HomeMy WebLinkAboutAgenda Packet 06/12/2012Utility Advisory Committee
Council Chambers
June 12, 2012 @ 2:00 PM
AGENDA
I. Call To Order
I1. Roll Call
III. Approval Of Minutes For May 8, 2012
IV. Late Items
V. Discussion Items:
A. 2012 Landfill Bluff Stabilization — Phase 1, Project SW02 -2012
B. Landfill Gas Utilization Project Request for Proposal Update
C. Residential Solid Waste Collection Survey Results
D. Utility Discount Ordinance Amendments
E. Morse Creek Hydroelectric Project Status
VI. Information Only Items:
A. Natural Gas Prices May Drive Power Rates (May 30, 2012 Bonneville
Power Administration Publication)
B. Advanced Metering Infrastructure System Update (verbal report only)
C. Wireless Mobile Data System Update (verbal report only)
VII. Next Meeting Dates: July 10, 2012
VIII. Adjournment
N: \uac \final \061212
Utility Advisory Committee /Special City Council Meeting
Council Chambers
Port Angeles, WA 98362
May 8, 2012
3:00 p.m.
I. Call To Order
Chairman Dan DiGuilio called the meeting to order at 3:00 p.m.
IL Roll Call
UAC Assigned
Councilmembers Present: Cherie Kidd, Dan Di Guilio, Sissi Bruch, PhD.
Other Councilmembers
Present: Max Mania, Patrick Downie
Other Councilmembers
Absent: Brad Collins, Brooke Nelson
Utility Advisory
Committee Members
Present:
Utility Advisory
Committee Members
Absent:
Staff Present:
Dean Reed, Paul Elliott, Murven Sears 11
None
Dan McKeen, Glenn Cutler, Bill Bloor, Mike Puntenney, Larry
Dunbar, Phil Lusk, Kathryn Neal, Eric Walrath, Tom McCabe,
Helen Freilich, Sondya Wray, Rick Hostetler
Others Present: Harold E. Day - Citizen
III. Introduction of Mr. Murven Sears, II, Community Representative Position No. 2
IV. Approval Of Minutes
Chairman Dan Di Guilio asked if there were any corrections to the minutes of April 10, 2012.
Committee Member Cherie Kidd moved to approve the minutes. Dean Reed seconded the
motion, which carried unanimously.
V. Late Items:
None.
VI Discussion Items:
A. Stormwater Engineering Services Professional Services Agreement
Amendment No. 1
1
Kathryn Neal, P.E., Engineering Manager, discussed the PowerPoint Presentation and identified
where a high fecal coliform bacteria has been detected in Peabody Creek within the City limits.
Work is proposed to be added to the Stormwater Engineering Services Professional Services
Agreement that was awarded to Herrera Environmental Consultants on August 16, 201 1. A
discussion followed.
Paul Elliot moved to recommend City Council to authorize the City Manager to sign
Amendment No. 1 to the Stormwater Engineering Professional Services Agreement with
Herrera Environmental Consultants in an amount not to exceed $20,976, which increases
the maximum compensation under the agreement from $107,143, to $128,119, and to make
minor modifications to the agreement, if necessary. Sissi Bruch seconded the motion, which
carried unanimously.
B. Concrete Cylinder Pipe Condition Assessment and Value Engineering
Mike Puntenney, P.E., City Engineer, reviewed the professional services related to the concrete
cylinder pipe condition assessment and value engineering has been awarded to Mill Creek
Management Technologies, Inc. There was a lengthy discussion.
For information only, no action requested.
C. Clallam Spring Clean Up Event
Tom McCabe, Solid Waste Superintendent, reviewed the public's participation and responses to
the Clallam Spring Clean Up Event. There was a brief discussion.
For information only, no action requested.
D. 2012/2013 EnergySmart Grocer Utility Participation Agreement
Phil Lusk, Power Resources Manager, shared the City was offered to participate in the
"EnergySmart Grocer Program" by Portland Energy Conservation, Inc. City expenses under the
agreement are eligible for reimbursement under the Bonneville Power Administration's Energy
Efficiency program. A discussion followed.
Dean Reed moved to recommend City Council to approve and authorize the City Manager
to sign the EnergySmart Grocer Utility Participation Agreement and to make minor
modifications to the agreement, if necessary. Paul Elliot seconded the motion, which
carried unanimously.
E. Utility Discount Ordinance Amendments
Larry Dunbar, Deputy Director of Power Systems, discussed a PowerPoint Presentation on the
proposed Utility Discount Ordinance Amendments. A lengthy discussion followed.
Guidance was provided by the Utility Advisory Committee for staff to return with a revised
ordinance that limits utility discounts to the Electric Utility, increases the income limits by
2
S2,000 per year, clarifies when participation in conservation programs is required, and
eliminates the requirement to participate in the City's average payment program.
D. Information Only Items:
A. Advance Metering Infrastructure System Update (verbal report only)
Information only. No action taken.
B. Wireless Mobile Data System Update (verbal report only)
Information only. No action taken.
VIII. Next Meeting Date: June 12, 2012
IX. Adjournment: 5:00 p.m.
Cherie Kidd, Mayor Sondya Wray, Administrative Specialist
3
PORTANGELES
W A S H I N G T O N , U.S.A.
Utility Advisory Committee Memo
Date: June 12, 2012
To: Utility Advisory Committee
From: Kathryn Neal, P.E., Engineering Manager
Subject: 2012 Landfill Bluff Stabilization — Phase 1, Project SW02 -2012
Summary: Erosion of the marine bluffs along the northern edge of the Port Angeles Municipal Landfill
(PALF) has broken a drainage pipe and exposed refuse at the top of the bluff. In October 2011, Council
authorized the award of the 2011 On -Call Landfill Cell Stabilization Professional Services Agreement
with Herrera Environmental Consultants (Herrera) for initial site investigations and to design repairs that
will correct the compromised drainage system along the bluff and to remove exposed refuse. The project
design for immediate repairs is complete, and a Summary of Findings Report that addresses potential
solutions to the Tong -term problem was submitted to the City. The next step is to follow up with further
investigation, and to develop conceptual design alternatives for a larger project to prevent landfill refuse
from entering the Strait of Juan de Fuca.
