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HomeMy WebLinkAboutAgenda Packet 11/09/2010I. Call To Order II. Roll Call III. Approval Of Minutes For October 12, 2010 IV. Late Items V. Discussion Items: A. Golf Course Road Waterline Repairs (verbal report only) B. Equipment Purchase — Light Operations Line Trucks (verbal report only) C. Advanced Metering Infrastructure System Communications Plan Presentation D. Advanced Metering Infrastructure System Communications Plan Consultant Agreement Amendment No. 1 E. Proposed Medic I Utility Rate Adjustments F. Consultant Agreement: Combined Sewer Overflow Phase I, Constructability Review G. Bonneville Power Administration Commercial and Industrial Demand Response Grant Acceptance H. Energy Conservation Program Increase I. Bonneville Power Administration Residential Exchange Program Settlement Agreement J. Amendment No. 2 to Telecommunications Consultant Agreement VI. Information Only Items: A. Retail Tiered Rate Methodology Study New Large Single Load B. Wireless Mobile Data System Grant Business Case Evaluation Update C. Advanced Metering Infrastructure System Update D. Electric Utility Grant Status Report VII. Next Meeting Date VIII. Adjournment N \uac \ final \110910 Utility Advisory Committee Jack Pittis Conference Room Port Angeles, WA 98362 November 9, 2010 @ 1:30 PM AGENDA December 14, 2010 Start time proposed 1:30pm due to 5pm City Council meeting City Council Special Meeting/Utility Advisory Committee Jack Pittis Conference Room Port Angeles, WA 98362 October 12, 2010 I. Call To Order Chairman Di Guilio called the meeting to order at 3:00 p.m. II. Roll Call UAC Assigned Chairman Di Guilio, Cherie Kidd, Brooke Nelson Councilmembers Present: UAC Assigned N/A Councilmembers Absent: Other Councilmembers Present: Pat Downie Other Councilmembers Brad Collins, Max Mania, Don Perry Absent: UAC Members Present: Vice Chairman Reed, Paul Elliot UAC Members Absent: N/A Staff Present: Kent Myers, Glenn Cutler, Terry Gallagher, Dan McKeen, Larry Dunbar, Phil Lusk, Brian Smith, Mark Karjalainen, Cate Rinehart Others Present: Patti Morris — Clallam County Tom Callis — Peninsula Daily News III. Approval Of Minutes Chairman Di Guilio asked if there were any corrections to the minutes of September 14, 2010. Councilmember Kidd moved to approve the minutes. Dean Reed seconded the motion, which carried unanimously. IV. Late Items None. V. Discussion Items c A. Wireless Mobile Data System Grant Update Terry Gallagher, Police Chief, emphasized that the system would be a technological advancement that would result in more efficient, effective, and safer operations for both Police and Fire services. A conference call was held with Dick Bull (National Law Enforcement and Corrections Technology Center Outreach Specialist) and Dan Brannon (City of Ripon Police Department Information Technology Administrator) to share their knowledge and experience operating and maintaining a wireless mobile data system. There was a brief discussion. Information only. No action taken. B. Bonneville Environmental Foundation Solar4R Schools Funding Agreement Phil Lusk, Power Resources Manager, advised that the City had been offered a funding agreement for a renewable energy demonstration and education program at the Feiro Marine Life Center. This program would provide hands -on teaching tools such as science kits, lesson plans and photovoltaic solar arrays so students could learn about solar, wind and other renewable energy technologies. A discussion followed. Dean Reed moved to recommend City Council authorize the City Manager to sign the Solar4R Schools Funding Agreement with the Bonneville Environmental Foundation for the Feiro Marine Life Center. Councilmember Nelson seconded the motion, which carried unanimously. C. 2010 Utility Rate Studies Recommendation Larry Dunbar, Deputy Director of Power Systems, provided a handout and reviewed the information it contained which included reviewing current and proposed rates and fees, reviewing City Council and public comments, and recommendations. There was a lengthy discussion. Councilmember Nelson moved to recommend City Council proceed with the proposed rate and fee adjustments for the Electric, Wastewater, and Transfer Station Utilities with no increase in water connection fees. Dean Reed seconded the motion which carried unanimously with Councilmember Kidd in opposition. D. Bonneville Power Administration Power Sales Agreement Exhibit F Revision Larry Dunbar, Deputy Director of Power Systems, advised that the Bonneville Power Administration had offered the City a revision to Exhibit F of the new Power Sales Agreement that will reduce the City's requirements for the Morse Creek hydroelectric project. There was a brief discussion. Dean Reed moved to recommend City Council authorize the City Manager to accept the revision to Exhibit F of the Power Sales Agreement. Councilmember Nelson seconded the motion, which carried unanimously. Larry Dunbar, Deputy Director of Power Systems, explained that the Bonneville Power Administration had offered the City a revision to Exhibit A of the Transmission Services Agreement which incorporates minor modifications to metering descriptions, points of receipt and delivery, and the incorporation of the new BPA Power Sales Agreement as a network resource. There was a brief discussion. Dean Reed moved to recommend City Council authorize the City Manager to accept the revision to Exhibit A of the Network Integration Transmission Service Agreement. Councilmember Nelson seconded the motion, which carried unanimously. VI. Information Only Items VII. VIII. E. Bonneville Power Administration Network Integration Transmission Service Agreement Exhibit A Revision A. Bonneville Power Administration (BPA) Residential Exchange Program Settlement Agreement Information only. No action requested. B. Advanced Metering Infrastructure (AMI) System Project Update Information only. No action requested. C. Metropolitan Area Network (MAN) Services Agreement Core Switching Equipment And Customer Premises Equipment Inspection Report Information only. No action requested. Next Meeting Date: November 9, 2010 — 1:30 p.m. Adjournment: 4:57 p.m. Dan Di Guilio, Mayor Janessa Hurd, City Clerk Dean Reed, Vice Chairman Cate Rinehart, Administrative Specialist II oRT NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo November 9, 2010 Date: To: Utility Advisory Committee From: Phil Lusk, Power Resources Manager Subject: Advanced Metering Infrastructure System Communications Plan Presentation Summary: A communications plan is crucial for the success of the Advanced Metering Infrastructure System project. The draft communications plan will be presented in person by Parker LePla at today's meeting. Recommendation: For information only, no action requested. Background /Analysis: A communications plan is crucial for the success of the Advanced Metering Infrastructure (AMI) System, and includes customer (external) and staff (internal) education with informational messages that need to be shared prior to, during, and after the project. The City must clearly articulate the benefits of the new AMI System in order to promote dialog and for the system to be accepted and embraced by our community. To the extent that we can proactively communicate, we have the opportunity to obviate any customer misperceptions that might arise. Furthermore, to the extent our citizens are directly engaged in activities related to the AMI System implementation, we can generate their understanding and support for our efforts. "Motivate customers through savings, control, and stewardship. Engage customers through rates, technology, and education. Satisfy customers through easy, enjoyable, fulfilling experiences," says one expert. The draft AMI System Communications Plan (see attachment) will be presented to the Utility Advisory Committee (UAC) by Parker LePla at today's meeting. The draft plan was developed using an iterative process involving staff from the City Manager's Office, and the Departments of Finance and Public Works and Utilities. An interview process with some members of the UAC and City Council was also used to help identify key issues. All feedback gathered at today's meeting will be incorporated into a similar presentation that will be made at the November 16, 2010 City Council meeting. Attachment: Draft AMI System Communications Plan N \UAC \Final \AMI System Communications Plan Presentation doe CITY OF PORT ANGELES AMI System Communications Plan November 5, 2010 COMMUNICATIONS OBJECTIVES Par erLeP a At its best, government is transparent as well as informative — particularly when it undertakes major financial investment and change on behalf of its constituents. The City must clearly articulate the benefits and potential drawbacks of the new AMI system in order to promote dialog and for the system to be accepted and embraced by your community. To the extent that you proactively communicate you have the opportunity to confront misperceptions and address concerns as well as educate and move your city forward. To the extent you engage citizens directly in activities related to system implementation, you can generate understanding and support. To that end this plan will: • Help City of Port Angeles staff provide customers and residents with excellent customer service throughout the AMI system implementation phase and beyond o Ensure that all staff who have AMI system implementation and related customer service responsibilities are able to accurately and fairly represent its merits and potential drawbacks in formal and informal communications o Ensure all staff with AMI customer service responsibilities are able to accurately and fairly represent the new Time -of -Use demand -based rate schedule o Ensure that other city employees and leaders, including the City Council, have the tools they need to explain the City's basic rationale for implementing the AMI system on behalf of the community and to help citizens learn more o Detail a process for updating all personnel at the appropriate level before, during and after implementation so the impacts are clearly understood and accessible by the public • Provide customers and residents of the City with timely information throughout the transition to the new AMI system • Ensure that results of the City's investment are shared • Use a streamlined approach so materials and activities achieve maximum reach using minimal resources AMI Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www.parkerlepta com • 206.285 5280 1 Par erLeP a PHASE ONE: MAKING INFORMATION CLEAR AND AVAILABLE IN MULTIPLE FORMATS THAT MEET CITIZEN AND CUSTOMERS' NEEDS 1. Create a visual theme that expresses the value of AMI, namely: "The sensible next step" The visual theme is the basis for the look and feel of all communications about the project —from bill inserts to a template for information documents to ads inviting citizens to information meetings. It provides a visual cue so people (city staff as well as citizens) recognize your communications as relating to AMI. This is not an "over the top" image but a low -key design that demonstrates the value of being sensible. 