71.33 $77.43
$103.80
Figure 1. 2015 Average Wholesale Rates Comparison
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2017-27 STRATEGIC PLAN
Environmental Management
Platte River has a longstanding commitment to being
a good steward of the environment, as demonstrated
by the organization’s record of consistently meeting
or exceeding regulatory requirements.
Figures 2 and 3 show a comparison of emissions
performance for Platte River’s Rawhide Energy Station
relative to other US coal plants. Rawhide is a top
performer among coal plants.
By continuing to look for ways to improve
performance and making investments in technology,
Platte River is able to operate its generation and
transmission systems at high levels of reliability
and environmental compliance. Rawhide is a top
performer among coal plants in terms of emissions
performance.
When new legislation and regulations are proposed,
Platte River takes an active role in discussions. This
helps shape the final outcome so that reliability, risk,
and costs are fully considered. This is consistent with
the organization’s strategic direction and essential to
meeting its mission.
Appendix D highlights the environmental-based
principles that are central to the organization’s
planning guidelines. It also gives context to major
areas of environmental focus and consideration,
including Clean Power Plan and ozone regulations.
Figure 2. 2015 Average Emission Rates of SO2 + NOx
(Coal-fired plants in the US)
Figure 3. 2015 Average Emission Rates of CO2
(Coal-fired plants in the US)
lb/MWh lb/mmBtu
0
.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Source: EPA
Rawhide
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Source: EPA
Rawhide
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Legislative and Regulatory Planning
Platte River maintains positive relationships with members of
Colorado’s congressional delegation, the governor’s office, the
Colorado General Assembly, as well as with state and federal
regulators.
In addition to direct issue-related communication with governmental
decision makers, Platte River is an active participant in trade
associations such as the American Public Power Association (APPA),
the Large Public Power Council (LPPC), and the Colorado Association
of Municipal Utilities (CAMU). These associations offer a cost-effective
means to participate in legislative and regulatory proceedings.
Platte River management and staff actively participate with these
organizations to ensure our positions are appropriately reflected by
these organizations
Appendix E provides a summary of pending issues and positions such
as the CPP and ozone regulations. The appendix also includes specific
environmental policies and principles that provide guidance to Platte
River management and staff.
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New Photo Fort Collins
Loveland
Longmont
Estes Park
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Community Owned
Platte River Power Authority is a Colorado political subdivision established to provide
wholesale electric generation and transmission to the municipal utilities of its owner
communities – Estes Park, Fort Collins, Longmont, and Loveland.
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Municipal Planning
Town of Estes Park
Estimated population for 2015: 6,257
Utility: Estes Park Light & Power, established in 1945
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Cost Sensitivity
The Town of Estes Park is cost sensitive because of its larger
service territory with fewer customers, which makes its rates
higher than large municipalities. However, rates are still lower
than regional investor-owned or rural electric utilities. Cost
consciousness will impact future planning.
Environmental Advocacy
Significant environmental advocacy exists within the Town and
the community is interested in understanding the cost impacts
of renewable energy or other environmental initiatives, especially
our higher-than-average population of fixed income retirees.
Capital Investment
The current focus is toward capital investment. Other areas
of focus include cost management and identifying risks,
opportunities and prioritization.
Key Initiatives
The key initiatives currently underway or being considered
as part of the overall planning process include economic
development, land use, and water/energy planning.
Renewables
The Town supports renewable energy by voluntarily purchasing
all of its electrical energy from renewable sources for use in its
municipal operations.
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PLATTE RIVER POWER AUTHORITY
2017-27 STRATEGIC PLAN Plan Fort Collins
The name, “Plan Fort Collins”
refers to the integrated process
to prepare major updates to two
key documents: City Plan and the
Transportation Master Plan (TMP).
City Plan is the comprehensive
plan for the City of Fort Collins,
and illustrates how the community
envisions Fort Collins over
the next 25 years and beyond.
The TMP serves to document
a bold vision for the long-term
multi-modal transportation
system that will support the Fort
Collins community well into
the future. The TMP provides
policy direction for decisions
regarding the implementation
of the transportation system to
achieve the community’s vision.
The process for updating two
distinct plans, City Plan and the
Transportation Master Plan, was
unified around the tenets of
innovation, sustainability, and
connections. This meant the long
range visions and policies for City
Plan and the Transportation Master
Plan would become mutually
supportive and comprehensive.
City Strategic Plan
The City of Fort Collins Strategic
Plan is the roadmap to achieve
the City’s vision of providing
world—class municipal services
through operational excellence
and a culture of innovation. The
plan reflects the priorities and
values of Fort Collins residents,
businesses and community
partners as identified through the
Citizen Survey, focus groups and
community engagement efforts.
The City aspires to provide world-
class services to the community
while cultivating an outstanding
organizational culture for its
employees. In order to achieve
this vision, both internal and
external services are data-driven
and implemented according to
organizational values.
Residents can not only expect to
receive exceptional service, but
also to have the opportunity to
engage with decision-makers,
provide input regarding the way
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recreation, economic health, environmental health, safety,
transportation, and high performing government. The city budget
is divided among these seven areas, and revenue is allocated to
support policies and initiatives that drive improvement in outcomes.
While each outcome area has unique defining characteristics, city
investment in a single objective regularly impacts more than one
outcome area.
Energy Policy
The City of Fort Collins’ Energy Policy reflects the community’s values
of reliability, safety, affordability, greenhouse gas (GHG) emissions
reduction, pollution prevention, and energy independence with the
vision of “Fort Collins is a leader in the transition to sustainable and
resilient local energy systems to serve the community’s 2050 carbon
neutral future.” The policy provides goals for the prioritization of
decision making, programs and services related to the quantity of
use and the sources of energy for electricity, thermal end-uses, and
transportation. The Energy Policy uses a systems approach to energy
production and consumption, as well as triple bottom line metrics
(economy, society, and environment), to guide City government in
the development of plans promoting policy outcomes for residents,
businesses, and other organizations. The policy supports Fort Collins
leadership in solutions at a community scale and includes specific
targets for energy efficiency savings, renewable energy, demand
response and reliability.
Fort Collins Utilities Strategic Financial Plan
The purpose of the Fort Collins Utilities Strategic Financial Plan (SFP)
is to manage the financial resources to achieve business objectives
and maximize customer value for each utility service by recognizing
the investments in a 10 year planning horizon that supports
both operational and capital funding to meet utility service level
expectations of the Fort Collins community. The SFP encompasses
the full range of finances, from establishing objectives and identifying
resources, analyzing data, and making financial decisions that support
the outcomes of the City Strategic Plan.
Road to 2020
In March 2015, the City of Fort Collins developed a Climate Action
Plan Framework (Framework) document and adopted updated carbon
reduction goals to reduce community emissions as follows: reduce
by 20 percent below 2005 levels by 2020, by 80 percent below 2005
levels by 2030, and achieve carbon neutrality by 2050. The Framework
lays out a number of high-level strategies in the areas of building,
mobility, energy supply, and waste reduction.
Since the Framework was developed, staff has been developing
specific strategies to achieve the 2020 goals. The 31 initiatives that
were initially identified are being vetted through the City’s Budgeting
for Outcomes process with a broader analysis of the benefits, costs,
and overall effectiveness of the various initiatives. A formal roadmap to
achieve the 2020 goals will be presented to City Council in February
2017.
Broadband Strategic Plan
As the demand for more advanced, reliable, and affordable broadband
service rises, the city must define its ongoing role in ensuring
access is provided. “Next generation” high-speed internet services
are becoming important infrastructure for communities in the 21st
century. This demand for service is challenging local communities
to develop effective strategies for connecting citizens, businesses,
and institutions. On November 3, 2015 Fort Collins voters overturned
Senate Bill 152, removing legal barriers to the city’s involvement in
providing residents telecommunication services. With the vote, the
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2017-27 STRATEGIC PLAN
City of Longmont
Municipal Planning
Estimated population for 2015: 92,088
Utility: Longmont Power & Communications, established in 1912
33
PLATTE RIVER POWER AUTHORITY
2017-27 STRATEGIC PLAN
Focus on Longmont
This Focus on Longmont Plan sets direction at a city level and is
included in the city’s annual budget process. Seven key categories/
initiatives with general goals include: (1) healthy business climate,
(2) education, (3) community identity, (4) enhance the natural
environment, (5) revitalize downtown, (6) high-performing
government, and (7) community safety. The city is also working on
incorporating a budget prioritization model into the plan. Longmont
Power & Communications (LPC) has ties to most of these categories.
Highlights include: low electric and broadband rates, unmatched
broadband speeds, excellence in reliability and customer satisfaction
for both electric and broadband, energy efficiency programs,
and quality safety programs with results for employees and the
community. LPC provides related reporting statistics – definitive goals
are not included as a part of the plan.
Sustainability Plan
The city has incorporated sustainability policies and programs
across various departments throughout its history. In the latter part
of 2015, the city plans to begin updating a sustainability strategy.
The Sustainability Plan will incorporate LPC’s programs including:
Efficiency Works™, LED replacement in street lighting, electric vehicles
and charging stations, renewable energy options, and others.
Comprehensive Plan
Longmont uses the city’s Comprehensive Plan to identify long range
capacity requirements. The plan provides a model for staff to predict
average loads based on specific densities and land development types.
New for 2015, Envision Longmont is a community-wide planning
effort by the city to update and integrate the Longmont Area
Comprehensive Plan and the Longmont Multi-Modal Transportation
Plan. The plans were last updated in 2003 and 2005, respectively. The
updated Comprehensive Plan will serve as a policy guide for the city
over the next 10 to 20 years. Envision Longmont will be a collaborative
and inclusive process in which all citizens are encouraged to
participate. LPC’s planning strategy includes distribution and
substation needs for the complete build out of the community. As the
Comprehensive Plan is modified, LPC reviews and updates planning
strategies accordingly.