Recommendation:
Forward a favorable recommendation to City Council to:
1) approve and authorize the City Manager to sign a Task Order for the 2011 On -Call Landfill Cell
Stabilization Professional Services Agreement with Herrera in an amount not to exceed $300,000,
which will increase the contract amount to $396,650, and to make minor modifications to the
agreement if necessary.
2) approve amending the 2012 budget for an additional expenditure of $300,000 from the Landfill
Post- Closure Fund for project SW02 -2012.
Background /Analysis:
The 304 compliant section of the landfill is
approximately 5.6 acres located in the northeast corner of
the property adjoining the bluff edge of the Strait of Juan
de Fuca. This section was closed in 1991 with a single
impervious top liner in accordance with requirements set
forth in WAC 173 -304. The bluff is approximately 125
feet above the Strait of Juan de Fuca. The 304 cell
extends for over 1000 feet along the bluff and the western
half of it is protected by the revetment wall that was
constructed at the toe of the bluff in 2006 -2007. The
Exposed Refuse and Cell Liner
on Landfill Bluff, June 4, 2012
2012 Landfill Bluff Stabilization — Phase 1. Project SW02 -2012
June 12. 2012
Page 2
eastern half of the 304 - compliant cell contains approximately 500,000 cubic yards of garbage.
Erosion of the marine bluffs along the northern edge of the PALF has broken a drainage pipe and
exposed refuse at the top of the bluff. In October 2011, Council authorized the award of the 2011 On -Call
Landfill Cell Stabilization Professional Services Agreement with Herrera. This professional services
agreement was specifically created as a contracting instrument for the award of multiple phases of
engineering work to address the short-term and long -term actions needed at the landfill bluff. Contract
terms allow for additional tasks to be authorized, with Council approval, for two years from the effective
date of the agreement.
Based on the findings from initial investigations, the long range strategy anticipates the following
engineering steps as the project moves forward. Council approval will be requested at each step. These
future steps may be modified and are intended to afford the greatest opportunity for cost savings to the
City in the future.
DESCRIPTION
STATUS
Preliminary Investigation & Short Term Remediation
including designing the compromised drainage system
along the bluff and to remove exposed refuse
Approved in Oct 2011
(Tasks 1 — 6)
Comprehensive Engineering Study (includes
Current Request
(Tasks 7 — 13)
construction support for the drainage system repair and
exposed refuse removal)
Design and Permits for the Toe Stabilization Project
Future Request
Construction for Toe Stabilization & Mitigations
Future Request
Design and Construction for Waste Relocation Project 1
Future Request
The previously authorized engineering work is complete, and a Summary of Findings Report that
documents site observations and potential long -term strategies was submitted to the City on April 1 1,
2012. Herrera will give a presentation on the report to the UAC at today's meeting.
Permits must be acquired for the repair project, and bids will be solicited and a contract awarded. The
next step is to follow up with further site investigation, and to develop conceptual design alternatives for
a larger project that will prevent landfill refuse from entering the Strait of Juan de Fuca.
The specific tasks involved for the Comprehensive Engineering Study are:
• Task 7 — Construction Administrative Services: This work is for construction services for the
Port Angeles Landfill Cell Stabilization, Work Order No. 145728 -1, which will correct the
compromised drainage system along the bluff and remove the exposed refuse. Herrera will
review shop drawings and submittals from the contractor. In addition, Herrera will perform two
site visits to inspect the new pipe line support system down notch 2.
• Task 8 - Shoreline Monitoring Program: Install a series of shoreline monitoring devices to
collect wave and energy data. This would include quarterly monitoring by Herrera.
• Task 9 - Geophysical Investigation of 304 Compliant Cell: Delineate the extent, depth and
volume of landfill refuse; investigate alternative areas for relocation of refuse.
N: \Professional Services Agreements \2011 Landfill Cell Stabilization Task Order 7 -13 \30 Council
• Task 10 - Summary of Data Collection and Concept Design Refinement: A memo
summarizing the data collected, and outlining design /cost alternatives for bluff protection and
waste relocation.
• Task 11 — Seawall Evaluation: Assess existing condition, evaluate the capacity to withstand
relocation of the eastern portion of 304 - compliant cell.
• Task 12 - Bluff Toe Stabilization Concept Mitigation Plan: Assess effects the project will have
on the surrounding environment. Develop an approach to off -set any environmental impacts.
• Task 13 — Grant /Funding Support: Support the City in seeking grants and funding for the
construction of the project.
The tasks and amounts negotiated with Herrera are shown in Table 1 below. Funding for Tasks 7 -13 has
been identified in the recently proposed 2012 Capital Facilities Plan.
Table 1: Task and Amounts
Tasks
Amount
Task 7 — Construction Administration Services
$25,000
Task 8 - Shoreline Monitoring Program
55,000
Task 9 - Geophysical Investigation of 304 Compliant Cell
55,000
Task 10 - Summary of Data Collection and Concept Design Refinement
60,000
Task 11 — Seawall Evaluation
50,000
Task 12- Bluff Toe Stabilization Concept Mitigation Plan
40,000
Task 13 - Grant/Funding Support
15,000
Total
$300,000
Funding is available from the Landfill Post - Closure Fund. This fund was set aside to provide for post -
closure maintenance activities for the mandatory period of 30 years as prescribed in law. The current
balance in the fund is $3,590,563. Because this will be an unanticipated expenditure in this fund, its
balance will need to be restored. It is anticipated that the source of reimbursement will come from future
municipal revenue bonds in conjunction with adjustments to Transfer Station tipping fees to support the
debt service. A reimbursement resolution will be prepared for Council action.