2. Create a series of flexible communication tools, each with multiple uses • Palm -sized cards that explain the AMI system's value and how to access more information • One and two -sided document templates in which to provide more in -depth information, as needed, such as: project overview, FAQ's, and project updates via utility bill inserts • Posters, placed on city property, to inform staff and residents with key information about the project and timeline • Door hangers to inform customers about their installation • Utility bill that is easy to read and provides information that helps customers control their costs. Content and design based on vendor selected for AMI system. • Utility bill insert one page, two -sided newsletter -style template designed to go with new bill AM Communications Ptan -- November 5, 2010 • Prepared for City of Port Angetes • www parkertepla corn • 206.285.5280 2 Par erLeP a 3. Create an AMI project page /section in the Utility Information Center on the City of Port Angeles website • General information about AMI systems • Specific information about the City's system and implementation plan • In -depth information about the project and the technology • Engage visitors via emailed questions /answers, news feed and links to AMI news stories and information about other communities using AMI a Site to submit form for "be sensible first" contest to have first meter installed • Coincide launch of new page(s) with initial public announcements regarding AMI system PHASE TWO: FOUNDATION FOR CITIZEN UNDERSTANDING— STAFF PREPARATIONS 4. Train CSRs (customer service representatives) and AMI implementation staff about the system's impacts so they can appropriately inform the public • Hold a 2 -hour interactive staff meeting to launch the project, celebrating the change and expected impacts (include Energy Conservation, water division staff) before the vendor equipment demos, if at all possible o Build excitement: "Welcome to the 21s century and new ways to help people benefit from new technologies and control resource usage on their own terms. It's the sensible approach to dealing with change." o Make the focus a communication workshop, training all on the key points for keeping customers informed o Provide: • Palm -sized card containing write -up of the key communications points ■ One -page project overview, including timeline • FAQs document AMI Communications Nan—November 5, 2010 • Prepared for City of Port Angeles • www parkerlepta corn • 206 285.5280 3 o Include a brainstorming session for how best to assist the public when they call with questions • Create posters that explain AMI; place in the department break room as well in other city government locations 5. Develop a detailed approach for answering questions and concerns • City of Port Angeles' AMI Communications Team uses input from all -staff meeting to create a decision -tree for helping CSR and other utility employees route questions to the best source to meet the particular need o Post on the City's Intranet • Create a plan to appropriately address a large volume of responses (positive and negative) • Provide city employees with a list of the appropriate people in the utility department associated with key questions each is equipped to answer so they can direct citizens to the information they need o Post on the City's Intranet o Post on City's website for citizens o Lead discussion of benefits and the key points to cover in every communication o Lead discussion of benefits and the key points to cover in every communication 4 Par<erLeP a 6. Explain the AMI system and its benefits to all city employees and leaders, helping them be informative spokespeople in accordance with their roles • Meet with the Utility Advisory Committee to officially launch the project and provide them with the write -up of key communications points o Provide one -page overview of the project, including timeline, FAQs and palm cards • Schedule a brief information session with City Council to launch the project and provide them with the write -up of key communications points AMI Communications Ptan— November 5, 2010 • Prepared for City of Port Angeles • www parkerlepla.com • 206.285.5280 ParerLeP a o Provide one -page overview of the project, including timeline, FAQs and palm cards • Hold three meetings at City Hall /Council Chambers (in order to include all city staff, approximately 230 people) to launch the AMI project across all city departments o Include a brief communication "workshop" so employees feel informed and able to help the public o Provide employees with palm cards for themselves and to give to citizens to help explain the project and connect the public to additional information • Distribute the palm cards and overview document to police and fire department staff and others unable to attend the launch meetings o Make available on Intranet o Leave copies in break rooms • Place posters that explain AMI in City Hall, police and fire stations o Customer - facing o Break rooms 7. Ensure that city government leads the Port Angeles community by example throughout the change —and after • Make a document available to the public that specifically addresses the cost of the system and expected benefits tied specifically to cost as much as possible o One -page overview o Detailed report o Post on City website and Intranet • Establish a protocol for measuring and reporting current city government usage and costs and for measuring impacts post- implementation o Take some pre- installation benchmark measurements around fun things as well as key usage statistics (then do this annually) • Compare cost of a recreation center class at peak vs. a similar recreation class at an off peak time AMI Communications Plan — November 5, 2010 • Prepared for City of Port Angeles • www.parkertepla.com • 206.285.5280 5 Par erLeP a • Compare cost of different types of activities that happen at the same time (like basket weaving vs. dance class) • Compare costs of heating a fire station and the police station before and after implementation • Show how information the City gets from the "smart" meters about individual usage is protected while that information contributes to helping the City reduce energy usage and costs • Report launch, implementation and system use results information on the home page and utility information center /AMI page of the City's website o Monthly updates or more frequently, as needed • Help customers understand and take control of costs o Create a working "smart" meter that you can take to in- person meetings to show how they work and the potential benefits (Example: if we put in 50 cents worth of electricity at off -peak time 5 light bulbs stay on for x minutes; at peak time you only get X minutes) o Develop "sensible saving" scenarios (by changing X you can save Y amount on your bill) • Post on City website ■ Post on City Intranet 8. Prepare staff to provide informative outreach to key customer and resident audiences • Identify AMI system champions from within city government o Leaders who are dedicated to the strategy that led to the decision and individuals who are excited about the impact it will have • Establish and train a team of "Energy Ambassadors" who will proactively seek to meet community groups —from general "town hall" meetings to specific interest groups, such as churches and the city's largest employers. The team will ideally include: o City Council members, including the Mayor o City Manager o Utility Advisory Committee members, including at least one citizen representative AM Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www parkerlepla com • 206.285 5280 6 o Finance Department and Public Works and Utilities Department leadership o AMI system champions from all levels of government • Assign each Energy Ambassador to speak to groups that are the best natural fit as much as possible o See Phase Three of this plan for more detail • Identify potential partners from within the Port Angeles community for endorsement and in- person presentations (business leaders, environmental leaders, spiritual leaders, local celebrities) o Hold a roundtable meeting to present AMI to them and ask for their support and active involvement o Brainstorm ideas for engaging their communities of interest over the course of the project o Convene the group again to provide an update and share results, when available; seek support for post- installation activities, if appropriate • Create an engaging presentation for use by Energy Ambassadors that can be easily given and tailored for each audience (and train the Energy Ambassadors to deliver the presentation) o Interactive 7 Par ereP a o Provide written information, including palm cards, one -page overview and FAQs to attendees o Provide a role for private citizen partners who choose to participate PHASE THREE: INFORMING CUSTOMERS AND CITIZENS PRIOR TO AMI SYSTEM INSTALLATION 9. Announce to the Port Angeles community that the City's decision to install the AMI system is about to be implemented, inviting one and all to town halt style meetings Communicate the big - picture AMI story, explaining the reasoning behind and benefits of the new AMI system, and the timeline. Invite community members to learn more through a series of town hall meetings, encouraging questions and dialog. AMI Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www parkertepta corn • 206.285 5280 • Identify the town hall meeting locations, dates and times for the general public o Ensure that citizens from all geographic areas have at least one meeting that's convenient for them to get to. • Announce the AMI system and invite the public to the town hall meetings via the following vehicles: o City of Port Angeles website • Home page • Utilities information center /AMI page, launched to coincide with the other communications o Utility bill insert o Media engagement ParcerLeP a • Press release distributed via newswire and directly (to obtain possible media coverage about the system and meetings) to: • Peninsula Daily News • KONP • KPLU • Quarter -page print advertisement in the Peninsula Daily News for three days • Focus on announcing the town hall meetings • 60- second radio spot on KONP to run two times during prime listening times (6:00 a.m. - 9:00 a.m., 12:00 p.m. and 3:00 p.m. - 6:00 p.m.) for three days • Focus on announcing the town hall meetings • Submit town meeting announcements to Peninsula Daily News and KONP community calendars o Send invitation letters to large commercial customers, business groups and community groups such as churches and sports clubs re: town hall meetings • Offer to schedule an Energy Ambassador from the City to speak to their organization about the City's new AMI system AMI Communications Plan — November 5, 2010 • Prepared for City of Port Angeles • www parkertepla.com • 206 285 5280 8 Par erLeP a 10. Raise general awareness in the Port Angeles community about the AMI change -over, the coming BPA rate hike and the regional movement toward this technology • Place palm cards throughout the community after they are unveiled at the town meetings (gathering places, businesses) o Encourage employees to take them to the places they like to go • Make the one -page project overview and FAQ sheets available at city offices, on the City's website and Intranet • Suggest media coverage by pitching story concepts (offering your staff as experts they can interview) to selected media about: o The coming BPA rate hikes and tiered structure o How the Port Angeles AMI system fits into the larger Pacific Northwest region's AMI and DR systems implementation (Other AMI systems, BPA DR grantees, the DOE Pacific Northwest Smart Grid Demonstration Project) ' o An in -depth human interest story on Gig harbor's AMI system. Five years down the road how has it affected life there? Councilwoman Brooke Nelson lived there during the AMI transition; she could be a local angle into the story. o First Smart meter install /ribbon cutting with contest winner (see #11 below) • Pitch the above noted articles /interest stories to the following news outlets: o Peninsula Daily News o KONP o KPLU 11. Engage citizens in system implementation activities • Hold a "be sensible first" contest to see where the first new smart meter will be installed ending in a ribbon - cutting ceremony AMI Communications Nan—November 5, 2010 • Prepared for City of Port Angeles • www.parkerlepla corn • 206 285 5280 9 Par ereP a o Announce contest as part of a pre- launch informational bill insert, news release and media advertisements (see #9 above) • Invite people to participate in contest via town hall meetings with option of entering at City Hall o Post invitation on City website • Hold "sensible saving /how to" workshops for large customers and customer groups (such as downtown businesses by block) on ways to reduce usage in high peak times, lowering electricity costs. o Submit meeting announcements to Peninsula Daily News and KONP community calendars • Set up a "sensible next step" AMI system educational booth at community events, such as the Clallam County Fair, Olympic Peninsula Senior Games, local festivals and school fairs. o Create a calendar of events with the goal of participating in at least two per month —try to reach as many different audiences as possible o Bring the smart meter display unit to demonstrate the impact on cost of using electricity during high vs. low rate times PHASE FOUR: KEEPING CITY STAFF AND CITIZENS INFORMED THROUGHOUT IMPLEMENTATION 12. Communicate to Customers about the install process • Send a second bill insert announcing the beginning of installations, informing customers of the installation phases and letting them know they will see a new billl format in early 2012. • Create two door hangers for individual customer install communications (electricity and water versions for each): o Appointment notice: your appointment for install is at X time o Outcome of installation: your new meter was successfully installed OR the new meter wasn't successfully installed, why, and process for resolution • Create a one page two -sided document that details information for customers who will incur installation expenses (if repairs required for installation exceed $750) o Distribute to impacted individuals AMI Communications Plan — November 5, 2010 • Prepared for City of Port Angeles • www parkerlepla.com • 206 285 5280 10 o Post on City website Par<erLeP a 13. Proactively communicate about progress with all stakeholders • Monitor relevant local print, radio and online community discussions about the new system and implementation process • Determine needed meeting schedule with CSR staff to triage volume of calls, discuss general sentiment of callers and to provide ongoing guidance. Could be daily at first, then less often. o Adjust call center decision -tree, if needed o Adjust outreach plan, as needed o Adjust verbal communications (website, bill inserts, etc.), as needed • Use regularly scheduled staff and team meetings to update everyone involved in implementation at least weekly o Post brief weekly updates on Intranet • Provide formal monthly updates to City Manager, City Council and all Directors via email and printed letter o Request that updates be shared in department meetings (leadership and field staff) o Post on Intranet • Use the above communication vehicles to link all city employees to information about the impact of the AMI system on the City's electricity and water use and expenditures via the City's website • Press release announcing results post- initial installation phase, distributed via newswire and directly to: o Peninsula Daily News o KONP o KPLU • Pitch story about the phase one results to all three media outlets linking the results to larger benefits for the City and the region AMI Communications Plan— November 5. 