NextLight™ Broadband Services
LPC began offering 100 percent fiber-to-the-premise services as a
pilot during 2013. A full build-out of the community began in 2014,
and network infrastructure installation is expected to be complete
near the end of 2016. LPC currently provides a 10 gigabit-wide area
network to the St. Vrain Valley School District, internet speeds up to a
symmetrical Gig for residents, and both standard and custom speeds
for commercial customers. Digital voice service is offered as well.
Customer demand is high, significantly exceeding study projections.
Network and customer installations are taking place in phases
throughout the city.
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2017-27 STRATEGIC PLAN
Municipal Planning
City of Loveland
Estimated population for 2015: 75,182
Utility: Loveland Water and Power, established in 1925
35
PLATTE RIVER POWER AUTHORITY
2017-27 STRATEGIC PLAN
Management, Staff and Funding
The Loveland Utility Commission serves as an advisory body to the
city council on all matters pertaining to the water, waste water, and
electric utility operations and services provided by the city.
The new City Manager is Steve Adams. Adams, formally Loveland
Water and Power (LWP) Director, took office July 1, 2016. Adams has
served as Loveland Water and Power Director since 2011. Adams
will be working on reaffirming the City Council goals in his new role.
Gretchen Stanford, former Customer Relations Manager, will be
serving as Interim Water and Power Director for at least six months.
In Process
Loveland is actively researching the feasibility of high-speed, fiber-
optic broadband service throughout the city. Loveland is also
gathering citizen feedback and research on traffic congestion on main
thoroughfares in the city. The city is redeveloping several blocks of
the downtown area to accommodate new office space, residential
living, retail space and a movie theatre. Loveland Water and Power
is performing a cost of service rate study, a water treatment plant
expansion and a wastewater treatment plant expansion. LWP is also
building the Foothills Solar and Substation project which is the first
generating facility in the United States to receive approval through
the FEMA process. The project includes a 3.5 MW solar array and a
substation on 52 acres.
Key Planning
Key planning items for Loveland include cost control, asset
management, demand-side management, demand response,
renewable supply integration, new rate designs, economic
development, energy efficiency programs, workforce planning, public
outreach, operational excellence, progressive technologies, regional
cooperation, customer service, broadband service, water capital
program, long-range planning, and addressing aging infrastructure.
Comprehensive Plan
City Council updated The Comprehensive Plan in 2015. The
document serves as a guide for aspects of Loveland’s planning. It
provides mission/vision statements and is mostly focused on land-use
planning. From a utility perspective, it includes water conservation
through land use, investigating options for alternative renewable
energy generation on city properties, supporting enhanced efficiency
and performance measures to reduce energy costs and conserve
resources through energy efficiency and water conservation and
undergrounding power lines.
Economic Development Strategic Plan
Loveland adopted an Economic Development Strategic Plan and
Incentive Policy in February 2012. That plan is scheduled to be
updated by December 2016.
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2017-27 STRATEGIC PLAN
Appendices
Appendix A
Resource Planning Update
37-47
Appendix B
Risk Management Plan
48-58
Appendix C
Strategic Financial Plan
59-60
Appendix D
Environmental Regulation Issues and Positions
61-64
Appendix E
Legislative and Regulatory Issues and Positions
65-67
Acronyms 68-69
37
Appendix A
Current Resources
Platte River owns and contracts for
a mix of fossil-fueled and renewable
generation. The existing portfolio of
owned resources includes coal-fired
generation located at the Rawhide and
Craig stations, and natural gas-fired
combustion turbines at the Rawhide site.
Platte River also receives energy through
federal contracts for hydropower.
Deliveries from hydropower sources
depend on local and regional hydrology
conditions, which vary over time.
Wind energy is supplied to Platte River
through contracts from the Medicine
Bow and Silver Sage wind projects in
southeast Wyoming, and the Spring
Canyon site in northeast Colorado.
Platte River has a diversified resource
mix from a capacity (MW) perspective;
however, about three-fourths of energy
(MWh) delivered by Platte River to the
municipalities is generated by coal plants.
Platte River also has a gap in its current
resource lineup — it lacks the flexible,
complementary resources that can help
integrate more intermittent renewable
sources over the long term.
Platte River’s renewable resources have
grown significantly over the past few
years. Wind power accounts for 78 MW
and about 9 percent of delivered energy
(2015), while solar will account for 30
MW and roughly 1.5 percent of total
delivered energy by 2017. To meet the
potential needs of the EPA’s Clean Power
Plan, the use of renewable generation
will need to increase, requiring enhanced
management of intermittent resources.
The current mix of resources has
delivered roughly 3,300 GWh annually to
the four municipalities that Platte River
serves over the last five years. Surplus
energy produced by Platte River is sold to
third parties, and typically averages about
750 GWh per year, primarily from Platte
River’s share of the Craig units.
Appendix A:
Resource Planning Update
38
In 2016, Platte River prepared an integrated resource plan with
an emphasis on CO2 emission reduction options, covering the
20-year planning period from 2015 to 2035. The IRP focused
on two distinct analytical segments—the near-term Resource
Acquisition Period (2015-2020), and the Planning Period (2020-
2035). The IRP links directly to the goals and initiatives that
have been presented in prior Strategic Plan documents.
The purpose of the document was to satisfy the Integrated
Resource Plan filing requirements as prescribed by Western,
and to provide recommendations and actions for changes to
Platte River’s existing operations in preparation of long-run
energy industry changes arising from technological progress,
consumer preferences, and regulatory mandates.
Due to the growing interest in the climate impacts from
greenhouse gases, the 2016 IRP placed emphasis on portfolio
options that can provide significant CO2 emission reductions.
Platte River considers this to be particularly relevant now, given
the increasing likelihood that carbon regulations will come
into effect, including possible future implementation of the US
EPA’s Clean Power Plan (CPP), a federal rule designed to reduce
carbon emissions from the electric power sector.
Electric Load Forecast
Platte River’s system electric load forecast is one of the primary
drivers in the resource planning process. Platte River’s statistical
model uses multiple variables to predict demand and energy
growth in the owner municipalities. These variables include
population, employment, and weather.
Peak load growth increased rapidly during the 1990s and into
the 2000s, due primarily to strong economic growth and
the increased incidence of air conditioning use. Future peak
load growth is expected to be lower than growth prior to the
economic downturn of the late 2000s—primarily because
air conditioning use has reached high levels of saturation.
Additionally, lower economic growth and increased energy
efficiency (EE) efforts over the last few years have reduced
electric load growth in the municipalities.
Platte River’s EE programs continue to evolve and
are planned to expand in the future. The cumulative
impact of EE is expected to reduce energy needs by
approximately 574 GWh through 2030, a nearly 14%
decrease relative to the projected loads without EE.
Appendix A: Resource Planning Update
Figure 5. Projected 2016 Energy Mix
Platte River’s Projected Sources of Energy in 2016
69.0%
18.5%
8.9%
2.6% 0.7% 0.3%
Coal
Hydropower
Wind
Natural Gas
Purchases
Solar
Appendix A: Resource Planning Update
39
Capacity and Renewables Planning
Platte River’s reliability planning standards indicate that a new
firm capacity resource will not be required until after 2030,
and with the current load patterns of our customers, the next
resource is likely to be needed only at time of system peak.
Many influences could accelerate the timing and type of
Platte River’s next firm resource, including:
• New regulatory requirements affecting the operation of
current resources
• The impacts of expanded demand-side management
(DSM)
• Unexpected new load growth (such as the addition of
new large customers)
• Changes in energy consumption patterns (air
conditioning, electric vehicles, miscellaneous electrical
devices, etc.).
Because of Platte River’s recent efforts to add renewable
generation resources, further renewable resources are not
required to meet existing state standards until well after
2030. However, Platte River will continue to evaluate options
to add more renewables to our generation fleet as renewable
costs continue to decline—for the purpose of diversifying the
fleet and providing further fuel risk mitigation.
The decision to add a new capacity resource is based on
ensuring an adequate balance between loads and resources
at all times. Traditionally, resource planning for electric
utilities has focused primarily on balancing loads and
generation through capacity planning, which is still a long-
term focus for Platte River. However, Platte River’s process
incorporates an integrated review of a variety of objectives,
with a consideration of potential CO2 reductions.
Planning Standard Expected Capacity Needs
Maintain a minimum planning reserve
margin of 15%
Under this standard, Platte River is not expected to need additional
firm capacity until after 2030.
Ensure loss of load expectation (LOLE) of
less than one day in ten years.
Platte River’s LOLE analysis indicates that system peaks are likely
to exceed available supply on a one-in-ten basis in the 2033
timeframe. The addition of about 10-15 MW/year may be required
after 2033 for Platte River to maintain the one-in-ten threshold
Platte River uses the following criteria for determining the timing of new firm generation resources:
40
Portfolio Analysis
Platte River uses the AURORAxmp Electric Market Model
(“Aurora”), developed by EPIS Inc., to perform modeling
related to system dispatch and production cost analysis.
Aurora simulates the hourly operation of Platte River’s
generation system and its management within regional
energy markets. The model also captures fixed costs and
capital costs which are necessary for evaluating the full cost
of potential new generation alternatives. Inputs for the model
are collected from a variety of resources including internal
and external experts. Internal experts review data supplied by
consultants to ensure it is reasonable.
Since the model cannot evaluate every potential
combination of portfolios, the pool of candidates is
narrowed to a reasonable number of the most promising
technologies.
Clean Power Plan
Federal
On August 3, 2015, the Environmental Protection Agency
released the Clean Power Plan Final Rule under 111d of
the Clean Air Act (CPP). The CPP is intended to curb CO2
emissions from US power plants by 2030. For the nation
overall, the CPP targets a reduction of 32% below 2005 levels
by 2030, with potential interim targets for early progress. The
responsibility for the implementation of the CPP is intended
to be delegated to the states, and the reduction targets vary
by state. Colorado’s 2030 proposed target is 35%, relative to
reported 2012 CO2 emissions.