It is requested that the Utility Advisory Committee forward a favorable recommendation to the City
Council to
1) approve and authorize the City Manager to sign a Task Order for the 2011 On -Call Landfill Cell
Stabilization Professional Services Agreement with Herrera in an amount not to exceed $300,000, which
will increase the contract amount to $396,650, and to make minor modifications to the agreement if
necessary.
2) approve amending the 2012 budget for an additional expenditure of $300,000 from the Landfill Post -
Closure Fund for project SW02 -2012.
Attachment: Landfill Bluff Stabilization Site Map
oa
, J'
Attachment: Port Angeles Landfill Bluff Site Map
PORTANGELES
W A S H I N G T O N , U.S.A.
Utility Advisory Committee Memo
Date: June 12, 2012
To: Utility Advisory Committee
From: Phil Lusk, Power Resources Manager
Subject: Landfill Gas Utilization Project Request for Proposal Update
Summary: A Request for Proposal for developing a turn -key landfill gas utilization project at the
City's landfill was issued in January and proposals were eligible to be received through May 11,
2012. However, due to several reasons no proposals were received.
Recommendation: For information only, no action requested.
Background /Analysis: On January 6, 2012, a Request for Proposal (RFP) was issued for a turn-
key landfill gas (LFG) utilization project at the City's landfill. The RFP was noticed in a variety of
publications, such as the Seattle Daily Journal of Commerce, the Peninsula Daily News, and also
by the US Environmental Protection Agency's Landfill Methane Outreach Program. The RFP was
sent by email to roughly 10 parties who had previously expressed an interest in a possible project.
The RFP was prepared to solicit proposals from a qualified developer to finance, design, permit,
construct, own, operate, manage and maintain a LFG -to- energy or other beneficial use project. In
exchange for the LFG and the use of the associated City property, the City intended to contract
with a qualified developer that submitted a responsive proposal that the City deemed to represent
the "best value" and "least risk" to the City. Interested developers had to register with the City by
February 17, 2012. A total of four companies submitted the necessary information and were
considered potential project bidders. Proposals were eligible to be received through May 11, 2012.
No proposals were received, which concludes staff efforts on this project.
There are several reasons why no proposals were submitted. The first is that compared to other
areas of the country where LFG projects are operating, regional wholesale power costs are not
sufficiently high to ensure required investor profitability. Staff has confirmed that the LFG project
is not eligible for carbon offset credits, which further lowers profitability. Due to the economy,
there has been adequate supply and low demand for new generation projects. The September 6,
2011 Aspect Consulting LFG evaluation report stated that prior to 2009, the collection system
flared about 475 -500 standard cubic feet /minute (scfm) of LFG, with methane concentrations in
the 45 % -50% range, and as a result of overly aggressive recovery efforts in late -2009, the LFG
extraction rate now averages about 100 scfm, consisting of 25 % -35% methane by volume. The
current LFG levels are simply too low to support a project having economic merit.
N: \UAC\Final \Landfill Gas Utilization Project RFP Update.docx
PORTANGELES
W A S H I N G T O N , U.S.A.
Utility Advisory Committee Memo
Date: June 12, 2012
To: Utility Advisory Committee
From: Tom McCabe, Solid Waste Superintendent
Subject: Residential Solid Waste Collection Survey Results
Summary: At the direction of the Utility Advisory Committee, staff conducted a survey of
residential solid waste collection customers in January of 2012. At today's meeting, staff is
seeking guidance on the key policy considerations that were included in the survey.
Recommendation: Provide guidance to staff on the key policy considerations (if any) to be further
evaluated as part of this year's rate study.
Background /Analysis: The Solid Waste Collection Utility has been using its unrestricted
cash reserves to avoid rate increases since 2006. Based on last year's rate study, staff estimates
that $359,000 of unrestricted cash reserves will be used in 2012 to balance the budget for the Solid
Waste Collection Utility, which represents a 13.2% rate insufficiency.
On December 13, 2011, the Utility Advisory Committee was informed that staff was proceeding
with a residential solid waste collection survey during January 2012. The purpose of the survey
was to gather residential customer input on key policy considerations that could possibly reduce
operating costs and to gather customer input on charging a separate fee for curbside recycling
collection, which was introduced last year as part of the rate study. The survey (see survey
questions and results on the following page) included ten questions to obtain customer input on the
following key policy considerations:
1. A possible mandatory every- other -week garbage collection service,
2. An optional monthly garbage collection service, and
3. Establishing a separate charge for the recycling collection service (similar to yard waste).
There was a very strong customer response to the January survey. A total of 1,684 completed
surveys were received, reflecting a 25% overall customer response rate. 90% of the respondents
indicated they subscribe to the recycling service (currently 80% of the customers are signed up for
recycling), which introduces a survey bias. Where appropriate, the survey results were analyzed by
whether the respondent receives weekly or every- other -week (EOW) garbage collection.
N: \UAC \Final \Residential Solid Waste Collection Survey Results.docx
Residential Solid Waste Collection Survey Results
June 12,2012
Page 2
Residential Solid Waste Collection Survey Results (Questions 1 -9)
1. On average, how full is your garbage
container on collection day?
Weekly
o Full to overflowing 35%
o % full 34%
o '/z full 24%
o '/< full or less 7%
EOW
14%
36%
33%
17%
2. How often do you have your garbage picked
up?
o Weekly garbage collection 34%
o Every- other -week garbage collection 66%
3. Current weekly garbage customers only:
Would you object to a mandatory every-
other -week garbage collection service?
o Yes 60%
o No 40 %
4. Current every- other -week garbage customers
only: Would you be interested in an optional
monthly garbage collection service?
o Yes 47%
o No 53%
5. Current recycling customers only: How
often do you put out your recycling cart?