2010 • Prepared for City of Port Angeles • www.parkerlepla.com • 206 285 5280 11 PHASE FIVE: AFTER FULL IMPLEMENTATION, FULL TRANSPARENCY 12 Par<erLeP a 14. Provide customers with the information they need to manage costs • Redesign the utility bill to simply communicate usage in peak and off -peak times; highlight a usage comparison between the customer and the average for their block or neighborhood and between the current year and the previous year's usage. o Explain the new bill through an accompanying utility bill insert so people know how to read it. o Create a newly designed newsletter style utility bill insert to send twice per year, starting with the new utility bill 15. Measure customer satisfaction with the process and system and make results public • Send survey via utility bill insert two billing cycles after the install. Measure satisfaction and ask about benefits /impacts via 2 open -ended questions. o Provide postage -free response envelope • Provide link to survey online via City website home page and Utility Information Center • Post results on City website and city Intranet, including detailed results on Utility Information Center page 16. Keep city employees and the public informed about city government and overall system usage (electricity and water) • Starting with pre- implementation, benchmark key statistics annually and communicate the comparisons o City website, Intranet and mini AMI website at least twice per year o Bill insert newsletter twice per year • Develop 2 press releases as usage and customer satisfaction results become available (initial results post -full implementation and 6 months later) AMI Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www.parkertepla corn • 206 285 5280 ■ o Distribute via newswire and to the following media outlets: • Peninsula Daily News is KONP • KPLU • Pitch articles /coverage about the impacts of AMI to the same three news outlets (see above). 17. Continue to engage customers and the larger community • Post customer "sensible success" stories on the Utility Information Center /AMI section of the city's website o Invite customers to submit their stories via website email form Par erLeP a o Free CFL (or other relevant promotional gift) for stories that are posted • Enlist local businesses to compete against each other for the most energy saved • Develop visuals that demonstrate usability and benefits of the system for the Utility Information Center page o Average usage patterns per neighborhood, allowing a customer to see how their usage, as reported on their bill, compares to the average and to other areas in the City o Thermostat that illustrates the amount of peak hour use avoided (in comparison to baseline year) • Connect results to things people care about, such as conservation o Report cumulative decrease in the amount of energy and water used • Translate that into a concrete benefit such as the amount of salmon or salmon habitat saved, the amount of greenhouse gas not emitted • Integrate all the above via all established communications channels: o Utility Information Center /AMI pages on the City's website o Bill inserts a Story ideas to local media AMI Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www.parkerlepla.com • 206.285.5280 13 IMPLEMENTATION BUDGET FOR PARKER LEPLA SERVICES Parker LePla's role is to provide tools and support to the City of Port Angeles' AMI system project staff so they are able to implement the plan outlined in this document. ,'Phase One and :Phase •Two,Activities ensuring ;tha Customer:Service Representatives responsibility ' for - the: AMI. system, and outreac stafareprepared to assist customers and..thaf fundamental =` communications tools: to help.citizen s" are; in 2011 Phase One. Two, Three. Four and Five Activities, ensuring that information is available to be shared with customers and citizens in avariety of forms, and that City leadership and all employees are $33,478 $1,522 $35,000 well- informed and able to assist citizens . throughout the AMI system implementation process; and begin updating customers on impacts: (phase five will continue into 2012)_ AMI Communications Plan— November 5, 2010 • Prepared for City of Port Angeles • www parkerlepla.com • 206.285 5280 14 Professional Services (including printing) Par erLeP a Media Placement TOTAL Date: To: From: Subject: PORT i NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo November 9, 2010 Utility Advisory Committee Phil Lusk, Power Resources Manager Advanced Metering Infrastructure System Communications Plan Consultant Agreement Amendment No. 1 Summary: The firm of Parker LePla has completed its initial scope of work by developing a Communications Plan to support the implementation of the Advanced Metering Infrastructure System. As requested by the Utility Advisory Committee in August, Parker LePla is now positioned to complete the remaining tasks by developing a companion Communications Plan for the Demand Response Pilot Project, as well as developing and implementing media materials for both plans. Recommendation: Forward a favorable recommendation to City Council to authorize the City Manager to sign Amendment No. 1 to the Agreement with Parker LePla in an amount not to exceed $69,801, and to make minor modifications to the agreement, if necessary. Background /Analysis: On August 17, 2010, City Council authorized the City Manager to sign a consultant agreement with Parker LePla in an amount up to $35,917 to perform necessary services to create a Communications Plan for the City's Advanced Metering Infrastructure (AMI) System. The Communications Plan includes developing customer (external) and staff (internal) education programs including informational messages that need to be shared prior to, during, and after the project. Based on input from the Utility Advisory Committee, development and implementation of needed media materials as part of the Communications Plan were deleted from the original agreement with Parker LePla. The needed media materials to support the demand response pilot project include recruitment materials, a website, customer surveys, and ancillary marketing materials. The needed media materials to support the AMI System include billing inserts, posters, and door hangers. The cost of developing and implementing media advertisements is included in the amended scope of work and the expenses have been included in the City's 2010 revised and 2011 proposed budgets. Staff has negotiated a $9,550 fee for developing the Residential DR Communications Plan, and a $15,450 fee for development and implementation of Residential DR media materials, for a total amount not to exceed $25,000. Grant funding in the amount of $25,000 will be provided by the BPA for the Residential Demand Response portion of the scope of work. Staff has also negotiated a $44,801 fee for developing and implementing AMI System media materials. N \UAC \Final \Communications Plan Consultant Agreement Amendment No 1 doc Advanced Metering Infrastructure System Communications Plan Consultant Agreement Amendment No. 1 November 9, 2010 Page 2 The table below summarizes the proposed amendment to the scope of work and fee for consulting services. COMMUNICATIONS PLAN SCOPE OF WORK ADDITION Cost Residential Demand Response Communications Plan Development $ 9,550 Communications Plan Subtotal $ 9,550 DEVELOPMENT & IMPLEMENTATION OF MEDIA MATERIALS SCOPE OF WORK ADDITION Cost 2010 AMI Media Materials $ 9,801 2011 AMI Media Materials $ 35,000 2011 Residential Demand Response Media Materials $15,450 Media Materials Not To Exceed Subtotal $60,251 Total $69,801 If City Council accepts the BPA Commercial and Industrial DR grant, a future amendment to the consultant agreement with Parker LePla will be necessary. Staff recommends that the Utility Advisory Committee forward a favorable recommendation to City Council to authorize the City Manager to sign Amendment No. 1 to the Agreement with Parker LePla in an amount not to exceed $69,801, and to make minor modifications to the agreement, if necessary. OJ NGELES W A S H I N G T O N , U.S.A. UTILITY ADVISORY COMMITTEE MEMO Date: November 9, 2010 To: Utility Advisory Committee From: Dan McKeen, Fire Chief Subject: Proposed Medic I Utility Rate Adjustments Summary: To reduce the size of future Medic I rate increases and to decrease the size of the General Fund contribution to the Medic 1 Utility, staff is proposing a 9% adjustment to the rates. This adjustment reflects a $0.39 increase for monthly residential rates and a $0.41 increase for monthly commercial/business rates. In addition, staff is proposing to extend its Medic I Utility rate discount programs to include multi- family facilities that provide subsidized housing to seniors, people with mental or physical disabilities and to people who are homeless. Recommendation: Forward a favorable recommendation to the City Council to: 1) Conduct a public hearing then provide a first reading of the proposed ordinance on November 16, 2010, and 2) Continue the public hearing on December 7, 2010, close the public hearing, then provide a second reading and adopt the proposed ordinance. Background /Analysis: The City of Port Angeles' Medic I program is structured as a utility — supported through an Enterprise Fund using transport charges, a monthly utility charge, and a General Fund contribution. The Enterprise Fund is based upon a cost of service approach, with the last cost of service study completed in 2009. As a result of the 2009 cost of service study, the monthly residential rate was adjusted in 2010 by $0.08 and the commercial/business monthly rate was adjusted by $0.19. This slight increase in rates was made possible through the one -time use of $76,000 from the Utility's operating reserves and was intended to soften the financial impact on customers from large rate increases during the current economic climate. Unfortunately, the use of reserves cannot continue to 2011. To avoid widening the gap between the Medic I Utility's expenses and the revenue received by the Utility, staff is recommending a 9% adjustment to the Utility's monthly fees for 2011. Even with this adjustment, it will be necessary to increase the General Fund contribution to support Medic I over the amount budgeted in 2010. Proposed Medic I Utility Rate Adjustments Page 2 November 9, 2010 The proposed adjustment reflects a $0.39 increase for monthly residential rates and a $0.41 increase for monthly commercial /business rates. The amount of the proposed increase for high demand user classifications, such as nursing homes and assisted living facilities, depends upon their user classification. As costs for basic needs increase, many low -wage and fixed- income households rely on programs that provide discounted utility costs just to make ends meet. The City of Port Angeles provides such utility discount programs, with many