A stay was issued by the US Supreme Court on February 9,
2016, pausing implementation of the CPP while litigation
proceeds. The outcome of this process is uncertain and
is further complicated by the possibility that the incoming
administration may make further changes. Platte River
staff remains engaged in the process and is prepared to
analyze any changes that come about and update plans as
appropriate.
Local
In 2016, Platte River will begin discussions with its member
owners to evaluate customized power production portfolios
that best suit the individual needs of the communities
The goals for this project will be determined jointly by the
member-owners, and driven by individual power cost and
emissions reduction objectives of the communities. For
example, Fort Collins has a council-approved climate action
plan with specific CO2 reduction objectives through 2050
that will be addressed within the context of the other cities’
goals.
Craig Unit 1 Exit Strategy
Platte River is a partial owner of Craig Units 1 and 2 (also
referred to as the Yampa Project). Units 1 and 2 typically
generate approximately one-fourth of all Platte River energy
sales and about one-third of CO2 emissions. In 2015-16,
Platte River studied three primary strategies, including:
1. Exiting Craig Unit 1 by 2020 and both Craig units by
2030, or
2. Exiting both units by 2020, or
3. Operating the two units at minimum contractual
capacities during most of the year.
Platte River’s board of directors approved staff’s
Appendix A: Resource Planning Update
41
The agreement results in a favorable balance for the plant
owners, their employees, and their customers—costly
measures for emissions controls will be avoided by the early
retirement of the unit, while Craig Unit 1 will continue to
operate through December 31, 2025.
Demand Side Management
Demand side management (DSM) refers to programs offered
by utilities that influence customers’ use of electricity. DSM
goals for the near-term include continued expansion of
energy efficiency programs, continued implementation
of a system-wide demand response (DR) pilot program
that is focused on existing DR resources, and developing a
distributed energy resource (DER) strategy.
Expanded Energy Efficiency Programs
Based on studies conducted by Platte River and its
consultants, we anticipate increasing our incremental annual
efficiency program savings from about 0.4% of load in 2015 to
1.25% of load in 2019. Following this trajectory and continuing
to add 1.25% energy savings each year thereafter will result
in approximately 739 GWh of cumulative energy efficiency
savings by 2035.
As part of the expansion, Platte River anticipates working with
the municipalities to hire an independent program evaluator
to evaluate one or more programs and provide independent
assessment of whether programs are achieving energy-saving
and demand-saving goals, and can help identify opportunities
for improving program outcomes.
Demand Response Pilot Program
DR has the potential to provide net capacity for use in a
variety of ways, including the ability to avoid or delay new
generation capacity, to shift energy use from high-cost times
to low-cost times, or to provide reserve services (where
permitted by the balancing authority or regional market). An
emerging use of DR is to help integrate intermittent renewable
generation, such as wind and solar.
Platte River and its consultants estimate that the present-value
costs of 20 to 50 MW of DR would be $18 - $35 million, and
present-value benefits would be $12 - $31 million over the
period 2025 through 2050. The analysis period was chosen to
align with the date of Platte River’s projected need for peaking
generation capacity, which may be delayed with DR programs
starting in 2025. More information on potential benefits and
costs for DR will be gathered as part of the pilot program.
The DR Pilot Program will provide Platte River’s system
operators with the ability to dispatch a portion of the
municipalities’ existing DR capacity. The goal of the pilot is to
explore how DR could be operated by Platte River to provide
maximum benefits to the overall system (integrated wholesale
and retail perspectives), and to identify improved methods
for allocating the system DR benefits to the municipalities
in proportion to the verified and reliable DR resource they
provide.
42
Distributed Energy Resource Strategy
For 2017 forward, Platte River and the municipalities will work
together to develop a more formal strategy for implementing
and integrating distributed resources. This strategy may include
some of the following:
• A range of distributed resources including generation (such
as combined heat and power, or CHP), load management
(including DR), and energy storage.
• Develop procedures to maintain an up-to-date distributed
generation database that includes proposed projects.
• Integrate lessons learned from the system DR pilot program
into overall strategy.
• Enhance modeling capabilities to analyze distributed
resources from wholesale, distribution, and customer
perspectives.
• Evaluation of means to improve the reliability, predictability,
and operational value of DER resources through a variety
of methods (e.g., metering/monitoring, variable generation
forecasting, appropriate rates and/or incentives, judicious
siting).
• Evaluate benefits and costs in an integrated fashion,
including the generation and transmission system,
distribution system, and end-use customers.
• Solar photovoltaic (PV) and CHP are the two types of
distributed generation most likely to be used in the near
future.
• PVs can be installed at an end-user’s facility or provided by
larger-scale installations at the distribution or wholesale
utility level. Platte River retained Nexant (a consultant) to
evaluate the potential for roof-mounted PV in the region,
based on roof orientation, capacity factors and economics.
Nexant suggested that PV installations could grow to an
estimated rated (direct-current) output of 120 MW in the
next 20 years (by 2035) — if utility incentives are provided
to cover all of the cost. This would have the effect of
reducing the summer peak by about 30 MW (and shifting
it to later in the day). Considering all PV systems already
installed on homes and businesses (over 630 systems), the
Loveland solar project (funded via FEMA), solar programs in
Fort Collins, and a potential system-wide community solar
program — total distributed PV installations could exceed
12 MW by 2017.
• CHP refers to a generation system that uses a fuel –
typically natural gas or biofuel – to generate electricity
and incorporates a heat recovery system that captures
waste thermal energy for beneficial use, making steam or
hot water. Nexant evaluated the potential for several CHP
technology applications and concluded that cost effective
potential for CHP was fairly low — less than 5 MW of system
wide capacity. This preliminary assessment did not include
detailed evaluation of specific larger projects at individual
customer facilities such as Colorado State University,
breweries, and regional hospitals. These larger, case-by-
case projects will be evaluated in more detail going forward.
• Community Solar is an option growing in popularity among
utilities nationwide. Under a community solar program,
customers subscribe to a large PV array to purchase either
a share of capacity or a share of the energy output from the
PV by paying a large up-front or small monthly payment,
Appendix A: Resource Planning Update
43
It also takes advantage of the economies of scale inherent
in classic utility-customer service models, with the added
benefit that the utility takes care of the operations and
maintenance of the system on behalf of the customer.
Platte River is currently evaluating the development of a
system-wide community solar program. Key factors being
evaluated are the cost of a solar project, the benefits it
provides, the resulting net cost that would be passed on to
customers, and the anticipated level of customer interest at
that level of cost.
Renewables Integration
In the coming years, Platte River will continue to focus on
integrating renewable energy resources within its resource mix.
Key areas of emphasis include expanding operating expertise
with wind resources (78 MW total), gaining experience with
the management and integration of 30 MW of new solar
generation, and modeling operational aspects of renewable
resource integration. Platte River will also continue to monitor
regional renewable resource opportunities at the wholesale
level and include distributed renewable sources in system
planning activities.
Intermittency
Preparing to manage the intermittency of renewable
generation will be an important effort for Platte River in the
coming years. The currently approved 108 MW of wind/solar
in Platte River’s portfolio is anticipated to grow substantially to
meet 2030 EPA CPP compliance requirements.
Currently, Platte River lacks sufficient flexible generation
resources to manage the intermittency of wind and solar
generation. To help address this need, Platte River relies on
PSCo (the regional balancing authority) to provide the services
to help balance intermittent renewables generation. Since
PSCo determines changes to the future cost of balancing
services, total reliance on these services carries uncertainty.
Platte River may be exposed to additional financial risks if large
amounts of renewable resources are added to its system.
Integration Study
In 2015, Platte River began efforts to evaluate the system cost
and performance impacts from higher levels of intermittent
generation. A consultant’s report evaluated the expected
incremental cost of balancing Platte River’s system at various
levels of solar and wind penetration (ranging from 7.5 percent
to 30 percent of Platte River’s total energy deliveries),
concluding that at lower levels of renewable penetration, Platte
River could expect additional integration costs of about $5
- $7/MWh. As the penetration of renewables increases to 30
percent of total energy supply, the expected cost could rise to
over $30/MWh.
44
These preliminary cost estimates
were included in Platte River’s
modeling efforts to date, and
Platte River expects to engage
in further analysis to more
accurately determine potential
costs for renewable resource
integration. Also, Platte River
intends to work closely with
Xcel Energy and the National
Renewable Energy Laboratory
for better collaboration of large-
scale integration of renewable
sources. Platte River expects to
bring expertise related to sub-
hourly modeling in-house over
time, similar to the approach
for hourly production cost
modeling using Aurora.
Transmission Plan
Platte River’s 10-Year
Transmission Plan is updated
annually to ensure that an
adequate transmission system
is planned for the reliable
delivery of electricity to the
municipalities and other Platte
River transmission customers.
The planning studies and
reliability assessments for the
near-term and long-term
planning horizons demonstrate
the transmission system meets
performance requirements
of the Western Electricity
Coordinating Council (WECC)
and NERC.
In its planning and engineering
efforts, Platte River works with
its member-owners to ensure
the effective integration of our
transmission network and the
municipal distribution systems.
As our businesses continue to
evolve, we will continue to plan
for future system adaptations,
including the accommodation
of potential distributed
generation resources within our
service area.
Appendix A: Resource Planning Update
Appendix A: Resource Planning Update
45
46
In-Service Project Name Description Purpose
May 2017 Loveland Foothills
115/12.47kV Substation
Site next to Mehaffey Park in west Loveland
off 29th St. and adjacent to Loveland West-
Horseshoe 115kV line to locate additional
115/12.47kV transformer(s).
New delivery point to serve
growing load.
December 2017 Boyd 230/115kV Substation
Expansion
Add 230/115kV transformer T2 and
reconfigure 230kV and 115kV yards to
breaker-and-a-half arrangement.
Improve system reliability in
the Loveland area.