Weekly EOW
o Every - other -week 86%
o Once per month 4%
o Only when it's full 6%
o No longer using cart 4%
82%
9%
8%
1%
6. Current recycling customers only: How fill is
your recycling cart when rolled out?
Weekly EOW
o Full to overflowing 48% 22%
o % full 36% 43%
o 1/4 full 11% 28%
o '% full or less 5% 7%
7. Recycling costs are currently
56 /month /customer, the avoided landfill
costs are $2 /month. Would you be willing to
pay $4 /month for recycling?
Weekly EOW
o Yes 55% 51%
o No 45% 49%
8. If you did not participate in curbside recycling,
what would you do with your recyclables?
Weekly EOW
78% 72%
o Put in garbage
o Take to the Transfer Station recycling drop
boxes 22% 28%
9. Should the City maintain the current
recycling program (costs of recycling and
garbage bundled together) for the societal
and environmental benefits it provides?
Weekly EOW
o Yes 88% 94%
o No 12% 6%
10. What ideas do you have to reduce the cost of
garbage and recycling services?
Responses were written
Summary of Written Comments (Question 10)
53% of the respondents submitted written comments as solicited in survey question 10 above. Staff
analyzed the comments and placed them into groups of similar suggestions. The grouping
includes: over half of the comments (52 %) elaborated on the topics of survey questions 1 -8 above:
frequency of collection service, costs, and container size; and 60 comments suggested reducing
recycling curbside collection to once per month, a topic not covered in questions 1 -9.
The remaining groups of written comments with similar suggestions include: nearly 9% of the
comments were requests for allowing glass bottles and more types of plastics to be placed into the
curbside recycling carts; the commingled collection; commercial recycling; yard waste service;
recycle drop boxes; the Transfer Station; education /outreach; and miscellaneous topics.
The survey was designed for residential rate payers who have access to curbside recycling
services, but was sent to all Solid Waste Collection Utility customers. As a result, staff assumed
some apartment residents and businesses responded, requesting recycle drop boxes in the city and
commercial collection services (available through Waste Connections). The yard waste comments
included requests for free service and requests for comingling food waste with yard waste.
Key Policy Considerations
The considerations listed below can be included in this year's rate study if so desired by the Utility
Advisory Committee.
Key Policy
Consideration
Description
Cost Impacts
Other Considerations
1. A possible
mandatory
every- other-
week garbage
collection
service.
Would require
the current
3,900 weekly
customers to
go to EOW.
One full -time employee
could be reduced to half
time. Commercial service
in residential
neighborhoods (multi-
family housing) would be
less efficient.
60% of the survey respondents
objected. Some customers may
need additional containers.
Reduced revenue would occur
unless rates are revised.
Recycling participation and cost
may likely increase out of
necessity.
2. An optional
monthly
garbage
collection
service.
A portion of
EOW
customers may
participate.
If participation rate is large
enough one full -time
employee could be reduced
to half time.
About half of the survey
respondents expressed interest.
Odors and pests are a concern.
Reduced revenue would occur
unless rates are revised. City
Council previously discussed
this consideration, but due to a
lack of support no City Council
direction was provided to staff.
3. Establishing
a separate
charge for
the recycling
collection
service.
Make the
recycling
$4.00 net cost
per month per
customer
transparent by
creating a
separate
recycling
collection fee.
The total cost is of
recycling is $6.00 per
month per customer and
the avoided Transfer
Station disposal charges
are $2.00 per month per
customer. Based on
current participation in
recycling, charging $4.00
per month per customer
would increase revenue by
$267,000 (about 75% of
the $359,000 deficit).
About half of the survey
respondents expressed support.
Customers that do not value
recycling may choose to
discontinue the service. Overall
recycling tons and net costs
would decrease. A multi -year
transition to the $4.00 charge
per month per customer can be
considered.
N: \UAC \Final \Residential Solid Waste Collection Survey Results.docx
PORTANGELES
W A S H I N G T O N , U.S.A.
Utility Advisory Committee Memo
Date: June 12, 2012
To: Utility Advisory Committee
From: Larry Dunbar, Deputy Director of Power and Telecommunications Systems
Rick Hostetler, Customer Services Manager
Phil Lusk, Power Resources Manager
Subject: Utility Discount Ordinance Amendments
Summary: Based on the direction received from the Utility Advisory Committee at last month's
meeting, staff has prepared a revised draft amendment for consideration.
Recommendation: Forward a favorable recommendation to City Council to proceed with a
public hearing on the proposed amendments to the Utility Discount Ordinance.
Background /Analysis: Based on the direction received from the Utility Advisory
Committee at last month's meeting, staff has prepared a revised draft amendment to the utility
discount ordinance that includes:
1. Limiting the discount to the Electric Utility, which provides an estimated $33,000 annual
State tax savings and some rate relief for all other utilities,
2. Expanding the number of eligible low- income senior and low- income disabled customers
by increasing the annual income limits by $2,000,
3. Clarifying that participation in conservation programs is only required when the applicant
is the property owner and if the conservation program is available at no charge, and
4. Eliminating the requirement to participate in the average payment program.
The positive impacts of the recent direction are the number of qualifying low- income customers
would modestly increase, the State tax savings would support additional utility discount customers,
and there would be some rate relief for all other utilities. The negative impact of the recent
direction is all currently participating customers would receive a lower utility discount if utility
discounts are limited to the Electric Utility. The current overall average monthly discount is
$28.40 (including 4 discount levels for all utilities) and would decrease to an overall average of
$14.30 if the utility discount is limited to the Electric Utility.
