HomeMy WebLinkAboutConstituent Letter - Mail Packet - 8/28/2018 - Letter From David May Re: Letter To Council Transmitting Draft Resolution On ElectricityFrom: David May
To: Wade Troxell; Gerry Horak; Bob Overbeck; Ray Martinez; Ken Summers; Kristin Stephens; Ross Cunniff
Cc: Darin Atteberry
Subject: Input on clean, affordable, reliable electricity
Date: Tuesday, August 21, 2018 11:02:47 AM
Attachments: Letter to Council transmitting draft resolution on electricity.pdf
August 21, 2018
Subject: Clean, Affordable, Reliable Electricity
Dear Mayor Troxell, Mayor Pro Tem Horak, and Council Members Overbeck,
Martinez, Summers, Stephens, and Cunniff;
A few months ago you received a proposed resolution advocating for 100 percent
renewable energy by 2030. The fact that staff had been directed to draft a
resolution was a surprise and has raised concerns with many primary employers
that count on Rawhide for affordable and reliable electricity.
We met with Jeff Mihelich, Deputy City Manager, to inquire about this and the
process. He indicated that if we had input, we should provide it soon. To that end,
we submitted the attached resolution to the staff writing team last week.
Even as we do so, we wonder what’s to be gained with a resolution on this
matter. Platte River Power Authority is currently updating its Integrated Resource
Plan so you don’t have all the information you need. And what may seem like just
a symbolic gesture can turn into unintended policy and economic consequences
that you haven’t had the opportunity to fully consider.
We provided our draft resolution to the staff as it’s important to have input in the
process, but we strongly believe that the more prudent course is to defer action
until PRPA has finished its study so that you have all relevant information at hand
when considering this important issue.
Sincerely,
David L. May
President & CEO
DRAFT * DRAFT * DRAFT
RESOLUTION IN SUPPORT OF CLEAN, AFFORDABLE, RELIABLE ELECTRICITY
Submitted to City Staff Writing Team
August 16, 2018
WHEREAS, electricity is a fundamental element of everyday American life,
something that impacts quality of life, the economy, health and safety, and is
embedded in every product, service and activity used by every individual, family,
business, government entity, and nonprofit, and
WHEREAS, in the 1970s leaders in four Northern Colorado communities decided
to pool their efforts and resources to provide reliable and affordable electricity to
their residents and businesses by forming a new organization called Platte River
Power Authority (PRPA), and
WHEREAS, PRPA has served its four member communities well by growing a
portfolio of power generating options including hydroelectricity, coal, wind, solar
and natural gas that have kept electricity rates affordable1 and delivery reliable
with Rawhide Unit 1 continuing to be among the nation’s top performers2 all
while doing so in an environmentally responsible manner, and
WHEREAS, PRPA has invested in environmentally-responsible clean coal
technologies, natural gas-powered units, hydropower and intermittent renewable
energy resources with the result of reducing the percentage of power produced
by coal to 65 percent today3, and
WHEREAS, PRPA’s Rawhide Unit 1 “meets or exceeds all applicable environmental
laws and regulations”4 and is in effect new because of proper maintenance and
upgrades, and stands in stark contrast to dozens of plants that have been
decommissioned in recent years or are slated to be, including some investor-
owned plants in Colorado that did not get the kinds of investments and upgrades
made by PRPA, and
WHEREAS, because of the large cost of capital investments necessary to produce
electricity, PRPA uses an Integrated Resource Plan (IRP) as a critical planning tool
1 20%-40% below other Colorado utility wholesalers
2 Source: PRPA Annual Report 2017 https://www.prpa.org/annual-report-2017/PRPA_Annual-Report-2017.pdf
3 Projected Deliveries of Energy in 2018 (communities) – Proportions by Source
(https://www.prpa.org/generation/)
4 Source PRPA website: https://www.prpa.org/generation/rawhide-energy-station/
“for ensuring an adequate supply of reliable, low-cost, and environmentally-
responsible electricity to meet the future needs of our owner communities. It
details Platte River’s plans in the areas of generation and transmission projects,
renewable energy, and energy efficiency,” and
WHEREAS PRPA is in the process of updating the Integrated Resource Plan, and is
scheduled to finish the IRP one year ahead of schedule in 2020 with new resource
options, a revised baseline, supporting studies with congestion analysis, Regional
Transmission Organization (RTO) impacts, a regional economic model to capture
the impacts of electric rate changes and a formalized action plan defining and
addressing renewable targets,5 and
WHEREAS, during July 2018 21 major employers and power users in the PRPA
service area were interviewed by a study task force of the Fort Collins, Loveland
and Longmont chambers of commerce and asked about their electricity needs
and related issues, and
WHEREAS, key findings of these interviews are:
• The highest business priority of those interviewed is power reliability,
followed by affordability. Environment stewardship is an important and