May 2018-2019 Harmony 230kV Substation
Terminals Upgrade
Modify 4 transformer bays with circuit
switcher additions and modify transformer
relaying.
Remove conditional line
ratings on the Portner and
Timberline lines.
May 2018 Avery 230kV Substation Sectionalize Carey-Timberline 230kV Line
with a new substation. PSCo will own and
operate the substation.
New PSCo delivery point to
serve growing load.
September 2020 Timberline 230/115kV T3
Replacement
Replace 230/115kV transformer T3. Improve system reliability in
the Fort Collins area. Existing
transformer was installed
1976.
February 2020 Fordham 115kV Substation
Expansion
Add 115/12.47kV transformer T3. New delivery point to serve
growing load.
April 2020 Re-Configure Harvard
Substation
Connect Harvard 115/12.47 kV transformers
T1 & T2 to different bays at Longmont NW
Substation.
Improve reliability to each
transformer. Meet Platte
River design criteria.
A summary of planned transmission projects is provided in the table below.
Appendix A: Resource Planning Update
Platte River Planned Transmission Projects
47
In-Service Project Name Description Purpose
October 2021 Rawhide Unit 1 GSU
Replacement
Rawhide Unit 1 GSUs (3 + 1 spare)
in coordination with major Rawhide
plant outage.
Satisfy maintenance
requirements.
May 2021 Loveland Boedecker
115/12.47kV Substation
Site near southeast corner of
Boedecker Lake adjacent to Loveland
West Tap 3-terminal 115kV line
structures to locate additional 12.47kV
transformer(s). Loveland owns the
land.
New delivery point to serve
growing load.
November 2021 Valley 115kV Substation
Expansion
Add 115/12.47kV transformer T3. New delivery point to serve
growing load.
December 2021 Fort Collins Northeast
115/13.8kV Substation
Considering a site south of Richard
Lake Substation and west of I-25
Substations. A short double circuit
115kV transmission line will be
required.
New delivery point to serve
growing load.
May 2022 Loveland Southeast Substation Considering sites near intersection of
I-25 and Hwy 402 to locate additional
12.47kV transformer(s). Could be
a 230kV or 115kV transmission
interconnection depending on desired
project route. Loveland owns the
land.
New delivery point to serve
growing load.
October 2022 Rawhide Station Service XFMR Replace Rawhide 230/12.47 Station
Service transformer with major plant
outage
Life cycle replacement.
Appendix A: Resource Planning Update
48
The Risk Management Plan summarizes Platte River’s proactive
efforts to identify, evaluate, rank, and mitigate risks that could
negatively impact electric supply, finances, reputation, and
safety requirements. Platte River’s risk management process
provides a framework to identify and assess specific risks
by soliciting staff input and following an assessment and
documentation process.
Identified risks are evaluated through a risk assessment
process coordinated by the chief financial and risk officer,
financial planning staff, and a Risk Oversight Committee (ROC)
consisting of the general manager, senior management, and
key staff members.
The ROC identifies subject matter experts throughout Platte
River to provide expertise and information regarding each
identified risk and to alert the ROC of additional risks. As risks
are identified, a detailed risk review process assesses risk
magnitude and probability based on Platte River data, industry
data, staff and management experience, and evaluation.
The ROC assigns each risk a magnitude and probability
rating based on specific criteria. Risks are prioritized for the
development and implementation of appropriate actions.
Strategic actions to address risks include avoidance,
transference, mitigation, and acceptance. Platte River’s
objective is to reduce risk exposures to acceptable levels
when elimination is not feasible. The ROC reassesses all
identified risks and the effectiveness of mitigation strategies.
The financial planning staff maintains all assessment
documentation and supporting analysis, and the ROC reviews
those materials.
All identified risks are listed in a Risk Inventory. The chief
financial and risk officer approves all risks included in the
Risk Inventory, along with assessments, and supporting
documentation.
A third party review of the Risk Management Plan and risk
mitigation activities concluded in 2016. The review included
a report summarizing strengths and suggested improvements
to Platte River’s overall risk management process. The overall
findings of the third party assessment show that Platte River
has achieved a certain level of stability through the annual
risk assessment process and the transition from a “top-
down” to a “bottom-up” approach have been successful.
The report recommended a phased work plan for specific
actions that can be adopted by Platte River to improve the
risk management program in four key areas: governance and
organization, policy and process, risk culture and awareness,
and risk infrastructure. The first phase of improvements, which
include expansion of defined risk management program
goals, improved processes and communication, and redefined
metrics are underway.
Appendix B:
Risk Management Plan
Appendix B: Risk Management Plan
Appendix B: Risk Management Plan
49
Platte River’s identified risks are analyzed and assigned a magnitude and probability
classification, respectively.
Risk Magnitude Electric Supply Safety Financial
Reputation and
Interests
HIGH
Loss of supply to an
entire city
Loss of life or serious
bodily injury
Significant impact
>$10 million
Significant long-
term damage
MEDIUM
Loss of supply to part
of a city
Bodily injury
Limited impact
$5 - $10 million
Short-term damage
LOW
Momentary loss to a
city substation
No injury
Modest impact
<$5 million
No appreciable
damage
Profitability Rank Probability Rank Definition
HIGH The identified risk is likely to occur within five years.
MEDIUM The identified risk could occur within five years and should be anticipated.
LOW The identified risk is unlikely to occur within five years.
Appendix B: Risk Management Plan
50
Identified Risk
Risks identified as significant to Platte River that could
negatively impact electric supply, finances, reputation, and
safety requirements.
Magnitude
The impact of an identified risk occurring. Ranking
classifications are detailed below.
Probability
The likelihood of an identified risk occurring within a specified
time period. Ranking classifications are detailed below.
Risk Oversight Committee
A committee consisting of the general manager, senior
management, and key members, charged with managing
Platte River’s risks and developing the Risk Management Plan.
Risk Management Plan
A document included as an integral part of Platte River’s
Strategic Plan summarizing Platte River’s identified risks and
risk mitigation strategies.
Risk Inventory
A table within the Risk Management Plan summarizing the
magnitudes and probabilities of identified risks.
Risks & Mitigation Strategies
The number assigned to each risk does not indicate a priority
or level of severity. It is designed to make it easier to find the
related detail of that risk on the following pages.
# Identified Risk Magnitude Probability
1 New Mandated Emission Reductions High High
2 Business Cybersecurity System Intrusions Medium High
3 EPA Coal Combustion Residuals Rule Implementation Medium High
4 Cybersecurity - Customer Data High Medium
5 Corporate Conduct Medium Medium
6 Damage by Outside Contractor Employees Medium Medium
7 Defined Benefit Plan Investment Under-Performance Medium Medium
8 Employee Errors Resulting in Loss of Electric Service Medium Medium
9 Interest Rate Changes Medium Medium
10 Mandated Renewable Energy Standard Medium Medium
11 Physical Threats Affecting Reliability or Human Life Medium Medium
12 Acts of Workplace Violence High Low
Appendix B: Risk Management Plan
51
# Identified Risk Magnitude Probability
13 Cybersecurity - Generation Combustion Turbines High Low
14 Cybersecurity - Generation Unit 1 and Gas Yard Balance of Plant High Low
15 Cybersecurity - System Operations High Low
16 Environmental Violations High Low
17 Interruption of Coal Supply (Fuel and Rail, Trapper Mine) High Low
18 Interruption of Water Supply for Rawhide Generation High Low
19 Unplanned Capital Requirements High Low
20 Increased Turnover of Employees (Knowledge Loss) Low High
21 Credit Risk Medium Low
22 Financial Internal Controls Medium Low
23 Commodity Market Volatility Low Medium
24 Electric Facility Siting Constraints Low Medium
25 Extended Baseload Forced Outage: Craig Low Medium
26 FERC/NERC Regulatory Compliance Violation Low Medium
27 General Liability Low Medium
28 Increased Federal Oversight Low Medium
29 Changes to Tax Exempt Status and Classification of Newly Issued Power
Revenue Bonds
Low Low
30 Increased State Oversight Low Low
31 Extended Baseload Forced Outage: Rawhide Low Low
32 Interruption of Natural Gas Supply (Fuel and Pipe) Low Low
33 Loss of Communication Systems Functionality (Phone, Fiber, Etc.) Low Low
34 Misalignment of Capacity Resources and System Loads Low Low
35 Physical Property Loss Low Low
36 Transmission Interruption Low Low
37 Wholesale Electric Market Manipulation Low Low
52
A brief summary of each risk and its mitigation
strategies follows. Each mitigation strategy requires
the ROC’s attention and follow-up to evaluate
alternative courses of action.
1. New Mandated Emission Reductions
Platte River generation facilities consistently operate below
existing emission permit limits for all regulated pollutants,
and the emission levels from Rawhide and Craig are among
the lowest for coal units in the United States.
Evolving operational and environmental standards may
require further reductions in emission levels; staff will
continue monitoring regulatory developments and analyze
various mitigation strategies. Emission reductions are also
evaluated as part of a larger strategic planning process
currently underway.
2. Business Cybersecurity System Intrusions
Platte River cyber systems are facing a growing and evolving
threat of system intrusions. To date, no known successful
intrusions have occurred. In response to the increased risk,
beginning in 2016 IT will be moving from an opportunistic to
a program-driven approach to cybersecurity improvements.
3. EPA Coal Combustion Residuals Rule
Implementation
In April 2015, the EPA finalized new rules resulting in
increased regulation of coal combustion residuals (CCR).
The new rules include standards for new and existing
facilities, applicable to operations at Rawhide. Platte River
is in the process of complying with current requirements
and determining what future requirements may apply. Platte
River will continue to monitor initial implementation of the
rule across the country, including industry best practices
and enforcement actions. Participation will also continue
in stakeholder meetings and public process coordinated by
Colorado Department of Public Health and Environment
concerning possible changes to state regulations to
incorporate the new federal standards.