The proposed City Council public hearing is July 3, 2012 for a presentation and to allow public
input to the process after the presentation. Staff will return to the Utility Advisory Committee on
July 10, 2012 requesting a recommendation to City Council to adopt the ordinance amendments.
The public hearing would be continued to July 17, 2012 at which time the public hearing will be
closed. The proposed amendments would be effective in January of 2013.
Attachments: Revised draft utility discount ordinance amendments
N: \UAC \Final \Utility Discount Ordinance Amendment.doc
Revised Draft Utility Discount Ordinance Amendments
13.20.010 - Purpose and findings.
13.20.020 - Definitions.
13.20.030 - Utility discount.
13.20.040 - Information to be made available.
13.20.050 - Qualifications for utility discount.
13.20.060 - Application for discount.
13.20.070 - Calculation of discount.
13.20.080 - Penalty for false information.
13.20.010 - Purpose and findings
The City Council of the City of Port Angeles finds that it is appropriate for the City of Port Angeles to
provide a discount against electric utility charges to low income elderly and disabled residents of the
City. The Council further finds that this discount should be accompanied by energy conservation
programs.
13.20.020 - Definitions.
A. "Utility discount" means a discount granted pursuant to the terms of this chapter to a low- income
senior citizen or a low- income disabled eitizenresident -, the amount of which is applied against
outstanding obligations of the citizen resident to the City of Port Angeles for residential electric utility
services.
B. "Low- income senior eitieenresident" means a person who:
1. Resides within the City of Port Angeles;
2. Is 62 years of age or older;
3. Receives electric utility services from the City of Port Angeles;
4. Is the head of a household;
5.
C. "Low-income disabled eitizenresident" means a person who:
1. Resides within the City of Port Angeles;
2. Receives electric utility services from the City of Port Angeles;
3. Is the head of a household;
4. Qualifies for special parking privileges under RCW 46.16.381(1) through (f), or a blind
person as defined in RCW 74.18.020, and whosc income, including that of his or her
or a
person who qualifies for supplemental social security benefits due to a disability.
13.20.030 - Utility discount.
There is authorized a utility discount for each calendar year commencing January 1, 19922013 which
discount shall be applied to the electric utility charges on monthly utility bills of qualified low- income
senior citizcns residents and low- income disabled citizcnsresidents in accordance with the terms of this
chapter.
13.20.040 - Information to be made available.
The City's Customer Service Manager shall maintain at all times the following information which shall be
current and applicable to current applications for, and awards of, electric utility discounts under the
terms of this chapter:
A. A list of all Federal, State or local energy - related programs which are available to
provide fiscal assistance to low- income senior and disabled citizensresidents ,f erwhich
B. A list of all conservation or consumption reduction programs of the City that are
available at no charge for which an applicant for a utility discount °°•is
the property owner and the requirements for each such program;
C. Current application forms.
13.20.050 - Qualifications for utility discount.
A. Each recipient of a utility discount must meet the following criteria:
1. Be a low- income senior or disabled eitFtenresident, as defined in section 13.20.020
2.
2
3. Agree to participate in available energy conservation programs of the
City that are available at no charge to a low- income resident that is the property owner.
4. Agree to participate in the City's average payment program.
B. Fai ure of the applicant to participate in an available energy conservation program,
after receipt of a utility discount, shall constitute a basis for denial by the City of participation in the utility
dis ount program during the ensuing years until such conservation or consumption reduction measures are
ins ailed.
13.20.060 - Application for discount.
I A.
8.
Applications for electric utility discounts shall be obtained from and filed with the City's
Customer Service Manager.
Submission of an application for an electric utility discount shall constitute a verification by the
applicant that all information provided in such application is true and correct to the best of the
applicant's knowledge.
13.20.070 - Calculation of discount.
Calculation of the amount of the utility discount for eligible low- income senior or disabled citizens
residents shall be in accordance with the following procedure:
A. A. The amount available shall be a percentage of the electric utility base and consumption
charges on the monthly utility bill. The percentage shall be based on the citizen's resident's
annual income in accordance with the following:
1. $0.00 — $7,X89,999.00 annual income 30% discount
2. $8,000.0010 ,000.00—$4-17-50(10013 500.00 annual income 20% discount
3. $447-50.1403.3 ,501.00 —$17W00 0019,500.00 annual income 10% discount
4. 54-77-56470019 ,501.00—$447000,0023 000.00 annual income 5% discount
B. The amount of discount to be received by any individual shall be reduced by the amount which
the total subsidy, including grants from other (e.g., Federal) sources, exceeds the customer's
utility bill.
13.20.080 - Penalty for false information.
The willful provision to the City of false information in an application for the electric utility discount shall
forfeit the low- income senior or disabled citizen's resident's eligibility for future credits. Additionally, the
low- income senior or disabled citizen resident shall be required to repay the amount of any electric
utility discount received based upon such false information.
3
PORTANGELES
W A S H I N G T O N , U.S.A.
Utility Advisory Committee Memo
Date: June 12, 2012
To: Utility Advisory Committee
From: Larry Dunbar, Deputy Director of Power and Telecommunications Systems
Subject: Morse Creek Hydroelectric Project Status
Summary: The Morse Creek hydroelectric facility was restarted in 2004 after being placed in a
standby mode in 1997 due to low energy prices. Due to upcoming unanticipated maintenance
expenses and an inquiry from a private party about purchasing the facility, staff is seeking
guidance from the Utility Advisory Committee to determine if the facility should continue to be
operated and maintained or retired.
Recommendation: Provide guidance to either continue to operate and maintain the Morse
Creek hydroelectric facility, or for staff to research and return to the Utility Advisory
Committee to consider retirement of the Morse Creek hydroelectric facility.