qualifying households participating. The City's Medic I utility is part of this program. In addition, households that are Medicaid eligible and receive in -home services can receive a Medic I Utility fee exemption under a separate program. Multi- family facilities that provide subsidized housing to seniors, people with mental or physical disabilities and to people who are homeless; clearly meet the intent of providing a Medic I Utility fee discount. Because some of these facilities are served by a single utility connection, they fall outside of the Medic I rate discount programs. Staff is proposing to provide these facilities with a 30% reduction in their monthly Medic I Utility rates. This discount would assist these facilities in meeting their basic financial obligations and would have little impact on the utility as there are a limited number of qualifying facilities. Attachment: Proposed Ordinance N \UAC \Final \Medic 1 Rate Study doc Legal Dept. Draft 41; 11.01 10 AN ORDINANCE of the City of Port Angeles, Washington, revising Chapter 13.73 of the Port Angeles Municipal Code relating to Medic 1 Charges. THE CITY COUNCIL OF THE CITY OF PORT ANGELES DO HEREBY ORDAIN AS FOLLOWS: Section 1. Ordinance 3215, as amended, and Chapter 13.73 of the Port Angeles Municipal Code are hereby amended by amending section 13.73.300 and Exhibit A PAMC to read as follows: PART C - FEES 13.73.300 Utility Rate Setting. ORDINANCE NO. A. Fee Formula. A monthly service fee for the operation of the Utility shall be established from time to time by ordinance of the City Council in conformity with RCW 35.21.766. The amount of the fee shall be based upon cost of regulating ambulance service and the cost of providing Medic I as determined by a cost -of- service study done pursuant to RCW 35.21.766(3). Those costs, after transport charges and the general fund contribution, shall be divided among Port Angeles residents and occupants based on a combined demand and availability calculation consistent with accepted principles of utility rate setting. The rate attributable to costs for availability of the Utility shall be uniformly applied across user classifications within the Utility. The rate attributable to costs for demand services of the Utility shall be established and billed to each utility user classification based on each user classification's burden on the Utility. The fee charged by the Utility shall reflect a combination of the availability cost and the demand cost. The resulting fee shall be assessed to identifiable use classifications. Fees will not exceed the revenue requirements to cover the costs of the Utility, as authorized by the City Council by adoption of an annual budget and subsequent amendments. Legal Dept Draft # 1; 11.01.10 B. Classifications. The monthly service fee shall be collected from each of the following utility user classifications: 1. Residential. 2. Adult family homes. 3. Assisted living facilities 4. 24 -Hour nursing facilities 5. Group homes 6. Jail facilities '7. Schools 8. Commercial/Business 9. City public areas The owner or occupant of each unit in such classifications shall be responsible for payment of this utility fee for the availability and use of ambulance services. C. Service Fee Exemptions/Reductions. 1. All vacant, unoccupied parcels are exempt from the Utility fee. 2. Utility customers shall be eligible for the City's Senior and Disabled Low Income Discount pursuant to PAMC chapter 13.20. 3. Any change in use of a parcel or any other change in circumstance that eliminates application of an exemption from the service fee shall immediately make the affected property subject to applicable service fees. The service fee shall become due and payable as of the date of the change in use and shall continue until the parcel again meets exemption requirements. 4. Monthly rates shall not be prorated. Initial and final charges may be prorated in accordance with the City's standard utility proration practices. 5. Any customer seeking an exemption from payment of the service fee and/or conversion from covered to exempt status, must file a written petition with the Finance Director seeking a determination as to whether a specific parcel satisfies the exemption requirements set forth in this section. 6. The combined rates charged shall reflect an exemption for persons who are medicaid eligible and who reside in a nursing facility, boarding home, adult family home, or receive in -home services. 7. The combined rates charged may reflect an exemption or reduction for designated classes consistent with Article VIII, Section 7 of the state Constitution. 8. The amounts of exemption or reduction shall be a general expense of the Utility, and designated as an availability cost, to be spread uniformly across the Utility user classifications. 9. Multiple residential units that are served by a single utility connection shall be given the option of (1) paying the utility fees for the units as a single combined amount or (2) charging an monthly fee to each unit occupant. Those that select the first option shall be entitled to a rate adjustment based on average occupancy, and shall receive a 25% reduction from the utility fees calculated pursuant to Section 13.73.400. 10. Federal or state subsidized multi - family housing complexes that are served by a single utility connection shall receive a 30% reduction in the combined rates charged from the utility fees calculated pursuant to Section 13.73.400. For purposes of the preceding sentence. -2_ Legal Dept Draft #1; 11 01.10 subsidized housing means housing provided to people who are categorized (11 as low - income and Mare 65 years of age. or have mental or physical disabilities or who without the subsidized housing. would be homeless. D. Periodic Service Fee Review. The City Manager or his /her designee will periodically perform financial review and analysis of the Utility's revenues, expenses, indebtedness, fees and accounting, and recommend budgets, fee adjustments and financial policy. Based on such review, the City Manager or his designee shall recommend changes, amendments or additions for adoption by the City Council. E. The total revenue generated by the rates and charges shall not exceed the total costs necessary to regulate, operate, and maintain an ambulance utility. Section 2. Ordinance 3215, as amended, and Chapter 13.73 of the Port Angeles Municipal Code are hereby amended by amending Section 13.73.400 and Exhibit A PAMC to read as follows: PART D 13.73.400 Charges Established. In accordance with the rate study presented to the City Council, effective January 4, 2010 the base rates and fees for the Utility shall be as follows: User Classification Residential Adult family homes* Assisted living facilities* 24 -Hour nursing facilities* Group homes* Jail facilities* Schools* Commercial/Business City public areas Rate $52.20 per year, per unit $852.00 per year, per classification $12,574.00 per year, per classification $6,184.00 per year, per classification $1,936.00 per year, per classification $1,290.00 per year, per classification $2,031.00 per year, per classification $54.93 per year, per unit $12,947.00 per year, per classification * Rates for individual facilities do not include allowable exemptions and vary based upon their percentage of use within that classification. For individual facility rates, with allowable exemptions, see Exhibit A. * Effective January 1. 2011. the 2010 individual rates established by section 13.73.400 and determined by Exhibit A. shall be increased by nine (9) percent. Legal Dept. Draft ill, 11.01 10 Section 3 - Severability. If any provisions of this Ordinance or its applications to any person or circumstances is held to be invalid, the remainder of the Ordinance or application of the provisions of the Ordinance to other persons or circumstances is not affected. Section 4 - Corrections. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of the scrivener' s /clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto. Section 5 - Effective Date. This ordinance, being an exercise of a power specifically delegated to the City legislative body, is not subject to referendum. This ordinance shall take effect January 1, 2011. PASSED by the City Council of the City of Port Angeles at a regular meeting of said Council held on the day of , 2010. ATTEST: Janessa Hurd, City Clerk PUBLISHED• . 2010 By Summary Dan Di Guilio, Mayor APPROVED AS TO FORM: William E. Bloor, City Attorney G \LEGAL1a ORDNANCES &RESOLUTIONSSORDINANCES 2010120 - Medic. 1 Uubty Rates.Chapter 13 102S10.wpd (November I. 2010) 24 -Hour Nursing Facility Crestwood 1116 E Lauridsen Blvd Group Homes 2nd Street House 138W2n Clallam County Hostelries 1132 Hazel Serenity House 2321W18 Adult Family Homes Home Away. From Home 1319 W 16" Olympic RN Adult Family 1725 W 11' Good Shepherds Haven 2314 S Lincoln Assisted Living Laurel Park 1 133 6 Park Avenue Park View Villa 1435 & 1445 Park View Ln Peninsula Manor 1017 W t7 St. Andrews Place 520 East Park Avenue Medic 1 Utility 2011 Annual Fees Exhibit A Amount Annual Fee After 2011 Facility Base Rate Utilization Before % of Exemption After Availability 2010 gala Exemption Exemption Amount Exemption Adjustment Annual Fee Adjustment $6,184 100% $6,184 60% $3,710 $2.474 $1 $2.475 $2,698 $1.936 15.2% $294 98% $288 $6 $1 $7 $8 $1,936 21.7% $420 100% $420 $0 N/A $0 0 51,936 63.1% $1,222 29% 1 $354 $868 $1 $869 $947 $852 58.3% $497 40% $199 $298 ! $1 $299 $326 $852 29.2% $249 0% $0 $249 $1 $250 $273 $852 12.5% $106 0% $0 $106 $1 $107 $117 1 $12,574 21.0% 1 $2,641 16% $423 $2,218 $1 $2,219 $2,419 $12,574 43.4% $5,457 0% $0 $5,457 $1 $5,458 $5,949 $12,574 5.8% $729 50% $365 $364 $1 $365 $398 $12,574 29.8% $3,747 63.57% $2,382 $1,365 $1 $1,366 $1,489 Facility Base Rate Jail Facilities Clallam County Adult 223 E 4' Clallam County Juvenile 1912 W 18 Schools Lincoln School 924 W 9' Franklin Middle School 2505 S Washington Hamilton Middle School 1822 W 7 Jefferson Middle School 218 West 12 Peninsula College 1502 E Lauridsen Port Angeles High School 304 East Park Avenue Queen of Angels 209 W 11' Stevens Middle School 1 139 W 14th $2,031 $2,031 $2,031 $2,031 $2,031 $2,031 $2,031 $2,03 I Utilization % Amount 1 Before E xemption of Exemption Exemption Amount $1,290 71% $916 N/A N/A $916 $1 $917 $1,000 51,290 29% $374 N/A N/A $374 $1 $375 $409 4.3% $87 NIA N/A $87 $ 1 $88 $96 2.1% $43 N/A N/A $43 $1 $54.93 $59.87 6.4% $130 N/A N/A $130 $1 $131 $143 2.1% $43 N/A N/A $43 $1 $54.93' $59.87' 14.9% $303 N/A N/A $303 $1 $304 $331 34.1% $692 N/A N/A $692 $1 $693 $755 10.6% $215 N/A N/A $215 $1 $216 $235 25.5% $518 N/A N/A $518 $1 $519 $566 1 High demand user classifications that do not qualify for an exemption cannot have a per -unit fee less than that of the commercial /business classification. 