must-have consideration but ranked 3rd in relation to reliability and cost in
the vast majority of cases
• Premature retirement of efficient and clean coal-fired generation is not a
business goal and is seen as squandering an important already paid-for
community investment
• It is prudent to maintain a diversified portfolio of energy resources
• It is critical to understand the true cost to business of any renewable energy
plan
• There is an immediate impact in that just the conversation about 100
percent renewables has created enough uncertainty around the long-term
predictability of costs to cause at least one power user to put all expansion
plans in the area on hold, and
WHEREAS, PRPA retained the services to Pace Global in July 2017 to provide an
independent assessment of the feasibility of PRPA achieving and maintaining a
zero net carbon (ZNC) generation supply portfolio by 2030 and the study was
designed to only assess the production costs of a ZNC portfolio and to aid in
future planning decisions by PRPA, and
WHEREAS, in its December 2017 report Pace Global did not recommend that
PRPA pursue either a zero net carbon or a zero carbon electricity generation
5 Source: Presentation to PRPA Board by B Decker 3-29-18
supply portfolio; the Pace Global ZNC study did find that 1) ZNC could be
implemented but will require investment, higher cost, and additional market risk,
2) PRPA could serve about 75% of load with zero carbon generation and would
offset the remaining 25% with sales of zero carbon generation to the market, 3)
PRPA would increase renewable capacity with about 600 MW of solar and 350
MW of wind and be able to sell a portion of that capacity into the market as an
offset by 2030 and build about 286 MW of new gas-fired, combined cycle
generation, 4) lithium ion battery storage is not economic for meeting firming and
capacity needs at this time, 5) a zero carbon (rather than zero net carbon)
portfolio would be more expensive because of added cost of storage and the
limited capacity credit attributable to intermittent resources (much more
renewables and batteries would be required), 6) higher rates are required to
achieve a ZNC portfolio as compared to the IRP portfolio, and
WHEREAS, Pace Global identified risk considerations for ZNC including:
• The study focused on Platte River achieving carbon neutrality assuming
others in Colorado were not simultaneously pursuing this same goal.
Researchers noted that if utilities did so, there would be more sellers of
renewables, fewer buyers, lower market prices, reduced carbon offset
values, and more renewables will have to be built to achieve ZNC, at higher
investment and cost than modeled here. The impact on system integration
costs of higher regional levels of renewables in the broader market
(Colorado) remains uncertain but it is conceivable that “At some point the
needed sales may have no market.”6
• Committing to renewables early in the planning period may result in
foregoing opportunities to capitalize on lower renewable costs later in the
planning period (need to strike the right balance).
• Future costs are uncertain, and this uncertainty increases further in the
future.
• Selling higher quantities of power in a bilateral market imposes higher risks
than in an RTO-based7 market. “Although risks to system reliability are
largely addressed through the addition of natural gas-fired generating
capacity, market access and price risks may rise as more utilities build
renewables and sell excess power into the marketplace. (It was) noted that
Platte River may need to sell renewable energy into the market at lower
rates than anticipated, for example, to meet the requirement of achieving
zero net carbon emissions throughout a given year.”
• Costs will go up according to Pace: “We estimate Platte River’s energy
production costs to achieve a zero net carbon portfolio would be
6 Zero Net Carbon Portfolio Analysis, PACE Global, Dec 5, 2017 p24
7 RTO = regional transmission organization
approximately 20 percent higher in 2030 than they would be under current
forecasts within Platte River’s current IRP.”8 Presumably zero carbon would
be even higher.
WHEREAS, a June 2017 paper published in Proceedings of the National Academy
of Sciences by 21 academic and private energy researchers argued against 100
percent renewables; while they emphasized adding renewable energy sources as
a matter of ‘paramount importance,’ they disputed the contention that a 100
percent electric grid by 2050 is feasible and affordable; and according to the lead
researcher "If we push down the avenue of 100 percent renewables, it will
become very obvious very quickly that it is neither cheap nor effective," and
WHEREAS, key points in the above-noted paper titled “Evaluation of a proposal for
reliable low-cost grid power with 100% wind, water, and solar”9 and an article in Inside
Climate News by Leslie Kaufman titled ‘Is 100% Renewable Energy Feasible? New
Paper Argues for a Different Target’10 include:
• To remove carbon dioxide across the energy grid, a broad range of
technologies are needed including nuclear power and carbon capture and
storage to allow continued use of some fossil fuel energy source. It is
critical to have energy sources that can be dispatched on demand when
needed.