Background /Analysis: The Morse Creek diversion weir was built in 1924 and was
originally used as the water supply for the City. In June of 1982, the City filed an application with
the Federal Energy Regulatory Commission (FERC) for a preliminary permit to study the
feasibility of developing a small hydroelectric project on Morse Creek. Final license application
was made in June of 1986, and granted by FERC in July of 1986.
Water diverted by the weir flows through a water transmission pipeline and then through a
penstock to the powerhouse. With a head of 430 feet and a maximum flow of 19 cubic feet per
second, the generator's output is approximately 480 kW of power. Due to low energy prices, at
the direction of the City Council the hydroelectric project was placed in standby mode in 1997. At
the direction of City Council in 2004, the project returned to operation and has been operating
since then.
Although the project is now 25 years old, operating wear and tear is 17 years and additional
maintenance, replacements, and improvements should be expected in the future. Modifications to
the Supervisory Control and Data Acquisition System have not yet been accepted and during
recent testing it was discovered that the bearings on the generator may require replacement. Staff
is seeking a proposal for bearing replacement and main penstock valve repairs (as of writing this
memo the cost is unknown). Staff will return to the Utility Advisory Committee in the future to
seek a recommendation to proceed with the repairs.
N: \UAC \Final \Morse Creek Hydroelectric Facility Update.doc
Morse Creek Hydroelectric Facility Status
June 12, 2012
Page 2
Phil Lusk, Power Resources Manager, prepared an economic summary of the Morse Creek
hydroelectric facility to accompany this memo. Staff recommends that due to the economics and
future risk that retirement of the hydroelectric facility should be considered.
If the Utility Advisory Committee guidance is to consider retirement of the project, further
research by staff will include but not be limited to the following:
a) Amendment to the Bonneville Power Administration Wholesale Power Sales Agreement.
b) Amendment (if necessary) to the Bonneville Power Administration Wholesale
Transmission Services Agreement.
c) A determination to sell or lease the project while retaining property ownership, or sell the
property including the project, including declaring the project and property surplus. Staff
has been recently contacted by a private party that may be interested in purchasing the
project.
d) An evaluation of the value of the project and property
e) Termination or transfer of the FERC license.
f) Termination or amendment to the Clallam County Public Utility District Morse Creek
Transmission Agreement, which currently provides a mutually beneficial arrangement for
electrical and water transmission.
g) Amendment (if necessary) to the City's water system plan.
h) The effect (if any) on the City's water rights.
Attachment: Morse Creek Hydroelectric Project Economic Summary
0
5W
FOR k ANGELES
W A S H I N G T O N , U.S.A.
PUBLIC WORKS & UTILITIES DEPARTMENT
DATE: June 7, 2012
T 0 : Larry Dunbar, Deputy Director of Power and Telecommunication Systems
FROM: Phil Lusk, Power Resources Manager
SUBJECT: Morse Creek Hydroelectric Project Economic Summary
Strong consideration should be given to the retirement of the City of Port Angeles' Morse Creek
hydro facility, as the City can clearly demonstrate that the costs of replacements, improvements,
or additions necessary to continue to operate this resource, combined with the resource's variable
operating costs, will exceed the reasonable economic return over the remaining life of the
resource.
This recommendation was developed using an economic model that first estimated likely heavy -
load hour (HLH), Tight -load hour (LLH) and demand (kW) using the facility's actual monthly
production statistics for the period 2006-2011.
As shown in Table 1, the model suggests that the facility can produce a total average of 825,743
HLH kWh, 615,202 LLH kWh and 2,308 kW during the course of an average production year.
The production statistics also suggest that the contribution of the facility to the overall City
power supply is minuscule, about 0.19% of total energy (kWh) requirements. This is equivalent
to 19 cents of a comparative $100 bill. The overall amount of energy produced is equal to
roughly the amount used by the Water Utility's municipal water pumping requirement, or
roughly 100 residential customers.
As shown in Table 2, using the current BPA BP -12 wholesale power rate schedule, these
estimated production values corresponded to an avoided cost of purchasing equivalent energy
and power from the BPA that equals $71,889 /year.
The key variable is demand, which accounted for $21,729 of the avoided cost total. The model
assumes that all of the demand was required (i.e., that the City exceeded its Contract Demand
Quantity or CDQ every month of production and the excess demand was purchased from the
BPA at market rates). Additionally, the model assumes that all of the City's HLH and LLH
load- shaping energy allotment is used, which may not necessarily be the case every month.
Power Resources Manager
Morse Creek Hydroelectric Project Economic Summary
June 7, 2012
A more likely proxy of market replacement cost can be estimated using the prior BPA BP -10
wholesale power rate schedule. Using this rate schedule, the corresponding cost to the City of
replacing the resource with BPA market purchases was estimated to be $37,447 /year.
The model also estimated likely operation and maintenance (O &M) expenses using the actual
expenses incurred during the same 2006 -2011 time frame. Total O &M expenses were estimated
to be $54,093 /year. However, as with most aging infrastructure, the O &M costs associated with
this facility have increased substantially each year since 2006 as shown in Figure 1. This
estimate of annual O &M expenses has excluded recent replacement cost upgrades to the
facility's Supervisory Control and Data Acquisition (SCADA) system, which has totaled
$50,440 since 2010.
As shown in Table 3, the projection is that, in the best case, the City may see a very small
reduction in its overall wholesale power bill as a result of using the Morse Creek hydro facility,
an amount equal to about $17,800 /year. However, in the most likely of situtations, the City
would more likely experience a net cost of around $16,650 /year.
Given the age of the facility, there is a significant element for added downside downside risk,
such as significant increases in O &M and replacement costs. For example, O &M costs for 2012
are now projected to total between $70,000 and $1 10,000. This is much higher than the level of
projected value of the using the BP -12 avoided costs.