2 Annual Fee After Exemption Availability I 2010 Adjustment 1 Annual Fee After 2011 9% Adjustment Facility Gerald Austin Apartments 1305 E 1st Bayview Apartments 306 W 1st 8th Street Apartments 615 W 8th Housing Authority Apart 323 East 2nd Housing Authority Apart 401 E 5th Morning Glory Apartments 529 E 1st Rozelle Apartments 212W3rd Jean Tyson Apartments 405 E Front Uptown Apartments 120 S Laurel Street Tempest Apartments 112 N Albert Street Apartment Buildings with Single Utility Connection Fee After Combined Base Rate Average Vacancy Vacancy 25% Billing Fee After 25% Availability 2010 After 2011 Vacancy Amount Exemption Adjustment Adjustment Adjustment Annual Fee P Adjustment Adjustment $1,337 20% $267 51,070 $268 $802 $29 $831 $906 $617 18% $111 $506 $127 $379 $13 $392 $427 $411 40% $164 $247 $62 $185 $9 $194 $211 $3,600 2.02% $73 $3,527 $882 $2,645 $77 $2,722 $2,967 $2,057 0% $0 $2,057 $514 $1,543 $44 $1,587 $1,730 2 $463 0% $0 $463 $116 $347 $10 $357 $389 $514 0% $0 $514 $129 $385 $11 $396 $432 $206 0% $0 $206 $52 $154 $4 $158 $172 $309 0% $0 $309 $77 $232 � $7 $239 $26 $669 0% $0 $669 $167 $502 $14 $516 $562 1 Less 30% subsidized housing adjustment of $890 for a final 2011 annual fee of $2,077 2 Less 30% subsidized housing adjustment of $519 for a final 2011 annual fee of $1,211 3 Less 30% subsidized housing adjustment of $169 for a final 2011 annual fee of $393 3 p ORTANGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Michael Puntenney, P.E., City Engineer Subject: Consultant Agreement: Combined Sewer Overflow Phase I, Constructability Review Summary: The City has committed to completing the Phase 1 Combined Sewer Overflow (CSO) Project by the end of 2013. The complexity of this project is extensive in both its technical requirements as well as the interdependencies that exist between the multiple organizations that will be involved during construction. Presently the City has received Brown and Caldwell's 90% design sub'mission. A constructability review of the design at this stage is an indispensable step for a project of this complexity. Recommendation: Forward a favorable recommendation to City Council to authorize the City Manager to sign a consultant agreement for a constructability review for the Combined Sewer Overflow Phase 1 project design. Background /Analysis: The City has committed to completing the Phase 1 Combined Sewer Overflow Project by the end of 2013. The complexity of this project is extensive in both its technical requirements as well as the interdependencies that exist between the multiple organizations that will be involved during construction. This first phase of the CSO project includes a gravity sewer main, two new force mains to convey flow from pump station #4, flow diversion facilities, various plant improvements and conversion of an existing industrial high capacity outfall to relocate discharges to a location outside of Port Angeles Harbor. The project goes through the Rayonier industrial site including areas of potential contaminated soil with Model Toxics Control Act (MTCA) cleanup requirements as well as archaeological aspects. With a construction budget in the range of $20M - $25M, the City will have a large investment at stake. Presently the City has received Brown and Caldwell's 90% design submission. A constructability review of the design at this stage by an independent third party is an indispensable step for a project of this complexity. Constructability reviews for projects of this nature are performed to lower construction costs by reducing the risk of change orders and to avoid unnecessary delays during construction. Industry -wide, the expected savings from constructability reviews varies from design to design, but typically reduces change order costs by at least five times the amount invested in the review, and in some case studies the return on investment has been 25 fold. N \UAC \Final \CSO Constructability Review doc Consultant Agreement: Combined Sewer Overflow Phase I, Constructability Review November 9, 2010 Page 2 of 2 Typical benefits of a constructability review include: • Reduced quantity of change orders and savings in contingency funds • Reduced Requests for Information (RFI's), saving time and the cost of processing • Improved ability to keep projects on schedule • Reduced contract administrative costs • Improved relationships between the owner, designer, contractor, and regulators The City is on a very tight timeline to effect the sale of the Rayonier property, obtain State sponsored loans, complete the design effort, obtain permitting, and advertise the construction project by summer 2011. To maintain the schedule, it is imperative that this constructability review be completed by mid - December 2010. Consequently, the consultant agreement for this constructability review is needed by mid - November. Staff has advertised for Statements of Qualification (SOQs) in the Seattle Daily Journal of Commerce and the Peninsula Daily News, with receipt of SOQs on November 5, 2010. The schedule for this effort is as follows: • Nov 5 Open proposals • Nov 9 Recommendation to UAC, and negotiate contract • Nov 16 Council approval to sign contract • Nov 17 Notice to Proceed • Dec 17 Recommendations to Brown and Caldwell • Jan 20 Final Design Submission • Feb 5 Final Review Complete • Feb 15 Final Design Signed and Issued Results of the evaluation of the SOQs has not been completed as of the authoring of this memorandum. An updated version of this memorandum will be provided at today's meeting. CITY OF FPORT NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Phil Lusk, Power Resources Manager Subject: Bonneville Power Administration Commercial & Industrial Demand Response Grant Acceptance Summary: A proposal was submitted in September to the Bonneville Power Administration for a Commercial and Industrial Demand Response Pilot Project and an award in an amount not to exceed $384,520 was offered to the City. Recommendation: Forward a favorable recommendation to City Council to authorize the City Manager to sign an agreement with the Bonneville Power Administration for up to $384,520 for the City's Commercial and Industrial Demand Response Pilot Project, and make minor modifications to the agreement, if necessary. Background /Analysis: Demand response (DR) is a practice that cycles or shuts down customer equipment during peak electric utility demand events to reduce Bonneville Power Administration (BPA) wholesale demand charges. At its simplest, DR uses a device to briefly curtail the power supplied to major appliances, equipment loads, or space conditioning units. Peak demand is measured as the maximum rate of energy consumed during one hour within heavy load hours (6am to 10pm Monday through Saturday) each month. Although DR is not a new practice for electric utilities across the nation, it has not been used by most electric utilities buying power from the BPA due to low peak demand rates. However, beginning October 1, 2011, the primary opportunity for the City to reduce its wholesale power costs under BPA's new wholesale Tiered Rate Methodology (TRM) will be to manage its peak demand. While there are many unresolved details, peak demand management may be able to reduce the City's TRM wholesale power costs by as much as $3 million annually ($1.6 million distribution system; $1.4 million industrial transmission system). Earlier this year, the Utility Advisory Committee supported and City Council approved the submission of a proposal to the BPA to participate in its Funding Opportunity for Commercial and Industrial (C &I) Demand Response (DR) Pilot Projects. The City submitted a proposal, and the BPA issued a formal notification of its intent to award an agreement to the City, with the BPA cost -share not to exceed $384,520. Staff has been advised that the BPA is still deliberating whether to use a Cooperative Agreement or a Memorandum of Understanding as the contracting instrument to be used for the award. N \UAC\Final \BPA C &1 DR Grant Acceptance doc BPA Commercial and Industrial Demand Response Agreement November 9, 2010 Page 2 While a number of key commercial and industrial accounts will participate in the pilot, staff is particularly pleased with one element of the award that would allow The Landing Mall to install a Catalyst Energy Technologies (CET) intelligent energy storage package referred to as Smart Storage KitsTM (SSK). The SSK is intended for load shaping, added reliability, and for reducing generator fuel consumption in off -grid applications. CET, a Port Angeles -based company, has established relationships with key component providers, tested relevant key technologies, installed pilot systems, conducted marketing studies and is developing a utility -grade SSK in sizes from 4- kW to 50 -kW. The first lithium -ion (LI) battery test was successfully completed in mid - September 2010 and the next development stage is installing a 48 -kW SSK in a controlled, commercial application. While the exact amount of funding may be reduced, the City's proposal requested a total of $384,520 from BPA. Of this amount, a total of $333,920 in BPA funds is currently programmed for DR equipment and customer incentives. As with the Residential DR Pilot Project, EES Consulting, Inc. (EESC) will assist the City by performing the economic evaluation of the cost - effectiveness of C &I DR and other technical project - related support services. At the conclusion of its evaluation, EESC will provide the City and BPA with a final report describing the data input, the economic analysis and resulting cost - effectiveness of the C &I DR strategies evaluated. This final report will provide the information required to determine if a full -scale deployment of C &I DR is warranted. The EESC contractual services will not exceed a total of $40,600, with a 100% cost share to be provided by the BPA. The economic and technical services are important to BPA because they plan to use the final report as part of its decision making for future programs. Similar to the efforts on the AMI System and Residential DR Pilot Project, the C &I DR project will include the development of a communications plan for the City's C &I customers using the consulting firm of Parker LePla, whose contractual services will not exceed a total of $10,000, with a 100% cost share to be provided by the BPA. Staff plans to be propose amendments to the consulting agreements for EES Consulting and Parker LePla for the C &I DR project at a future Utility Advisory Committee meeting. Staff requests that the Utility Advisory Committee forward a favorable recommendation to City Council to authorize the City Manager to sign an agreement with the Bonneville Power Administration for up to $384,520 for the City's Commercial and Industrial Demand Response Pilot Project, and make minor modifications to the agreement, if necessary. Attachments: C &I DR Narrative Proposal COMMERCIAL AND INDUSTRIAL DEMAND RESPONSE PILOT SUBMITTED BY: CITY OF PORT ANGELES, WASHINGTON u• PORT A 4 :40,4 4p s ie li f grik SUBMITTED TO: U.S. DEPARTMENT OF ENERGY BONNEVILLE POWER ADMINISTRATION SEPTEMBER 30, 2010 City of Port Angeles Commercial and Industrial DR Pilot Projects TABLE OF CONTENTS 1. PROJECT DESCRIPTION 1 1.1 GENERAL DESCRIPTION 1 1.2 PROJECT RATIONALE 1 1.3 GOALS AND OBJECTIVES 2 1.4 END -USER IMPACT 2 1.5 INCENTIVE 3 1.6 PERSISTENCE OF ASSETS 3 2. PROPOSED TECHNOLOGY 3 3. EXPECTED IMPACT TO CAPACITY 4 4. READINESS 4 5. TASKS 4 5.1 TASK 1- ADMINISTRATION 5 5.2 TASK 2 - DEVELOPMENT OF DEMAND RESPONSE PROTOCOL 5 5.3 TASK 3 - DEMAND RESPONSE EQUIPMENT TESTING 5 5.4 TASK 4 - ECONOMIC EVALUATION 11 6. PROJECT TIMELINE 11 7. MEASUREMENT AND VERIFICATION 12 8. CHALLENGES 12 9. KEY PERSONNEL 12 9.1 THE CITY OF PORT ANGELES 13 9.2 EES CONSULTING 14 9.3 CAPACITY PROVISIONING, INC. 14 9.4 AMI SYSTEM VENDOR 15 10. BUDGET 15 ATTACHMENT A- RESUMES ATTACHMENT B - PROPOSED BUDGET ATTACHMENT C- BUDGET JUSTIFICATION NARRATIVE ATTACHMENT D- LETTERS OF SUPPORT AND CITY COUNCIL APPROVALS September 30, 2010 Pagel City of Port Angeles Commercial and Industrial DR Pilot Projects LIST OF TABLES TABLE NO. TITLE 3 -1 MAXIMUM DEMAND REDUCTION 5 -1 INTEGRATED LOAD MANAGEMENT RESOURCES 5 -2 INTEGRATED LOAD MANAGEMENT SUMMARY 5 -3 FAST DR / RENEWABLE ENERGY INTEGRATION SUMMARY 5 -4 DIRECT LOAD CONTROL SUMMARY 6 -1 PROJECT TIMELINE PAGE No. 4 6 7 8 9 11 LIST OF FIGURES FIGURE NO. TITLE PAGE No. 9 -1 PROPOSED PROJECT TEAM ORGANIZATION CHART 12 September 30, 2010 Page it City of Port Angeles Commercial and Industrial DR Pilot Projects 1. PROJECT DESCRIPTION 1.1 GENERAL DESCRIPTION This proposal is submitted in response to the Project Implementation Plan issued by the Bonneville Power Administration (BPA) and Global Energy Partners, LLC (Global) for Commercial and Industrial (C &I) Demand Response (DR) Pilot Projects. The City's Utility Advisory Committee (UAC) and City Council authorized the submission of this proposal during July 2010. The proposed pilot project will fulfill all key goals that have been identified as regional focus areas. These focus areas are: 1) Integrating renewable into grid; 2) Managing winter peaks; 3) Handling grid disruptions, and; 4) Integrating energy efficiency and DR activities. The City of Port Angeles (City) is actively involved in upgrading its electric utility with an Advanced Metering Infrastructure (AMI) system with smart meters capable of incorporating rate designs to mimic BPA's forthcoming wholesale power Tiered Rate Methodology (TRM). If this pilot project is selected for funding by BPA, the City will purchase and install DR equipment at selected C &I facilities and integrate BPA and City load data via a fiber optic network. Once the pilot DR equipment is operational, the City will collect qualitative and quantitative data for a maximum of 15 months. The pilot project will conclude with the submission of a report that, based on load and survey data, will evaluate the cost - effectiveness of DR and the City's C &I customer's acceptance of DR technologies, including lessons learned during the test period. As a result, the City is uniquely positioned to be able to assist the BPA in achieving its objectives for the C &I Pilot Project, with the overarching objective to identify and implement practical DR pilots in the C &I sectors. The City supports BPA's vision that experiences from these pilots will be used to broaden the DR knowledge base in the Pacific Northwest and that findings from these pilots will ultimately be shared in some form with regional participants. Specific priorities for reaching these objectives in the City's proposal include: 1) Ensure stakeholder involvement and a transparent project implementation process; 2) Identifying, preparing, and securing viable pilot participants; 3) Demonstrating the technical feasibility of DR pilots that have not been proven elsewhere; 4) Successfully demonstrating how DR can facilitate grid integration of intermittent renewable resources, especially wind, to address generation variability; 5) Demonstrating load shifting strategies in combination with load curtailment that result in shifting peak period loads to off -peak hours, along with load reduction during peak periods; 6) Building customer success with DR, and; 7) Demonstrating solutions that can be scaled up and applied elsewhere. 