• Taking the entire energy grid to 100 percent renewable energy by the
2050’s is not feasible or affordable.
• Political blowback on renewables in general could occur if 100 percent
renewables is attempted, driving energy prices up, eliminating serious
efforts to responsibly reduce carbon emissions affordably.
• Affordable 100 percent renewables is only possible if scaled up over time,
relying on other technologies to smooth the transition away from fossil
fuels and to balance out the variability of renewable power source while
storage solutions evolve.
• No evidence exists that 80 percent de-carbonization of the U.S. power grid
could NOT be achieved at a reasonable cost (i.e. 80 percent reduction is
feasible and CAN be done affordably and reliably).
8 Vicinus, G (2017, December 7) Zero Net Carbon Achievable, Platte River Power Authority Archives
https://www.prpa.org/news/zero-net-carbon-energy-achievable/
9 Clack, Christopher T. M et al., (2017). Evaluation of a proposal for reliable low-cost grid power with 100% wind,
water, and solar. Proceedings of the National Academy of Sciences of the United States of America,
PNAS June 19, 2017. 201610381; published ahead of print June 19,
2017. https://doi.org/10.1073/pnas.1610381114
10 Kaufman, L (2017, June 19). Is 100% Renewable Energy Feasible? New Paper Argues for a Different Target, Inside
Climate News, https://insideclimatenews.org/news/19062017/100-percent-renewable-energy-climate-change-
targets
• A central point of the paper, "Relying on 100 percent wind, solar, and
hydroelectric power could make climate mitigation more difficult and more
expensive than it needs to be," and
WHEREAS, converting the community’s homes and autos to electricity appears to
be a priority resulting in even more demands on baseload electricity production,
and
WHEREAS, power quality and reliability matters to end users with power quality
referring to those characteristics of the power supply that enable equipment to
work properly. A power quality problem is defined as “Any power problem
manifested in voltage, current, or frequency deviations that results in failure or
misoperation of customer equipment.”11 When power quality is poor “There are
economic impacts on utilities, their customers, and suppliers of load equipment.
The quality of power can have a direct economic impact on many industrial
consumers…This usually means electronically controlled, energy-efficient
equipment that is often much more sensitive to deviations in the supply voltage
than were its electromechanical predecessors. Thus,…industrial customers are
now more acutely aware of minor disturbances in the power system.” For some
businesses even the most minor disturbance in steady supply voltage, proper
frequency and waveform have significant negative impacts. Power quality is at
the heart of many businesses’ concerns about the intermittent nature of
renewables, and,
NOW THEREFORE BE IT RESOLVED THAT, as stewards of public resources and the
public’s welfare, the Fort Collins City Council believes the social well-being and
health of residents and economic health of the area depends on universal
access to clean, affordable and reliable energy resources, and the Council
reiterates its commitment to the citizens and businesses of the community to
support the production and distribution of electricity that is clean, affordable, and
reliable, and to make the best possible use of existing capital assets, and
BE IT FURTHER RESOLVED THAT, as a group the Fort Collins City Council prides
itself on being data-driven and does its homework before making important
policy decisions, and
BE IT FURTHER RESOLVED THAT, we celebrate the success of the great
collaborative regional partnership called the Platte River Power Authority that our
Fort Collins predecessors helped found in 1973 with the Town of Estes Park, the
City of Longmont, and the City of Loveland and which has delivered on the three
11 Electrical Power Systems Quality, Dugan, McGranghan, Santoso, Beaty
objectives of environmental stewardship, reliable power, and affordable power,
and
BE IT FURTHER RESOLVED THAT, as we acknowledge the tremendous capital asset
that we have in the Rawhide Station, appreciate the financial stewardship of past
and current PRPA staffs and boards to maintain and retrofit it, and thank them for
being open to other options over time, and now, as stewards of these capital
assets through the PRPA Board, the Fort Collins City Council is committed to the
proper maintenance of these assets to extract their full value to the benefit of
residents, businesses, and ratepayers, and
BE IT FURTHER RESOLVED THAT, any conversations about increasing renewable
power sources are not intended in any way to suggest or imply lack of
commitment on the part of the Fort Collins City Council and its agents to continue
making capital improvements and maintenance investments in Rawhide Unit 1
through our role on the board of directors of the Platte River Power Authority. We
have a fiduciary responsibility to residents to assure capital investments are
protected as contained in Article 18, Part 1 of CO Rev Stat § 24-18-103 (2016)
which in part reads “A public officer, member of the general assembly, local