Platte River is evaluating options for upgrades to the ash
handling system at Rawhide including a range of alternatives.
The evaluation is not simply limited to the least cost options
to meet compliance but will deliberately include a particular
focus on more costly alternatives that would have additional
benefits including reduced risk of environmental impacts.
4. Cybersecurity – Customer Data
Platte River hosts the Customer Information System
(CIS) on behalf of two municipalities; the CIS database
includes records containing confidential data. A third-
party vulnerability assessment is scheduled for late 2016,
documenting opportunities for improvement and developing
an action plan to address identified improvement areas.
5. Corporate Conduct
Ethics violations typically receive highly negative publicity,
which could damage Platte River’s reputation and result in
legal action. As a result, Platte River has incorporated a “Code
of Conduct” within the Employee Handbook, providing
guidance and ethical principles applicable to all employee
behavior.
Platte River has provided workforce training on ethics
guidelines and the Employee Handbook section on ethics
has been strengthened with more specific guidance for
Appendix B: Risk Management Plan
53
6. Damage by Outside Contractor Employees
The responsibility for screening contractors’ employees
rests with the contractors themselves. However, Platte River
personnel responsible for administering contracts must
account for the risk posed by contractors.
The contractor screening, selection, and bidding process
helps mitigate the risk. Contract terms and conditions
further mitigate risks and reinforce administrative personnel’s
responsibility and authority. These terms and conditions
include, but are not limited to, contract termination, safety
assessments, indemnification, or surety bond requirements.
7. Defined Benefit Plan Investment Under Performance
Investment earnings on the Defined Benefit Plan are subject
to volatility. Platte River closed the Defined Benefit Plan
to employees hired on or after September 1, 2010, which
reduced future Defined Benefit Plan funding requirements.
The reinstated lump sum distribution, combined with
modified plan assumptions implemented in 2016, further
reduces the risk of investment under-performance.
The Retirement Committee, in conjunction with investment
advisors, meets quarterly to monitor investment diversity and
performance, and evaluate and update investment strategies.
8. Employee Errors Resulting in Loss of Electric Service
Reliance upon human behavior introduces the unavoidable
element of human error.
To reduce errors and minimize their impacts, Platte
River implemented job training focused on acquiring
and maintaining skills. The training includes updating
apprenticeship step progression requirements, regular
refresher training on specialized processes or activities, and
documenting processes. Time is scheduled to review job
hazards before starting work, which minimizes the potential
for errors and standardizes safety procedures and practices.
9. Interest Rate Changes
Interest income and financing costs are divergently impacted
by interest rate volatility.
A laddered maturity strategy based on cash flow projections
mitigates the impact of interest rate volatility on investments.
Staff analyzes various debt options to help mitigate potential
rising rates during times of anticipated debt issuance.
10. Mandated Renewable Energy Standard
The Colorado Renewable Energy Standard (RES) currently
does not apply to Platte River, but requires municipal utilities
with more than 40,000 customers to provide 10 percent of
their energy from qualified renewable resources by 2020;
currently one owner municipality qualifies. Future mandates,
from both federal and state governments, may require
additional renewable resources in Platte River’s portfolio.
Platte River will continue to proactively diversify its resource
portfolio, while monitoring the regulatory landscape and
analyzing potential scenarios for future compliance.
11. Physical Threats Affecting Reliability or Human Life
Generation and transmission facilities include high-value
assets in multiple locations serving the owner municipalities.
This exposes Platte River to increasing physical security
threats.
Platte River implements the NERC Critical Infrastructure
Protection (CIP) reliability standards as required, and uses
54
12. Acts of Workplace Violence
Platte River, similar to any employer, is exposed to threats
of violence against its employees, both at the jobsite and
outside the workplace. A zero-tolerance policy is defined in
the Employee Handbook, including disciplinary actions for
employee demonstrating threatening behavior. Workplace
violence training has occurred, and avenues exist for
employees to report potential workplace violence concerns.
Platte River will continue to improve employee safety through
training and facility planning.
13. Cybersecurity – Generation Combustion Turbines
CIP reliability standards from NERC, FERC, and WECC require
significant cyber oversight, resulting in the installation
of system hardware and software to protect generation
combustion turbines. The most recent audit found no
potential violations, and cited no areas of concerns or
recommendations.
The Controls Network Administrator maintains reliability
and security of the controls network and all cyber assets
connected to it, including the combustion turbines. Multiple
layers of cybersecurity protection exist, along with built-in
redundant, independent protections. The presence of five
smaller, independent, generation units mitigates the impact
versus possessing all peaking capacity on a single unit.
14. Cybersecurity – Generation Unit 1 and Gas Yard
Balance of Plant (BOP)
In the event of a severe cyber breach, a loss of generation
infrastructure would cause a system outage until manual
restoration occurred, along with potential personnel and
equipment damage. CIP reliability standards from NERC,
FERC, and WECC do not currently apply to Unit 1 and Gas
Yard BOP. An initial cybersecurity assessment demonstrated
areas in need of improvement. Staff has identified and
implemented strategies to address concerns, and will
continue assessing future security needs.
15. Cybersecurity – System Operations
System Operations uses a SCADA system to monitor and
control the Platte River Bulk Electric System (BES) assets.
The technology used by the SCADA system and personnel
with access may introduce vulnerabilities. A breach of the
SCADA system cybersecurity could cause a loss of control or
situational awareness, resulting in the loss of load to one or
more of the owner municipalities.
Platte River will address threats and regulatory requirements
specific to SCADA systems through internal controls
improvement, capital investment, employee training, and
proper staffing to adapt to evolving threats.
16. Environmental Violations
Operation of a BES requires compliance with numerous
environmental regulations with increasing complexity.
Non-compliance during the operation of generation and
transmission facilities may result in financial penalties and/or
mandated system upgrades.
Platte River remains proactive in environmental compliance,
and continually trains staff to ensure environmental
compliance. Training programs are enhanced as regulations
and other requirements evolve.
Appendix B: Risk Management Plan
Appendix B: Risk Management Plan
55
17. Interruption of Coal Supply (Fuel and Rail, Trapper
Mine)
The absence of coal for baseload generation would result
in replacement power purchased, or peaking generation,
both potentially higher cost alternatives to Platte River’s
baseload units. The proximity of mines, coal mine diversity,
and adequate stockpile inventories reduce the chances of
interruption.
To avoid an interruption, Platte River will continue to seek
long-term coal supply and rail contracts, while maintaining
strong relationships with coal and rail providers. Platte River
targets a minimum of 75 days of stockpile inventory at
Rawhide and a minimum of 60 days of stockpile inventory at
Craig to mitigate supply disruptions.
18. Interruption of Water Supply for Rawhide
Generation
Without a reliable water supply, Platte River could experience
sustained curtailments of generation from the Rawhide coal
unit. The Windy Gap Project is the primary source of water
for Rawhide generation, and historically produces adequate
water for operational needs.
To mitigate the risk of water shortages, Platte River is
participating in the Windy Gap Firming Project to improve
reliability of the Windy Gap water supply. The permitting
process is nearly complete and current projections indicate
the firming project will be completed and begin filling by
2021 or 2022. In the interim, Platte River will continue
researching alternative water supplies for Rawhide coal unit
operations.
19. Unplanned Capital Requirements
Capital expenditures are planned and prioritized annually to
determine capital funding requirements over the next several
years. Significant variances over planned project expenses
can produce financial strain and rate pressure.
Platte River implements best practices for project
management to improve cost projections.
20. Increased Turnover of Employees (Knowledge Loss)
The demographics and tenure of a portion of Platte River’s
workforce suggest many employees may consider retirement
in the near future, resulting in a loss of institutional and
operational knowledge. Individual managers of impacted
areas continue to improve the documentation and
knowledge sharing in their areas as this loss is recognized.
The recruiting function will continue to strengthen as well as
training and development programs.
21. Credit Risk
Platte River invests in a number of Government Sponsored
Enterprises (“agencies”) that present credit risk. Default of any
agency debt could result in substantial loss of investment
principal.
Platte River diversifies its portfolio by purchasing different
types of securities allowed under Colorado State Statute:
agency debt, treasury notes, investment pools, bank deposits,
and money market accounts. Within direct purchase agency
debt, Platte River limits its exposure to each individual
agency to less than 20 percent (subject to review by the
chief financial and risk officer). Platte River will continue to
maintain a diversified investment portfolio while monitoring
56
22. Financial Internal Controls
A financial loss due to fraud or embezzlement is limited
by strong financial internal controls and separation of
financial duties. An internal auditor is on staff, and policies
and procedures exist to support internal financial controls.
The Internal Audit Committee prioritizes the internal audit
program, reviews audit findings, and recommends action
items.
Additionally, Platte River has a confidential hotline, operated
by external auditors, for employees to report suspicious
activity. Platte River also maintains insurance policies to
mitigate financial loss.
23. Commodity Market Volatility
Commodity prices are currently in a period of depressed
prices; market recovery and volatility is anticipated. Platte
River expenses directly impacted by commodity market
volatility currently represent 29% of total budgeted expenses,
with projections increasing to 33% in 2021. Increased
operating expenses resulting from variances above current
projections would be offset by increased surplus sales
revenues.
Platte River will continue to monitor markets for future
opportunities to mitigate price volatility and analyze future
resource and fuel needs.
24. Electric Facility Siting Constraints
Installation of new electric facilities (generation and
transmission) requires extensive time for planning, design,
permitting, and construction. Analysis using strategic
planning tools to properly forecast the timing of a new
facility, combined with proper project planning, mitigates
delays associated with siting and permitting.
25. Extended Baseload Forced Outage: Craig
In the event a forced outage exceeding two weeks occurred
at either of the Craig units, Platte River’s ability to serve
load would not be curtailed. This is due to the presence of
Platte River’s natural gas peaking units, availability of other
generation resources in the region, and the wholesale market.