1.2 PROJECT RATIONALE The City, located on the Northern Olympic Peninsula in Washington State, is an ideal location for C &I DR technologies because the peninsula is presently served by a capacity- constrained, single -feed radial transmission system. The area has experienced significant population growth and it is projected that power- transmission capacity in the region may be inadequate to supply demand during extremely cold winter conditions'. The development of wide -scale C &I DR options has the potential to benefit the City and the region in avoiding costly transmission upgrades and lowering wholesale power supply costs. Transmission issues may be further exacerbated by the Elwha Ecosystem Restoration Project, which is the second - largest ecosystem restoration project in the history of the National Park Service after the Everglades. This federal project will consist of removing two dams, the Glines and Elwha, and their reservoirs from the Elwha River, which is expected to begin in 2011. Together, these two dams generate 2 Pacific Northwest National Laboratory, Pacific Northwest Grid Wise Testhed Demonstration Protects. Part 1 Olvmoic Peninsula Protect, DOE Contract Number DE- ACO5- 76RL01830, October 2007 September 30, 2010 Page 1 City of Port Angeles Commercial and Industrial DR Pilot Projects over 28 megawatts of electricity and are the only significant sources for power generation on the Northern Olympic Peninsula. Their removal may create further challenges as power balancing between distant generation sources and local demand for the City and the BPA. In 2010 and 2011, Port Angeles will purchase and install a new AMI system, including electric and water meters for nearly all of its utility customers, and will develop a robust two -way communications system and integrate it with the City's existing fiber -optic network. This project also includes an initial investigation of "Smart Grid" applications such as distribution automation, peak load management and DR, and business area networks. A key deliverable for the AMI system will be its flexibility to interface with the electric utility's Supervisory Control and Data Acquisition (SCADA) System to control DR events and the City's substation Voltage Optimization (VO) system. In preparing for the shift to the BPA's TRM for wholesale power purchases effective October 1, 2011, the City has conducted an assessment to evaluate methods to equitably allocate the BPA wholesale TRM power costs to customer rate classes (e.g., residential, commercial, etc.), develop retail rate design options for each rate class based on the shift to BPA wholesale TRM power costs, evaluate cash reserve needs, and develop a capital financing strategy. The most advantageous retail rate design to respond to BPA's wholesale TRM was found to be a seasonal Time -of -Use (TOU) rate with a demand charge, which was approved by City Council on August 17, 2010, and will become effective on January 1, 2012. This recommended rate design for all customer classes, similar to the City's current Municipal Water Pump rate design and an optional TOU rate schedule that has been available to all City electric utility customers since 2007, will also feature an inclining block demand rate. As a result, future DR programs for all customer classes are planned to incentivize customer's to avoid exceeding their contract demand quantity (CDQ), to help maintain similar load shape to BPA, and to help mitigate critical peak periods 1.3 GOALS AND OBJECTIVES In addition to the regional goals noted above, the City has two primary project goals. In anticipation of the change to the TRM, the first project goal is to demonstrate the ability to mitigate the City's critical peak demand period in order to meet the following objectives: • Delay or eliminate regional transmission system upgrades • Reduce the City's peak demand above its assigned CDQ • Reduce wholesale power supply costs to the City's electric utility customers. The second project goal is to work with BPA to reduce demand on BPA's transmission system. This proposal includes implementing the Open Automated Demand Response Communication Standards (OpenADR) communications protocol between BPA and the City so that BPA is able to take advantage of the identified automated and dispatchable DR resources. 1.4 END -USER IMPACT The City, along with Global, approached more than 20 of the City's largest customers regarding their participation in the C &I DR Pilot Project. The City will move forward at this time with DR pilot projects with nine of the City's largest C &I customers and another 250 commercial customers. Following the implementation of the pilot project, these DR efforts will be expanded to include other City C &I customers as will be further detailed below. For this pilot project, the City expects to achieve an initial overall peak reduction of 1.98 MW as outlined in Table 3 -1 below. The City is also proposing a dispatchable DR component to the pilot project that would allow BPA to control its peaks for both generation and transmission systems serving Port Angeles. z The City's electric utility's non - coincident peaks in the winter month have a greater than 90% probability of occurring between 6 00 a m and 10 00 a m For the purposes of the proposal, this time period will be referred to as the City's "critical peak " September 30, 2010 Page 2 City of Port Angeles Commercial and Industrial DR Pilot Projects 1.5 INCENTIVE As previously noted, the City is in the process of implementing demand rates for all customer classes. At a minimum, the City's future demand rate will be set at BPA's wholesale rate to the City (the current indicative rate is estimated to be $8.50/kW). Project participants will have to be able to consistently reduce their monthly demand to maintain cost savings through lower retail demand costs on their utility bill. For the City's C &I customers scheduled to participate in the Integrated Load Management project component, incentives are based upon a "mock" market concept that has a rate adder during the DR event plus an equipment incentive. The "mock" market concept would not really penalize for not shedding, but post -event information will be used to educate customers about the increased costs they would incur for not reducing load. Using this "mock" market model, the city proposes using a hypothetical rate adder in calendar year 2011 of up to $5.00/kW (in addition to current demand rates that vary by rate class) during scheduled DR events. 1.6 PERSISTENCE OF ASSETS The City intends to continue to use the pilot project assets following the pilot project's completion. The City anticipates expanding this pilot project to include offering all C &I customers DR opportunities as it strives to avoid exceeding its anticipated CDQ, to better match BPA's load shape and to minimize its use of BPA's capacity constrained transmission system. Minor extensions of the City's fiber optic network will be completed by Capacity Provisioning, Inc, which will be continued after pilot project completion. 2. PROPOSED TECHNOLOGY The City is in the process of selecting a vendor for the purchase and installation of a turnkey AMI system for its electric, water and wastewater utilities. The AMI system vendor will provide and install the DR equipment proposed for this pilot project, some of which will directly interface to the City's electric utility SCADA system. The City is planning to use the following technologies: • OpenADR communications infrastructure • Client devices to accept OpenADR resources • Metering (if required) • System level network controllers • Load control switches • In- business displays • Smart thermostats • Data presentment OpenADR communications infrastructure will consist of poly -phase and CT metered customers that will receive DR signals directly from the City's SCADA system. OpenADR specifications will be essential to ensure interoperability among technical components with open standard, platform- independent and transparent end -to -end technologies or software systems. The design of the pilot will consider the applicability of these technologies to specific industries or customer segments. OpenADR allows customers to choose their level of response and how to enable DR strategies. OpenADR communications will increase the number of facilities that participate in DR and eventually lead to reduced cost to frequent participation in DR events. September 30, 2010 Page 3 City of Port Angeles 3. EXPECTED IMPACT TO CAPACITY As outlined in Table 3 -1, the C &I DR Pilot Project proposed by the City is expected to achieve a maximum peak reduction of 1.98 MW each month. As a matter of scale, this represents the potential ability to reduce the City's critical peak by about 1.5 %. Because the City does not have access to natural gas, it is feasible to expand this DR pilot project to nearly all C &I customers to varying degrees with the expectation that a mature C &I DR program might have up to a 50% market penetration among the eligible customers. As will be further explained, dispatchable DR could add even a greater potential. Task 3.1 — Integrated Load Management Task 3.2 — Fast DR/RE Integration Task 3.3 — Direct Load Control TOTAL Commercial and Industrial DR Pilot Projects Maximum Load Shed (kW) 1,842.25 48.00 89.04 1,979.29 4. READINESS The City is in the process of selecting an AMI system vendor, and has completed its initial review and interviews of the responding vendors. The procurement process includes recommendation of the preferred vendor to the Utility Advisory Committee (UAC). The UAC reviews all major projects and issues affecting the City's utilities and makes recommendations to the City Council. The UAC is composed of three City Council members, a representative from the industrial rate class and a representative from the residential /commercial rate classes. The UAC meets monthly and the meetings are open to the public. The City Council approved the issuance of a revenue bond that provides funding for the AMI system. The City expects to issue the AMI system vendor contract in November 2010. The selected AMI vendor is required to install a "Phase 1" of the AMI system in conjunction with the BPA- sponsored residential pilot DR equipment by March 2011, which will consist of the 600 AMI systems to be in support of the residential DR pilot project. The complete balance of AMI system will be scheduled for completion in the spring of 2011. As will be further detailed, the AMI system can include ZigBee® as an integral part of the electric meter for approximately 500 commercial general service customers. ZigBee functionality may only be available for electric meter forms 1S, 2S and 12S, as around 500 other commercial meters may not be functional with ZigBee. Among other measures, the C &I DR Pilot Project includes installing equipment on the C &I customer side of the electric meter to manage energy use and demand. Further, the City has staff available for the administration of the C &I DR Pilot Project as outlined later in this proposal. 5. TASKS The purpose of the proposed pilot project is to implement a C &I DR effort aimed at reducing the City's critical peak demand. The following tasks accomplish this goal on a pilot scale that can easily be expanded to the City's remaining C &I customers. September 30, 2010 Page 4 City of Port Angeles Commercial and Industrial DR Pilot Projects 5. 