There are a number of replacement issues facing the facility as well. For example, the generator
bearings have recently failed, and the City does not yet have a price for its repair. Also, the main
penstock valve at the powerhouse is also leaking so badly that, when closed, it does not
sufficiently reduce the water flow to allow checking or cleaning the needle valves. Currently,
staff needs to drain the penstock just to clean debris from the needle valves. The main valve
needs to be removed and a new seal installed. The repair price for this is also not currently
known.
Other elements of risk include items such as the basic placement of the diversion pipeline on and
through a rock formation that is prone to slippage. Should even a minor disruption occur,
replacement costs would be far higher than any expected value of the future avoid costs of
purchased power.
N: I UACOriginall Morse Creek Retirement Menm.docx Page 2
Power Resources Manager
Morse Creek Hydroelectric Project Economic Summary
June 7, 2012
TABLE 1: 2006 -2011 Average Morse Creek
Hydro Production
HLH kWh LLH kWh Demand kW
Jan 115,260 83,971 330
Feb 104,750 70,276 387
Mar 79,208 57,385 131
Apr 59,608 47,862 193
May 120,466 97,135 373
Jun 133,009 98,026 375
Jul 91,423 70,722 227
Aug 27,590 19,802 71
Sep 0 0 0
Oct 653 1 0
Nov 22,699 13,780 78
Dec 71,078 56,245 144
825,743 615,202 2,308
N:I UACIOriginallMorse Creek Retirement Memo.doce Page 3
Power Resources Manager
Morse Creek Hydroelectric Project Economic Summary
June 7, 2012
TABLE 2: 2006 -2011 Average Morse Creek Avoided Costs
HLH kWh
BP -12 Costs Avoided Costs BP -10 Costs • Avoided Costs
Jan 50.04003 54,614 50.02968 53,421
Feb 50.04093 $4,287 $0.03031 53,175
'Mar 50.03957 53,134 50.02812 52,227
Apr 50.03753 52,237 50.02639 f ,, _ $1,573
May 50.03506 _ 54,224 50.02204 52,655
Jun $0.03597 $4,784 $0.01995 , $2,654
Jul 50.04207 53,846 50.02457 52,246
Aug _ 50.04435 3 $1,224 _ 50.02878 5794
Sep _ 50.04345 50 50.02970 ! 50
Oct 50.03786 $25 5503141 $21
Nov $0.03837 $871 50.03350 , $760
Dec 50.04110 $2921 $0.03496 ; $2485!
$32,167 $22,011.,
LLH kWh
BP -12 Costs Avoided Costs BP -10 Costs • - Avoided Costs
Jan 50.03170 52,662 $0.02146 $1,802
Feb $0.03317 $2,331 50.02168 , $1,524
,Mar 50.03233 51,855 50.02061 $1,183
,Apr $0.03041 $1,455 50.01897 5908
.May $0.02440 $2,370 50.01524 $1,480
Jun $0.02302 52,257 50.01059 $1,038
Jul - _ $0.02991 52,115 50.01799 $1,272
Aug 50.03215 5637 50.02134 5423
Sep _ 50.03359 $0 50.02384 $0
Oct 50.03120 $0 50.02301 $0 •
!Nov $0.03140 5433 50.02443 $337
;Dec 50.03339 $1878 $0.02565 $1443
517,993 $11,409
Demand kW
BP -12 Costs Avoided Costs BP -10 Costs Avoided Costs
t
Jan $9.70 $3,198 51.96 4 5646
,Feb 59.92 $3,840 $1.99 `_ _ _ $770 -
,Mar $9.60 $1,253 $1.85 ; 5242
Apr $9.10 $1,754 _ $1.74 $335
May 58 50 53,172 $1.44 ; 5537
Jun 58.72 53,270 51.32 $495
Jul $10.20 52,315 $1.61 • 5365
Aug _ _ 510,75 - $767 $1.89 $135
_Sep 510.53 59 $1.96 $0
Oct 59.18 $0 52.05: $0
,Nov 59.31 „ $722 $2.19 $170
'Dec $9.97 , $1437 $2.30 5332
$21,729 $4,027
TOTAL - $71,889 $37,447
N.•I UACIOriginallMorse Creek Retirement Memo.docx Page 4
Power Resources Manager
Morse Creek Hydroelectric Project Economic Summary
June 7, 2012
$120,000
5100,000
$80,000
y $60,000
rn
540,000
$20,000
$0
FIGURE 1: Morse Creek Hydro Facility
Annual O &M Expenses
y= 14294x +916 .8
R2 =0.852
2006
2007
2008
2009
2010
2011
Series1
$30,258
$33,835
$56,952
$60,939
$65,341
5112,016
N:I UACQOriginallMorse Creek Retirement Memo.docx Page 5
Power Resources Manager
Morse Creek Hydroelectric Project Economic Summery
June 7, 2012
TABLE 4: 2006 -2011 Average Morse Creek Avoided Costs and Benefits
Avoided BP -12 Cost' _ O&M
Cost Sum 7 Savings/(Costs)
!`Jan $10,474 ($4,694) $5,780 -Ii
Feb $10,459. ($4,210)4 $6,2491
Apr - - _ $6,443 - - - - -- - ($4446)4_ $1,7971
'Mar $6,243 ,
, ($3,027)1-- ---- $2,419_
May - _ $9,766-1-- ($4,279)1 $5,486
Jun • $10,311 ($7,276)L $3,035
_ $8,277 _ ($2,291)1 _ $5,986
$2,627 ($5,383) ($2,756
$0 ; ($4,408)1-- - ($4,408)1
$25 ($3,114)■ ($3,089)
$2,025 _ ($4,643)1 _ ($2,617)
$6,237 ($6,322) 1 ($85)
$71,889_ ($54,093)' $17,796
;Jul
Aug -
�Sep
Oct
Nov
Dec
1
Avoided BP-10 Cost O &M Cost Sum Savings /(Costs)
,
$5869
;Jan ($4,694) $1,175
[Feb ! $5,469 ($4,210) $1,259
Mar $3,652 _($4,446) ($794)
;Apr $2,816 4 ($3,027) ($211)
May $4673 1 ($4,279) $393
;Jun $4,187 ($7,276) __($3,090)
;Jul $3,884 ($2,291)1_ $1,593
Aug -- - $1,351 ($5,383), - - - -- ($4,031)1
Sep I $0 - -- ($4,408) ($4,408)(
Oct $21 ($3,114) ($3,093)
Nov _ $1,267 ' - ($4,643) ($3,376)
Dec $4,259 ($6,322) ($2,062),
L _- - - _ - _ -- $37,447 _ ($54,093)1 ($16,645)4
i
NOTE: BP -12 demand valued as if the distribution utility exceeded its monthly
CDQ, which may not always be true i
N.•IOAQOriginallMorse Creek Retirement Memo.docx Page 6
8 O N N E V I L L E P O W E R A D M I N I S T R A T 1 O N
I I
Natural gas prices may drive FY 2014 -2015 power rates
May 30, 2012
It might seem surprising, but the price of natural gas is likely to be a significant driver of BPA's power
rates for the 2014 -2015 rate period — most notably, the priority firm rate paid by public utility customers
in the Pacific Northwest.