The primary exposure is the cost to replace baseload
generation with a combination of natural gas fueled
combustion turbines and wholesale market purchases. To
represent Platte River’s interests, Platte River employees serve
on the Yampa Engineering and Operating Committee and the
Yampa Coordinating Committee.
26. FERC/NERC Regulatory Compliance Violation
Platte River is subject to the NERC Compliance Monitoring
and Enforcement program for mandatory and enforceable
Reliability Standards.
This requires annual self-certifications and compliance
audits every three years. FERC has the authority to issue civil
penalties for violations.
Platte River’s Reliability Compliance Program and well-
documented internal compliance program operate
independently of areas responsible for reliability standards
compliance. Responsibilities are assigned to relevant staff,
and numerous policies, processes, procedures, and internal
controls have been implemented.
Appendix B: Risk Management Plan
57
27. General Liability
Due to risks associated with the nature of Platte River
business activities, Platte River purchases various insurance
products to mitigate financial risk. With the assistance
of insurance brokers, appropriate insurance policies are
maintained.
Platte River promotes a culture of high safety standards,
starting with the general manager, with a focus on
continuously improving business policies and procedures.
28. Increased Federal Oversight
As a political subdivision of Colorado, many federal
legislative and regulatory reforms that apply to private
businesses do not apply to Platte River. Increasingly
Platte River is subject to federal oversight in areas such as
employment, finance, business transactions, employment
benefits, land and water development, and wildlife
protection.
Platte River remains active in monitoring changes to the
legislative and regulatory landscape, and communicates its
positions to legislators and regulators, when necessary. In
addition, Platte River is an active member of coalitions that
monitor and participate in the legislative and regulatory
process.
29. Changes to Tax Exempt Status of Newly Issued
Power Revenue Bonds
Platte River’s ability to issue tax-exempt debt lowers
financing costs, which benefits rate payers. Modifications
to tax-exempt financing are being considered as part of
federal tax reform.
Platte River will continue to support APPA and LPPC in their
efforts to ensure the continuance of tax-exempt financing.
Staff will continue analyzing various debt options that could
be used if tax exempt financing is modified.
30. Extended Baseload Forced Outage: Rawhide
Historical performance of Rawhide Unit 1, along with
staff analysis defines an extended baseload outage as a
two-week outage. An outage of this duration would not
jeopardize Platte River’s ability to serve load because excess
capacity has been constructed to meet peak summer
demands and ensure electric supply during outages.
The primary exposure is the cost to replace baseload
generation. Replacement resources available include
natural gas combustion turbines, wholesale market
purchases, and a forced outage assistance agreement.
Excellent maintenance practices and operating standards
will continue to sustain the unit reliability.
31. Increased State Regulatory Oversight
Historically, Platte River has not been subject to any
significant degree of regulatory oversight by the Colorado
Public Utilities Commission (CPUC) due to its status as a
political subdivision and municipally owned utility.
Platte River will continue actively monitoring changes to
the legislative and regulatory landscape, and communicate
Platte River’s positions to legislators and regulators, when
necessary.
Appendix B: Risk Management Plan
58
32. Interruption of Natural Gas Supply (Fuel and Pipe)
Natural gas is currently used only on an intermittent basis.
Regular inspections ensure reliability of the pipeline, and Platte
River maintains a consistent and reliable interconnection with
Xcel Energy. In the event a natural gas disruption occurred,
Platte River could sustain a loss of load depending on the
timing and duration of the event.
Regular inspection and maintenance of natural gas pipeline
infrastructure, including the Colorado Interstate Gas
interconnects, will continue to ensure reliability. Staff remains
familiar with scheduling procedures on Colorado Interstate
Gas’ pipeline as an alternate source, while monitoring potential
alternative supply sources, including natural gas storage.
33. Loss of Communication Systems (Phone, Fiber, Etc.)
Communication losses have been quickly repaired with
minimal impact. Communication reliability is maintained
through system redundancies, emergency backup systems, and
continued maintenance.
34. Misalignment of Capacity Resources and System
Loads
Platte River has two significant risks related to capacity
resources and load: 1) resources are insufficient to serve
loads (short capacity), or 2) Platte River costs increase due to
underutilized generation resources (long capacity).
Platte River updates the load forecast annually to include
recent load trends. In 2016 Utility Financial Solutions modified
and verified Platte River’s econometric model for statistical
validity. Additionally, resource planning efforts are underway to
analyze the timing of future capacity expansion.
35. Physical Property Loss
Platte River has experienced few instances of property damage
or loss because of maintenance procedures, training programs,
and safety standards. Platte River’s property insurance, which
is reviewed annually, limits financial exposure to policy
deductibles.
36. Transmission Interruption
Forced outages on overhead transmission lines are typically
of short duration. Inventories of temporary transmission
equipment exist to quickly recover from a forced outage. Platte
River’s redundant transmission system is continually reviewed
for opportunities to decrease system constraints in the event of
an outage.
37. Wholesale Electric Market Manipulation
The jurisdiction of the FERC was expanded to include oversight
preventing market manipulation, subject to fines and penalties.
Platte River policy prohibits market manipulation. A compliance
audit program and internal controls minimize the likelihood of
market manipulation.
Appendix B: Risk Management Plan
59
Platte River’s Strategic Financial Plan (SFP) provides direction
to create long-term financial stability. The priorities of the SFP
are to generate adequate cash flows, maintain access to low-
cost capital, provide stable and competitive wholesale rates,
and effectively manage financial risk. The board of directors
reviews the SFP policies, goals, and financial projections at
least annually.
Rate Requirements
Under Colorado law, Platte River’s board of directors has
the exclusive authority to establish electric rates. The Power
Supply Agreements (PSAs) with the municipalities require the
board to review rates at least once each calendar year.
The PSAs with the municipalities and the General Power
Bond Resolution contain specific provisions governing Platte
River’s rate setting. The PSAs require that rates be sufficient
to cover all operating and maintenance expenses, purchase
power costs, debt service expenses, and to provide reasonable
reserves and adequate earnings margins so Platte River may
obtain favorable debt financing. The General Power Bond
Resolution requires that rates be sufficient to generate net
revenues that cover debt service expense at a minimum 1.10
times.
Policies and Goals
The policies and goals listed below are described in detail on
the next page.
• Generate minimum debt service coverage of 1.50 times
• Generate minimum net income equal to $6 million
• Target minimum 200 unrestricted days cash-on-hand
• Maintain $20 million in the Rate Stabilization Fund
• Target debt-to-capitalization ratio less than 50 percent
• Provide stable and competitive wholesale rates
• Maintain access to low-cost capital and favorable credit
ratings
• Maintain bond required reserves
• Prudently manage and invest reserves
• Variable rate debt managed in accordance with interest
rate risk management policy
• Manage financial risk
The listed policies and goals are interrelated. By achieving the
minimum target for debt service coverage of 1.50 times, the
net income target of $6 million, and the minimum 200 days
of unrestricted cash-on-hand, Platte River should generate
adequate cash flows to meet liquidity targets, exceed its debt-
to-capitalization goal, and maintain access to low-cost capital.
Generate Minimum Debt Service Coverage of 1.50
Times
While the legal requirement for debt service coverage is 1.10
times, coverage at this level does not generate adequate cash
flows. It also increases future debt issuance and significantly
impacts Platte River’s credit rating, which increases the cost of
future financings. Target debt service coverage of 1.50 times
provides sufficient annual cash flows to partially fund future
capital additions, as well as, maintain favorable credit ratings.
Generate Minimum Net Income of $6 Million
PSAs with the municipalities require Platte River to have an
adequate earnings margin to obtain revenue bond financing
on favorable terms. A target minimum of $6 million net
income is a sufficient earnings margin to maintain cash
balances, meet liquidity requirements, and provide financial
60
Target Debt-to-Capitalization Less Than 50 Percent
A debt-to-capitalization ratio less than 50 percent provides
Platte River with a strong balance sheet. It also reduces the
risk of becoming over leveraged in the debt market.
Target Minimum 200 Days of Unrestricted Cash-on-
Hand
A minimum 200 days of unrestricted cash-on-hand target
ensures that adequate cash is generated and maintained,
thus ensuring Platte River’s financial flexibility, strength,
and liquidity. Included in the days of unrestricted cash-on-
hand target is a Rate Stabilization Fund target of $20 million.
The purpose of the Rate Stabilization Fund is to reduce or
eliminate the rate impact due to an unforeseen event that
affects Platte River’s ability to meet the minimum legal debt
service coverage requirement.
Maintain Access to Low-Cost Capital and Favorable
Credit Ratings
Interest rates between various credit ratings can fluctuate
significantly depending on market conditions. Maintaining a
strong credit rating provides access to low-cost capital and
favorable financing terms, resulting in lower overall debt
service expense.
Provide Stable and Competitive Wholesale Rates
The board develops and reviews rate projections at least
annually. To provide more stable rates from year to year,
Platte River may smooth the projected rate modifications
over several years to meet SFP criteria. Platte River uses rate
comparisons with other utilities in the region to measure
the competitiveness of wholesale rates charged to the
municipalities.
Maintain Bond-Required Reserves
The General Power Bond Resolution requires Platte River to
maintain a Reserve and Contingency Fund at a minimum of
2 percent of net plant. Bond service and bond reserve funds
are maintained as required.
Prudently Manage and Invest Reserves
Platte River’s investments will be managed according to
Platte River’s Investment Policy. The primary objectives
of the investment activities are safety, liquidity, and yield,
while achieving market returns comparable to benchmark
performance.
Variable Rate Debt Managed In Accordance With
Interest Rate Risk Management Policy
The board-approved Interest Rate Risk Management Policy
has established guidelines that govern variable rate debt.
Manage Financial Risk
Platte River’s financial risks are managed according to, but
not limited to, the following board-approved documents:
Energy Risk Management Policy, General Power Bond
Resolution, Interest Rate Risk Management Policy, and PSAs.