government official, or employee whose conduct departs from his fiduciary duty
is liable to the people of the state as a trustee of property and shall suffer such
other liabilities as a private fiduciary would suffer for abuse of his trust…,” and,
BE IT FURTHER RESOLVED THAT, we pledge to remain reliable partners with the
companies in our region that count on Rawhide to deliver high quality power
reliably and affordably and in our interest to expand intermittent renewable
power fuels sources we will do nothing to compromise the high level of power
quality as defined above, and
BE IT FURTHER RESOLVED THAT, we encourage PRPA to continue to pursue
joining an organized market because intermittent generation is much easier to
manage in an organized market, the market effectively allows regulation up /
down to be done on a regional-wide basis within the hour, and reserve charges for
renewable wind resources would be significantly less which would save Platte
River approximately $2.5 million in 202112, and
BE IT FURTHER RESOLVED THAT, since PRPA is doing an update to its IRP, we
acknowledge not all of the data is available regarding generation and transmission
projects, renewable energy, and energy efficiency and impacts on customer rates,
12 Butcher, A (2018, May 31). Managing Renewables in Markets. PRPA Board of Directors Presentation
https://www.prpa.org/wp-content/uploads/2018/05/05.31.2018-Combined-Presentations-1.pdf
reliability, and environmental impacts but we do encourage PRPA to continue to
explore expansion of renewables and ask PRPA leaders to continue their practice
of being fully transparent with its four partner communities about the obstacles,
risks, capital costs, power quality and reliability risks, and potential rate impacts
relative to various fuel sources, and
BE IT FURTHER RESOLVED THAT, as we encourage PRPA to continue to expand use
of renewable sources as it deems feasible while keeping rates as low as possible
and without compromising reliability, and we are not committing to a specific
percentage of renewables by a specific time, but rather, we are saying to the PRPA
board that we want to pursue renewables in a brisk but prudent fashion in the
context of the IRP update, and,
BE IT FURTHER RESOLVED THAT, to that end, we have the following suggestions:
• Reliability of the power grid is of paramount importance. As such,
alternative forms of decarbonized energy sources should be included in all
cost analyses (e.g. nuclear, bioenergy, etc.) that address the reliability of
the grid.
• Carbon capture and storage technologies for fossil fuel generation should
be factored into the analysis, in combination with bioenergy this could
actually be a NEGATIVE emissions system (i.e. carbon absorption).
• Make it a condition that storage technologies examined in the model must
be proven technologically feasible NOW, scalable and cost effective.
• Make it a condition that a regional transmission organization (RTO) must be
included in any study to reduce reliability issues.
• The IRP should show that the proposed energy system is technically and
economically feasible, and at a minimum, show, through transparent
inputs, outputs, analysis, and validated modeling, that the required
technologies have been commercially proven at scale at a cost comparable
with alternatives; that the technologies can, at scale, provide adequate and
reliable energy; that the deployment rate required of such technologies
and their associated infrastructure is plausible and commensurate with
other historical examples in the energy sector; and that the deployment
and operation of the technologies do not violate environmental
regulations.
• This analysis should include an accounting of the costs of the physical
infrastructure (pipes and distribution lines) to support these systems.
• Reliability of the grid must be adequately modeled including realistic
capacity factors of existing technologies, transmission, reserve margins, and
frequency response.
• The IRP should study the negative environmental impacts associated with
creating and effectively using renewable resources such that those impacts
can be included in any cost/benefits analysis, and
FINALLY BE IT RESOLVED THAT, in summary the Fort Collins City Council stands
behind all three elements of PRPA’s mission to provide clean, affordable and
reliable electricity, and while strongly supporting the growth of renewable fuel
sources, as fiscal stewards of the public’s resources, we do not believe it should be
done at any price. As such, we will not support fuel, technology or other changes
that result in electricity rate increases of more than 2% to 5% per year; and in light
of the fact that PRPA is updating its Integrated Resource Plan (IRP), which is a
critical planning tool “for ensuring an adequate supply of reliable, low-cost, and
environmentally-responsible electricity to meet the future needs of (PRPA)
communities” and because PRPA has the expertise best suited to conduct the IRP
it is inappropriate for the Fort Collins City Council to make a policy statement on
something as important as renewable energy sources until PRPA completes its
work on the IRP.
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