Since we concluded the BP -12 rate case, natural gas prices have fallen significantly. Prices have moved
steadily downward to levels thought inconceivable just a year or two ago. The changed outlook for the
price of natural gas has significant implications for future electricity prices and, therefore, BPA's net
secondary revenue forecasts and resulting power rates.
Natural gas prices drive wholesale electricity prices several months of the year, and the price of electricity
largely determines the amount of net secondary revenue the agency receives. Net secondary revenue, in
turn, augments the agency's revenues and, thus, affects power rates. As revenues increase, power rates
can go down. However, if this source of revenue decreases, then revenue from preference customers
needs to make up the difference.
At this point, BPA's forecast of natural gas prices for the FY 2014 -2015 rate period suggests that net
secondary revenue will decline by $114 million annually relative to what was assumed when the agency
set FY 2012 -2013 power rates. This decline could increase to $196 million annually if gas prices stay at
their currently depressed level. This issue is likely the most significant driver of BPA's power rates for
FY 2014 -2015. A $114 million reduction alone results in a roughly 8 percent rate increase for public
utility customers. The $196 million reduction translates into a 14 percent increase, all other things being
equal. (Note: These forecasts will continue to be updated until rates are set in July 2013.)
The graphs below demonstrate the connection between natural gas prices and power prices — and reveal
how low both are.
Previous Q20
Natural
Gas Weekly
Price
Comparison
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The following graph depicts Mid - Columbia next -day power prices.
eawout SO 94
Mid -C Weekly Spot Power Price Comparison( HLH)
[Current 512
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Updated: M
2012
What is driving natural gas prices?
Production
Much has been written over the last few years about "fracking," or the technology of hydraulic
fracturing in horizontally drilled wells that has made it possible to extract natural gas from
abundant shale formations. This has radically changed the U.S. natural gas supply picture.
Production in the U.S. lower 48 states has increased at an accelerating pace since 2009 and hit
record levels of over 62 billion cubic feet per day in 2011. The steady increase in supply has
been a major contributor to the low prices of the past few years compared to 2008 and earlier.
Additionally, rig technology continues to improve, leading to lower drilling costs and higher
initial production rates. And gas is essentially being produced free as a byproduct of drilling for
oil using the same technologies that unlocked the shale gas boom. All of these factors have led to
increased domestic supply at lower cost.
Weather and storage
In spite of strong domestic production, natural gas prices held at around $4 per million British
thermal units (MMBtu) until falling dramatically over the last six months. The main cause of the
recent precipitous price decline is weather, specifically, an unusually mild winter.
On average across the U.S., the winter of 2011-2012 was the warmest in 60 years by a large
margin. The estimated decline in U.S. demand for gas ranges from 400 billion cubic feet (Bcf)
to 800 Bcf due to temperature variation alone. Combined with the continued strength in
2
B O N N E V IL L E P O W E R A 0 M I N I S T R A T I O N
production, the mild weather resulted in an end -of- winter gas storage level of almost 2.5 trillion
cubic feet (Tcf), which is projected to hit storage capacity limits of 4.1 Tcf by October and has
recently sent forward prices below $2 /MMBtu.
c
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Can prices remain low?
It is our view that the current $2 price level does not represent the equilibrium long -term
marginal cost of gas production in a balanced market but is a reaction to the current storage,
which is probably the most significant driver of current prices. Over time, the market should
rebalance to reflect a more appropriate equilibrium gas price around the $4 -$5 range.
However, production remains high, storage is at record levels and there are limited short-term
opportunities for increases in demand, all of which contribute to continuing lower prices as well
as lower price forecasts.
Further, we think substantial restrictions on fracking via environmental legislation or national
policy are unlikely. A more likely scenario would be an excise tax or other financial penalty, or
legislation surrounding fracking fluid or wastewater disposal, which would have a limited impact
on the marginal cost of production.
Predicting when natural gas prices will return to the $4 to $5 range is very difficult given the
variables at play — but important to setting rates sufficient to recover our costs.
While current prices seem unsustainably low, it is not clear when gas prices will return to higher
levels. The price of gas seems determined to stay in the $2 -$3 range before approaching $4 in
2014. BPA is monitoring the market closely for any trends in production as we head into the
summer months.
3