The Energy Risk Management Committee and the ROC are
charged with managing Platte River’s business risks.
Appendix C: Strategic Financial Plan
Appendix D: Environmental Regulatory Issues
61
Platte River uses state-of-the-art air quality control systems
at its power generation stations and meets or exceeds all
applicable environmental laws and regulations. As new
legislation and regulations are proposed, Platte River
participates in public processes and supports additional
control requirements where costs are commensurate
with measurable environmental benefits. In addition, as
technology improves and opportunities arise, Platte River will
be proactive in evaluating and implementing improvements
in its power operations that balance environmental and other
socio-economic concerns.
Principles
The following principles are used to guide Platte River’s
decision making and operations:
• Consider environmental factors in planning, design,
construction, and operations decisions
• Ensure compliance with applicable laws, rules,
regulations, and permits
• Conserve natural resources
• Reduce environmental risks
• Communicate environmental values
• Encourage public participation
• Support cost-effective programs to conserve energy
• Coordinate generation and transmission planning with
interconnected utilities
• Consider environmentally progressive technologies to
meet future generation needs
Clean Power Plan
On August 3, 2015, the EPA issued a set of rules regulating
the emission of CO2 from new, modified and reconstructed,
and existing fossil fuel-fired electric generating units (EGUs)
under section 111 of the Clean Air Act (CAA). Nationwide, EPA
projects that the set of rules will reduce emissions from the
power sector by 32 percent (from 2005 levels) by the year
2030. Presently the Supreme Court has stayed the CPP, and
litigation may extend into 2018. Considerable uncertainty
exists about the outcome of this process and what additional
changes the incoming administration will make. The
following is a brief description of the program as it exists
currently.
Set of Rules
1. A final rule under section 111(b) of the CAA setting
emission standards for new EGUs, based on the “partial”
application of carbon capture and sequestration for coal-
fired EGUs
2. In the same rule, emission standards for modified and
reconstructed EGUs, which are not based on carbon
capture and sequestration for coal-fired EGUs
3. The final “Clean Power Plan (CPP),” a rule under
section 111(d) of the CAA that establishes state-by-
state CO2 emission reduction “goals” starting in 2022.
It directs each state to submit for EPA approval a plan
demonstrating how the state’s affected EGUs will meet
its reduction goals.
In addition, EPA released a proposed federal plan that would
establish unit-by-unit emission reduction obligations for
affected EGUs in states that did not submit an approvable
state plan. The proposed federal plan also includes
62
State Responsibilities
As with many other CAA regulatory programs, section 111(d)
gives states the primary responsibility to meet their reduction
obligation by adopting state plans that limit emissions at
regulated facilities. The CPP sets state-specific CO2 emission
goals to reduce statewide emission from the power sector.
These goals consist of an Interim Goal, which must be met on
average during the years of 2022-2029, and a Final Goal for
2030 and beyond.
However, the EPA proposes to allow states to determine when
and how quickly individual EGUs in the state must reduce their
emissions. The EPA allows states to demonstrate progress
either through multi-year “step down” goals or through a
state-determined “glide-path” approach.
Three Forms of Goals
EPA specifically set state goals in three forms, which it deems
equivalent:
1. A rate-based goal measured in pounds of CO2 per
megawatt hour (lb CO2 /MWh) of generation by the
electric power sector.
2. A mass-based goal covering the mass emission of only
existing affected EGUs within the state, measured in tons
of CO2.
3. A mass-based with new source complement, measured in
tons of CO2, which includes emissions from both existing
and new affected EGUs.
States choose the goal they want to use when designing and
submitting their plans. The CPP requires states to submit their
initial plans by September 6, 2016. Note: The EPA may grant a
state an extension for as many as two years, provided its initial
submission meets certain specified criteria for progress and
consultation.
States must submit their final plans by September 2018.
EPA Changes
Reacting to significant public comment, EPA has adopted
a number of changes to address reliability concerns. These
changes include:
• A requirement that each state plan demonstrate that is has
considered reliability
• A way for a state to revise its plan in the face of
unanticipated reliability challenges
• A temporary “safety-valve” for individual EGUs when CPP
requirements conflict with reliability obligations
• An agreement between EPA, the Department of Energy,
and the Federal Energy Regulatory Commission to
coordinate and monitor implementation of the rule in
order to ensure reliability.
Staff are preparing for these new requirements and taking an
active role in collaborating with peer utilities, trade groups, and
consultants to determine possible effects on operations and
determine best practices for compliance going forward. After
a final disposition of CPP is determined at the federal level,
and the State of Colorado sets its implementation plan, Platte
River and other utilities will be able to produce fully informed
models that support different planning scenarios.
Ozone Standards
On November 25, 2014 the EPA issued a proposed rule under
the National Ambient Air Quality Standards program to tighten
the primary and secondary standards for ground-level ozone.
Appendix D: Environmental Regulatory Issues
63
NOx emissions from combustion sources and volatile organic
compounds (VOCs) are the major contributors to ozone.
Major NOx sources include vehicles, commercial/industrial
activities, and electric generation. The main contributors to
VOC emissions are oil and gas operations.
On October 1, 2015, the EPA announced revisions for ground-
level ozone. The standard has been changed from 75 parts per
billion (ppb) to 70 ppb, which is at the top of the 60 ppb to 70
ppb range that was proposed. The change has no immediate
effect on Platte River operations, but may have some future
implications:
1. More difficult and complicated permitting requirements.
With the current 75 ppb standard the North Front Range
ozone non-attainment area does not quite reach Rawhide.
However, this new standard increases the likelihood that
the Rawhide site will be included in the future.
2. Further state-level rulemaking for additional reductions.
If the state is unable to show that sufficient emissions
reductions can be achieved to meet this standard through
existing programs or other less expensive alternatives,
we could see new reduction mandates for existing
units through additional rulemaking. Depending on the
magnitude, impacts at Rawhide could range from a simple
air permit change to expensive new controls including
installation of selective catalytic reduction (SCR).
Potential Nonattainment Boundaries
At present, the Rawhide Energy Station is in an area that attains
the 75 ppb standard. Based on 2011-2013 monitoring data,
EPA indicates that at 70 ppb, 358 counties nationwide would
violate the standard. Extension of the nonattainment area
depends on the 2014-2016 monitoring data and modeling
results. At 70 ppb, if ozone monitoring data shows favorable
results, the North Front Range nonattainment area may
not be extended. The EPA will make attainment boundary
recommendations in October 2016, and designation of
nonattainment areas are expected in October 2017.
Permitting for new resources located in a non-attainment area
is considerably more difficult and complicated. NOx emission
offsets must be obtained from existing sources within the
nonattainment area for any new emissions. New units must
also be constructed with lowest achievable emission reduction
controls and limits. Any additional NOx produced from new
generation units at the Rawhide site may involve committing
to lower emissions from Rawhide Unit 1.
Depending on the designation of nonattainment areas and
the ability of the state to show that sufficient reductions
are possible with existing programs, the Rawhide coal unit
may be required through future rulemaking processes to
make additional emissions reductions. The cost of additional
NOx controls, in the form of SCR or selective non-catalytic
reduction (SNCR), would be significant and would result in
relatively small incremental reduction due to the already
relatively low NOx emission rates achieved with existing
combustion controls.
Disposal of Combustion Residuals from Electric Utilities
Rule (CCR Rule)
On April 17, 2015 the EPA posted to the Federal Register a
final rule including new regulations affecting coal combustion
64
Platte River operates two bottom ash transfer ponds and an
ash monofill that are subject to the rule, all located at Rawhide.
There is still considerable uncertainty as to exactly how the
new standards will be enforced, what the state’s role will be,
and how some important details will be interpreted. In the
face of such uncertainty, below is a list of actions Platte River
expects to be required to take during the initial 42-month
implementation period:
• Expand the existing groundwater monitoring plan.
• Demonstrate that all existing operations meet the new
standards, and make contingency plans in case they do
not.
• Comply with expanded inspection requirements (weekly,
monthly, and annually).
• Comply with expanded recordkeeping requirements.
• Comply with a new requirement to post compliance
information to a public website.
Platte River is recommending a significant upgrade to the
existing bottom ash handling system at Rawhide during the fall
2018 outage. The goal of this project is to implement industry
best practices by eliminating the use of wet impoundments
from the existing bottom ash handling system. The existing
system operates via a sluicing process, moving coal ash
through pipes with water to a dewatering impoundment
where solids settle out and are periodically excavated.
Although there is no reason to suspect that the existing
system has caused environmental harm, the current regulatory
environment and our industry is moving away from storing
ash in wet impoundments and it is prudent for Rawhide to be
proactive on this front as well.
Technology exists for handling this material in a dry form
without sluicing or replacing the impoundments with a
system of self supporting tanks. Platte River has retained an
experienced engineering consultant to assist in evaluating the
various options and will make a final recommendation by the
fall of this year.
Benefits of upgrading the bottom ash handling system include
improved short-term and long-term regulatory certainty,
reduced compliance costs and risk, lower auxiliary load costs,
lower water usage, and lower operations and maintenance
costs.
In response to the CCR Rule, the Colorado Department
of Public Health and Environment is planning to update
their solid waste regulations and incorporate the new EPA
requirements. Staff is planning to participate in any related
rulemaking stakeholder processes to communicate the need
for achievable standards with clear expectations and include
flexibility for operations.
Craig is not subject to the CCR rule as it is primarily managed
as backfill material at Trapper Mine. This type of CCR
management is specifically exempt from the current rule;
however, similar standards are expected in the future through
the Office of Surface Mining.
Due to the type of coal burned, boiler chemistry, and other
factors, mercury emissions from the Craig Station are low and
no emission control equipment is currently required for that
facility.