1 TASK 1- ADMINISTRATION The City will provide the overall coordination of the DR pilot project. The City will coordinate all vendor installation schedules with its electric utility customers. - The City will administer the day to day tasks, including the following: • Contractual agreements, if necessary, with customers to participate in the pilot project • Communicate with customer participants o Onsite training o Notify customers of DR events o Resolve customer issues • Collect and compile metering data for evaluation task • Prepare regular status reports to BPA 5.2 TASK 2 - DEVELOPMENT OF DEMAND RESPONSE PROTOCOL The City also proposes to acquire BPA's load - balancing signal and transmit that information via the fiber optic network in real -time to the pilot participants, along with real -time information regarding the City's distribution system load, through its SCADA system. In general, the City is interested in scheduling a total of four DR events with durations not expected to exceed two hours. Events will be categorized according to the City's system characteristics, but they will likely occur during the winter heating season. The specific frequency and time period for the events will be further defined in conjunction with the BPA and the pilot project participants. There is also an opportunity for the BPA to schedule DR events that can be determined upon project award. Task 2 includes developing load reduction strategies for each participating customer, depending on available resources. Different protocol may be designed based on curtailment event. Two types of DR resources will be evaluated in each protocol. For customers where integrated load management is possible, DR resources will consist of process rescheduling and /or voluntary load curtailment. For customers where direct load control is appropriate, end -use will be curtailed using DR controllers. 5.3 TASK 3 - DEMAND RESPONSE EQUIPMENT TESTING Under this task, the City will implement specific DR pilot projects at selected facilities. These DR pilot projects can be divided into three categories: • Integrated Load Management ✓ Nippon Paper Industries: Equipment shutdown during critical peak periods. ✓ Olympic Medical Center: Equipment shutdown and possible use of an alternate boiler fuel during critical peak periods. ✓ Port Angeles Hardwood: Equipment shutdown during critical peak periods, combined with a start-up time delay to provide load- shifting during morning hours. ✓ City of Port Angeles Water Treatment Plant: Reschedule backwash operation to non -peak periods. • Fast DR/Renewable Energy Integration ✓ Catalyst Energy Technologies: Incorporate an intelligent energy storage package referred to as a Smart Storage Kit on the customer's side of the meter at The Landing Mall. The Landing Mall, located on the downtown waterfront, is home to 18 groups and businesses. Among others, these September 30, 2010 Page 5 City of Port Angeles Commercial and Industrial DR Pilot Projects include three restaurants, two art galleries, the National Oceanic and Atmospheric Administration, and the Chamber of Commerce. • Direct Load Control ✓ North Olympic Library System: Heating, ventilation and air conditioning (HVAC) set point change during the critical peak period. ✓ Clallam County Courthouse: Direct load control of two boilers and a freezer used for food storage. ✓ Clallam County Housing Authority: Direct load control of domestic hot water supply provided by electric water heaters. ✓ City of Port Angeles: Direct load control of electric water heaters, boilers, heat pumps, air conditioners, and refrigeration in several buildings. To ensure that the DR impacts can be captured over two heating seasons, data will be collected for a maximum 15 -month period beginning January 1, 2011 and ending March 31, 2012. Pilot project details follow. TASK 3.1 — INTEGRATED LOAD MANAGEMENT City C &I customers may enter into contracts with the City, or otherwise agree to curtail load by a pre - specified amount (e.g., full /partial shutdown) during a DR event. This, combined with load shifting (e.g., rescheduling operations) provides for an integrated load management DR pilot project. Table 5 -1 below summarizes the integrated load management resources identified for the C &I Pilot Project. ,Table5-1. - , ., vailable`; In' t e�rated Loadna�emenf,Resou'rces..;, Fully OpenADR Day -Ahead Notice Rescheduling Curtailment Automated Nippon Paper Industries I I X I X I I X PA Hardwood I X I X I X I I X Olympic Medical Center I X I X I X I I X PA Water Treatment Plant I X I X I X I X I X The integrated load management pilot projects in this subtask are further described below. Table 5 -2 illustrates the potential demand reduction capable at each customer's facility, such as the current potential demand reduction from a complete plant shutdown during a critical peak period or rescheduling the backwash process to a period other than a critical peak period at the water treatment facility. As detailed below, the maximum potential load shed from the integrated load management pilot projects is 1.84 MW. Nippon Paper Industries, USA Co., Ltd is equipped with an individual custom load controller. Programmable logic controllers (PLC) can be added and programmed to include automatic shut down. Port Angeles Hardwood is equipped with Allen Bradley PLC's that are networked and provide complete plant visibility from an operator console. Logic can be added to the controllers to include automated shutdown. Olympic Medical Center is equipped with a Siemens Direct Digital Control (DDC) system; a DR strategy can be integrated into the Siemens DDC system to reset supply air temperatures for a specified air - handling unit. The Pilot Project would decrease supply air temperature in the winter and increase September 30, 2010 Page 6 City of Port Angeles supply air temperature in the summer. The Olympic Medical Center also uses two electric boilers that are manually operated, and with advance notice the electric boilers could be cycled off. City of Port Angeles Water Treatment Plant is a new facility equipped with a fully- automated control system. The facility operates a backwash cycle that is staggered during a week. The cycle includes a 15 minute process per filter for six filters. This process might be rescheduled to avoid a critical peak period. Type of Equipment Nippon Paper Industries Filter Plant Back Wash Pumps Subtotal Port Angeles Hardwood De- barker Ring Hog Whole Log Chipper Overhead Dust Collector Kilns (7) Subtotal GRAND TOTAL T able;5 -2 ntegrated 1Vlanagement•ReSdOrce Summa ,,.� � � i t Base Load Total for All Units (kW) 18.65 18 65 59.70 149.20 238.70 44.80 564.00 1,056 30 Commercial and Industrial DR Pilot Projects Maximum Load Shed (kW) 18.65 18 65 59.70 149.20 238.70 44.80 564.00 1,056 30 Olympic Medical Center Supply Air Temperature Reset 8.00 8.00 Electric Boiler (2) 625.00 625.00 Subtotal 633 00 633 00 City of Port Angeles Water Treatment Plant Blower Motor 59.7 59.7 Pump and Motor 14.9 14.9 Pump and Motor 59.7 59 7 Subtotal 134 3 1343 1,842.25 1,842.25 TASK 3.2 — FAST DR / RENEWABLE ENERGY INTEGRATION The Landing Mall will install a Catalyst Energy Technologies (CET) intelligent energy storage package referred to as Smart Storage KitsTM (SSK). The SSK is intended for load shaping, added reliability and arbitrage, and for reducing generator fuel consumption in off -grid applications. CET, a Port Angeles - based company, has established relationships with key component providers, tested relevant key technologies, installed pilot systems, conducted marketing studies and begun the development of a utility - grade SSK in sizes from 4 -kW to 50 -kW. The first lithium -ion (LI) battery test was successfully completed in mid - September 2010 and the next development stage is installing a 48 -kW SSK in a controlled, commercial application. This battery-set is controlled by a patented Battery Management System (BMS). The heart of the SSK is a proprietary inverter with the unique ability for capturing reactive power (VAR) from any circuit with inductive loads, such as motors and florescent lighting, and redelivering it back to the system as useful power. This unique characteristic can extended the storage - duration in the batteries and deliver power with a unity power factor. September 30, 2010 Page 7 City of Port Angeles , Commercial and Industrial DR Pilot Projects For the C &I DR pilot, the SSK will operate on the customer side of the meter and provide power to the end -user for an initial period of 90 days. During this period, the batteries will be cycled at least once a day and the parties will evaluate the operation of the battery bank, inverter, charger and general benefits to the end -user. The charging current will be provided by the utility (purchased by the end -user) and may be supplemented by other renewable resources such as wind. During the initial pilot project phase, stored power will not be exported to the utility. The City will be able to manually control the charging and discharging cycles through its SCADA system, and evaluate the power factor improvement offered by CET's inverter, as well as achieve some limited level of load shaping. The next pilot project phase will install remote dispatching and communication hardware and software that will fully interface with the City's SCADA system. This will allow the SSK to demonstrate its capability to fully function as an instantaneously dispatchable resource ( "Fast DR ") and demonstrate how DR can facilitate grid integration of intermittent renewable resources, especially wind, to address generation variability. CET will work closely with the City during this pilot project phase to ensure the communication and dispatching protocol is an exact fit. When all phases of the pilot project are completed, CET will turn over the project equipment to The Landings Mall. Each SSK unit provides 48 kW /48 -kWH of storage capacity, an aggregated array of these units could provide an exceptionally reliable and highly flexible reserve to the electric utility. The location of these kits may also allow the utility to reduce its transmission and distribution demand during the peak periods by dispatching the stored power from the LI batteries at the point of use. As shown in Table 5 -3, the maximum load shed potential from the Fast DR/Renewables Integration pilot project component is almost 0.05 MW. Type of Equipment The Landing Mall Battery Storage TOTAL TASK 3.3 - DIRECT LOAD CONTROL Table; 5 -. enewable En`ergy.Integ "ration Base Load Total for All Units (kW) 48.00 48.00 Maximum Load Shed (kW) 48.00 48.00 Direct load control allows the electric utility to manage the demand of a customer's end -use equipment, including air conditioners, heat pumps, electric space heaters, and water heating systems. Direct load control equipment will be obtained from the AMI system vendor, and will be ZigBee compliant. All signals for a DR event will be executed through the City's SCADA system via the customer's smart meter. A smart thermostat will allow remote adjustment of temperature setting on space conditioning systems, allowing the utility to adjust the set point down during a critical peak period and return the temperature to the previous set point at the conclusion of the event. For water heaters, a load control relay with a two -way paging device (receiver) will be installed. Water heaters will be shut off remotely (curtailed), using the paging system, for up to two hours each weekday morning during the City's critical peak period. If desired, participants will be able to override the curtailment by logging into a secure web site via the Internet. Interval meter data and load control data will be collected for later analysis. Table 5 -4 summarizes the direct load control resources available from the five currently participating customers, and the total maximum load shed in the winter is estimated to be almost 0.09 MW. September 30, 2010 Page 8 City of Port Angeles Type of Equipment Nippon Paper Industries Water Heater Tanks (3) Subtotal able Direct Load:Cont"rol'Sumina Base Load Total for All Units (kW) 162.00 162 00 City of Port Angeles City Hall Hydronic Central Boiler 324.20 Subtotal 324 20 City of Port Angeles West City Hall Water Heater 6.00 Subtotal 6 00 Commercial and Industrial DR Pilot Projects Maximum Load Shed (kW) 19.44 19 44 North Olympic Library System Rooftop Variable- Air - Volume Unit 84.00 10.10 Roof Mounted Heat Pumps (2) 18.00 2.20 AC Unit (2) 6.00 0 70 Subtotal 108 00 13 00 Clallam County Courthouse Boiler (e) 180.00 5.60 Freezer 1.50 1.40 Electric Boiler (N) 480.00 15.00 Subtotal 661 50 22 00 Clallam County Housing Authority Heat Pump (2 units at office) 18.00 2.20 Water Heater Control (6 units at 3 sites) 25.00 2.50 Subtotal 43 00 4 70 22.00 22 00 City of Port Angeles Vern Burton Gym Kitchen Water Heater 31.10 1.60 Icemaker (Kitchen) 2.30 0.20 Locker room water heater 8.70 0.90 