Appendix D: Environmental Regulatory Issues
Appendix E: Legislative and Regulatory Issues
65
Clean Power Plan Regulations
The CPP regulations focus the electric industry’s attention
on the issue of carbon emissions in a new and dramatic
fashion. Presently the CPP regulations are stayed, and the
litigation may well continue into 2018. If upheld by the
courts the regulations pose a number of unique challenges,
many of which will be addressed through the creation of a
State Plan for Colorado. Planning activities are on-going in
Colorado despite the pendency of the stay. Platte River will
work with industry participants, stakeholders, legislators, and
regulators in a positive manner with the goal of crafting an
implementation plan that meets compliance goals in the
most reasonable, equitable, and cost effective manner.
Ozone Regulation
The new ozone standards may expand the non-attainment
areas within Colorado. In turn, this may create operational
issues for existing sources of NOx emissions as well as for
new sources, including resources that may be necessary to
meet regional load growth and compliance with the CPP.
Revisions to the boundaries of the nonattainment areas
may take a number of years identify. Platte River will actively
monitor this process and participate as necessary.
Dodd-Frank Reform
The Dodd-Frank legislation and subsequent rulemakings
affect a number of Platte River business practices. Platte
River has complied with new Dodd-Frank protocols
for natural gas hedging. Platte River supports on-going
legislative and statutory efforts to limit the application of
Dodd-Frank requirements to public power business
transactions unrelated to the types of transactions that led to
the 2008 financial crisis.
Tax-Exempt Status of Municipal Bonds
Federal budget concerns have put the tax-exempt status of
municipal bonds at risk.
The unique tax-exempt status of public financings dates
back to the inception of the income tax, and recognizes the
public nature of the capital projects funded by municipal
bonds. Platte River has issued $2.4 billion in debt during its
history.
The issuance of this debt has been critical for developing the
infrastructure necessary to meet the needs of the growing
populations in our owner municipalities. The reduced
interest costs associated with tax-exempt financings
are passed directly to electric utility customers in these
communities.
Platte River strongly opposes repealing or altering the
current tax-exempt status of municipal bonds.
Transmission Planning and Wholesale Market Reform
FERC requires jurisdictional utilities to operate their
transmission systems as common carriers. Platte River is
non-jurisdictional, but voluntarily adopted an open access
transmission tariff. The Platte River open access tariff is
modeled after the FERC pro forma tariff with rates consistent
with the FERC rate setting formula.
Appendix E:
Legislative and Regulatory Issues
66
FERC also requires jurisdictional utilities to engage in
regional transmission planning. Platte River is a member of
WestConnect, a regional transmission planning organization.
Platte River is presently involved in efforts associated with
regional joint dispatch and transmission tariff reform. Platte
River is a member of the Colorado Coordinated Planning
Group and the Foothills Planning Group, and has established
a transmission planning process as part of its open access
transmission tariff. Platte River supports regional transmission
planning as a means to assist in the development and
integration of renewable resources and enhance grid resilience.
Under the auspices of the Mountain West Transmission Group,
Platte River is working with others entities to create a single
transmission tariff that will eliminate rate pancaking. This
effort may eventually yield a workable wholesale market in the
western region.
Renewable Energy Standard and Incentives
Changes to the Colorado Renewable Energy Standard should
be incremental and must not conflict with other regulatory
requirements. Platte River supports the continuation of
federal financial incentives to encourage the development of
renewable energy.
Renewable energy incentives should continue, be expanded,
and be made available on an equal basis to municipal power
systems, rural electric cooperatives, and investor-owned
utilities.
Fuel and Resource Diversity
Platte River supports policies that promote improved
technology for all electricity generation sources including
coal, natural gas, hydro, nuclear, wind, solar, geothermal, and
biomass as vital components of the country’s energy portfolio.
Efforts at the federal level to encourage diversity should
provide clean coal technology funding, increased research and
development funds addressing the integration of renewable
resources, and innovative distributed generation, particularly as
these issues and technologies apply to smaller utilities.
Preventing Market Abuses
The Energy Policy Act of 2005 (EPAct 2005) grants FERC
expanded jurisdiction to address market manipulation,
including authority over public power systems. In 2006, Platte
River adopted a policy prohibiting market manipulation and
implemented training and audit programs in pursuit of this
policy. Platte River conducts bi-annual market manipulation
audits, and none of the audits have revealed any market
manipulation by Platte River employees. Platte River
encourages continued FERC oversight of market abuses, and
recognizes that this will become an increasingly important issue
as organized markets evolve in the West.
System Reliability
In 2007, FERC adopted electric reliability standards with the
force and effect of law. Platte River is registered to perform ten
functions under the reliability protocols adopted by FERC, and
the municipalities are registered as distribution providers. Platte
River has a well-established Reliability Compliance Program
and promotes a culture of compliance. Platte River continues
to assist the municipalities with reliability compliance.
Physical and Cybersecurity
There is an increasing recognition of the importance of physical
and cybersecurity for the interconnected bulk power system.
Appendix E: Legislative and Regulatory Issues
67
Federal Hydropower
Federal hydropower comprises a significant portion of
the electricity delivered to the municipalities. Platte River
supports continued federal ownership and management of
hydropower resources through regional power marketing
administrations (PMAs). Platte River supports the continued
operation of the PMAs within the constraints set forth by
Congress through authorizing legislation, including the rate-
setting guidance contained therein. Platte River recognizes
that hydropower dams create unique environmental
challenges and supports a reasonable balance between
species recovery and operational flexibility.
Municipal Annexation and Utility Service Territory
Colorado’s Constitution and the existing state statutes
regarding electric service provision in newly annexed areas
are equitable to all parties. Any proposed changes will be
closely scrutinized to ensure that equity is maintained.
Pole Hill
Flatiron
Elephant Butte
Towaoc
Glen Canyon
Crystal
Lower
Molina
Upper
Molina
Blue
Mesa
Morrow
Point
Green
Mountain
Bualo Bill
Heart Mountain
Shoshone Spirit Mountain
Yellowtail
Guernsey
Glendo
Boysen
Fremont Canyon
Seminoe
Fontenelle
Alcova
Kortes
McPhee
Estes
Mary’s Lake
Big
Thompson
Mount
Elbert
Flaming Gorge
Deer Creek
Colorado River Storage Project
Loveland Area Projects
Amistad
Falcon
68
ACRONYM DEFINITION
APPA American Public Power Association
ARPA Arkansas River Power Authority
CAA Clean Air Act
CAMU Colorado Association of Municipal Utilities
CAP Climate Action Plan
CCR Coal Combustion Residuals
CHP Combined Heat and Power
CIP Critical Infrastructure Protection
CO2 Carbon Dioxide
CPP Clean Power Plan
CPUC Colorado Public Utilities Commission
DR Demand Response
DSM Demand Side Management
EE Energy Efficiency
EGU Electric Generating Unit
EPA Environmental Protection Agency
EPAct 2005 The Energy Policy Act of 2005
FERC Federal Energy Regulatory Commission
GHG Greenhouse Gases
GWh Gigawatt-hour
IRP Integrated Resource Plan
LPC Longmont Power & Communications
LPPC Large Public Power Council
Acronyms
69
ACRONYM DEFINITION
MATS Mercury and Air Toxics Standard
MW Megawatt
MWh Megawatt-hour
NERC North American Electric Reliability Corporation
NOx Nitrogen Oxides
PMA Power Marketing Administrations
ppb Parts Per Billion
PSA Power Service Agreement
PSCo Public Service Company of Colorado
PV Photovoltaic
RES Renewable Energy Standard
ROC Risk Oversight Committee
SCADA Supervisory Control and Data Acquisition
SCR Selective Catalytic Reduction
SFP Strategic Financial Plan
SNCR Selective Non-Catalytic Reduction
SO2 Sulfur Dioxide
SWOT Strengths, Weaknesses, Opportunities, and Threats
TRI-STATE Tri-State Generation and Transmission Association, Inc.
VOC Volatile Organic Compound
WECC Western Electricity Coordinating Council
Acronyms
Source: Western Area Power Administration
Platte River’s Hydropower Resources
Platte River is engaged in national discussions of these issues
before the relevant legislative and regulatory bodies as this
issue matures.
Appendix E: Legislative and Regulatory Issues
residuals (CCR).
The regulations became effective October 17, 2015.
The CCR Rule includes comprehensive requirements for
design, monitoring, and reporting; with requirements for new
and existing CCR disposal facilities.
Appendix D: Environmental Regulatory Issues
presumably approvable model trading frameworks for states
submitting their own plans.
Appendix D:
Environmental Regulatory Issues
flexibility.
Appendix C:
Strategic Financial Plan
Appendix C: Strategic Financial Plan
the Federal Housing Finance Agency reports to ensure the
counterparties remain stable.
them as a roadmap for physical security practices in other
areas. An internal committee developed a comprehensive
security policy and completed a security evaluation to
identify areas of improvement.
employees. These guidelines will be reviewed annually. Staff
has implemented a compliance hotline for reporting potential
violations and communications efforts to reinforce the tool
will continue.
Appendix B: Risk Management Plan
respectively. Community solar is a popular option because
it can be made available to customers that don’t own their
home or that don’t have suitable roof space for solar.
Appendix A: Resource Planning Update
recommendation to develop a strategy to exit Craig Unit 1,
which was finalized in 2016. Through negotiations with the
State’s environmental office and other resource advocates,
the joint owners of the Craig Generating Station (PacifiCorp,
SRP, Tri-State, PSCo, and Platte River), reached an agreement
to close Craig Unit 1.
Appendix A: Resource Planning Update
city will continue researching practices in other communities and the
feasibility of a range of business models for telecommunications. Staff
plans to work with the public throughout 2016 to gauge what role the
city should play in broadband services, if any.
City resources are allocated,
and have access to government
information in a timely and
transparent manner. The City of
Fort Collins works to continuously
improve seven key outcome areas:
community and neighborhood
livability, culture and
Municipal Planning
City of Fort Collins
Estimated population for 2015: 161,175
Utility: Fort Collins Utilities, established in 1938