Subtotal 42 10 2 70 City of Port Angeles Police Wing Water Heater 6.00 0.60 HVAC for main offices 7.00 0.40 Subtotal 15.30 1 00 0.50 0 50 September 30, 2010 Page 9 City of Port Angeles Commercial and Industrial DR Pilot Projects City of Port Angeles Fire Hall RTU Heat pumps 2.30 0.10 Subtotal 2 30 0 10 City of Port Angeles Senior Center Walk -in freezer 1.00 1.00 Ground -level heat pumps 52.50 2.60 Subtotal 53 50 3 60 Grand Total 1,417.90 89.04 Direct load control participants include the Nippon Paper Industries, USA Co., Ltd, the North Olympic Library System, Clallam County, the Clallam County Housing Authority, and the City of Port Angeles. The roll -out of the AMI system can also include ZigBee as an integral part of the meter for an additional 500 commercial general service customers. ZigBee functionality is only available for electric meter forms 1S, 2S and 125, and the City has approximately 500 other commercial meters that may not be functional with ZigBee. ZigBee functionality will be very similar to the residential demand response pilot project, with water heater load control being the primary opportunity targeted. Investing in ZigBee functionality may be an upfront cost that becomes a lost opportunity resource if the initial investment is not made. Replacing a new smart meter with another smart meter having ZigBee functionality in the near future would be a poor use of ratepayer funds. The City therefore intends to use the C &I Pilot Project as an opportunity to provide ZigBee functionality to all of its compatible commercial account meter forms. As many commercial customers have expressed an interest in DR, the City also proposes to purchase an additional number of controllers that could be placed, with the customer's approval, into service along with the AMI system roll -out. Including the controllers for the committed customers mentioned above, a total of 250 ZigBee- compliant controllers will be purchased. Also, the AMI system inherently allows the use of in business displays that show current energy consumption rates and peak demand events. As part of this proposal, 10% of the City's general service customers, around 100 customers, would be provided entry-level in- business displays. A total of 15 of the larger general service customers would be provided with a more sophisticated business area network. Lastly, the City intends to provide a data presentment service to up to 100 of its C &I customers who request the service. The main thrust of this service is to provide daily consumption information tied to the utility rate structure to conduct "what if' analysis and make quality decisions on efficiency and demand reduction opportunities. The data presentment service also provides a five -day weather algorithm, which will allow some ability to predict peaking events since weather is highly correlated with the City's distribution system critical peaks. TASK 3.4 - DISPATCHABLE DEMAND RESPONSE The focus of this task is to test the methodology for ADR dispatching during BPA's generation and transmission critical peak demand periods. This task will test the ability for the BPA to remotely and securely initiate a request to reduce the City's C &I load during its critical peak periods. The City is nearing the completion of its previously mentioned distribution system VO project. The AMI system is capable of integrating 24 voltage sensors into the City's SCADA System that will dynamically adjust substation transformer voltage to ensure that customers at the end of any feeder would not experience any under- or over - voltage issues. As part of this proposal an interface would have to be programmed for the voltage sensors for each substation to ensure that the lowest sensor output is used to adjust transformer voltage. September 30, 2010 Page 10 City of Port Angeles Commercial and Industrial DR Pilot Projects The City could also set up a communication protocol through its SCADA system to allow BPA to remotely initiate a request to reduce the City's voltage through its VO project, impacting commercial and residential customers. Investigations by the City show that a 2.5% -3.75% reduction in voltage could result in a 1.3 % -1.5% reduction in the electric utility's demand for its distribution customers (Industrial Transmission excluded). This could potentially contribute another 2.0 -2.5 MW of load reduction during BPA's critical peak period. This process could also be expanded in the future to allow the BPA to dispatch the 5.8 MW of stand -by generation that the City owns and operates. The two resources could easily be considered dispatchable resources given an appropriate economic incentive from the BPA. 5.4 TASK 4 - ECONOMIC EVALUATION The economic evaluation will look at the cost - effectiveness of DR from four perspectives; (1) BPA's perspective, (2) the City's perspective, (3) the customer's perspective, and (4) the total resource cost (TRC) perspective. 1) From BPA's perspective, the analysis will look at avoided transmission facilities upgrades, functionality of dispatchable DR, and large - scale, system -wide benefits. 2) From the City's perspective, the analysis will account for avoided generation and transmission peak demand charges, functionality of large -scale cooperative dispatchable DR, avoided distribution facilities upgrades, customer relations and response to incentives. 3) From the customer's perspective the analysis will include reductions to their utility bills due to the demand cost savings, incentives, and equipment costs. 4) The TRC test will be applied to determine if this application is beneficial to the region as a whole. The proposed C &I Pilot Project results can be scaled to the Pacific Northwest Region, as the savings determined from this project might apply to BPA customers in other service territories. Other utilities might use the savings data to conduct benefit -cost analyses for similar DR projects as they apply to their own territory. Likewise, savings estimates from other utility studies might be used in the future as the City evaluates DR projects for other customer /building types (such as commercial retail, restaurants, or other consumption patterns not included in this pilot project). 6. PROJECT TIMELINE The project timeline is outlined on a quarterly basis in Table 6 -1. The timeline, presented on a calendar year basis, will be further refined during the planning and design phase. Installation Testing/Operation Evaluation of Results September 30, 2010 Table Ci alendar,Year Project Timeline 2010 I 2011 Q I Q1 I Q2 I Q3 Planning and Design � I Q4 I Q1 I I A 2012 Q2 Page 11 City of Port Angeles Commercial and Industrial DR Pilot Projects 7. MEASUREMENT AND VERIFICATION The C &I DR Pilot Project will be evaluated by calculating the baseline consumption (kW) for the period of interest (calendar year 2011) and comparing the actual consumption to the estimated baseline. The measurement and verification model will use fixed effects so that savings will be evaluated on an individual basis for each participant. The baseline consumption will be calculated using a forecast of average kW consumption that is developed using historic data. All participants are currently demand metered or will be demand metered upon the installation of the AMI system. Weather variables will be included in the forecast model to match consumption data to the weather data observed in 2011. In addition, known energy efficiency improvements will be accounted for in the forecast of the baseline. Peak demand reduction savings from the Northwest Power and Conservation Council's 6 Power Plan documents will be used to account for energy efficiency improvements. Actual savings will be based on observed weather. Estimated savings as a percentage may be extrapolated to similar industries and commercial electric rate classes only. 8. CHALLENGES The City is in the process of securing a vendor to install the AMI system and has requested that the vendor supply and install the DR equipment outlined in this proposal if the City is selected by BPA for the C &I DR Pilot Project. The timing of the AMI system's installation and the C &I DR Pilot Project proposal is a challenge; however, the City is in a unique position to be able to the installation the AMI system at the same time as the DR equipment. This presents the unique opportunity to demonstrate a C &I DR pilot project with the least possible cost. In any event, the Integrated Load Management projects and the Fast DR/Renewable Integration project can proceed independently of the AMI system's deployment. 9. KEY PERSONNEL The project team is composed of the City of Port Angeles, EES Consulting Inc., Capacity Provisioning, Inc., and an AMI/DR equipment vendor to be determined during the course of the City's AMI project. The City will function as the prime organization as shown in Figure 9 -1. Larry Dunbar will be the City's project manager for this effort, and Phil Lusk will serve as the BPA's principal investigator for the City. Both team members have more than 25 years of professional experience in the energy industry. Specific qualifications from each team member organization and staff follows. - EES' C onsulting; "Inc. FIGURE 9 -1: Proposed Project Team Organization Chart CITY OF PORT ANGELES Larry Dunbar Project Manager• Phil Lusk.. Principal Investigator i / AMI SYSTEM VENDOR \ / TELECOMMUNICATIONS SERVICE PROVIDER , (TBD) Capacity, Provisionirig, Inc:•, September 30, 2010 Page 12 City of Port Angeles Commercial and Industrial DR Pilot Projects 9.1 THE CITY OF PORT ANGELES The City is a non - charter code city incorporated in 1890. The City encompasses an area of approximately 10.7 square miles in northwestern Clallam County along State Highway 101 on the northern shore of Washington's Olympic Peninsula. The City had an estimated population of 19,170 in 2008. The City's electric utility serves around 10,765 industrial, commercial and residential customers using 9 miles of transmission, 103 miles of overhead distribution and 40 miles of underground distribution with 7 substations. The utility purchases its bulk power from the BPA and also operates the 465 -kW Morse Creek hydroelectric facility. The BPA maintains a 69 -kV substation in Port Angeles and all of the power to the City is delivered over BPA's transmission system and through their substation. Capacity on the City's system is directed through two 69 -kV transmission lines that form a 9 mile loop around the City, to seven 69/12.47 -kV substations down to a total of 24, 12.47 -kV distribution feeders to its customer portfolio. The highest coincident peak the City had with BPA generation in 2008 was 108.6 - MW and its highest distribution system peak was 144.9 -MW. The City also averaged 83.5 -aMW in 2008 and, largely due to milder winter weather, an average of 79.1 -aMW in 2009. The following City employees will perform the work associated with this project. Glenn A. Cutler, P.E., Public Works and Utilities Director Glenn A. Cutler is a registered professional engineer in Washington and Georgia with 30 years of experience in managing public works and utility functions for the United States Navy and the City of Port Angeles. He has been the Director of Public Works and Utilities for the City since June 1999. Mr. Cutler is responsible for managing the City's utility systems (electric, water, wastewater, storm water, and solid waste collection and disposal), project management and design, road and street maintenance and improvements and energy programs. Larry Dunbar, Deputy Director of Power Systems, City of Port Angeles Mr. Dunbar has 28 years of experience working for electric, water, wastewater and solid waste utilities including the Snohomish County Public Utility District No. 1, City of Richland, Energy Northwest, and the City of Port Angeles. Dunbar was the advanced metering infrastructure project manager for the City of Richland, which replaced its remote electric meters and basement -set water meters with meters capable of wireless communications. As the fiber optic project manager for the City of Port Angeles, Dunbar developed a municipal area network providing advanced telecommunications services and oversaw the design and installation of local area networks within numerous utility and municipal facilities. Phil Lusk, Power Resources Manager, City of Port Angeles Among other items, Phil Lusk manages the conservation program and assists with other projects relative to rate structures, power resources, and power management activities. Prior to his coming to Port Angeles in 2008, he worked as a consultant for a range of public and private clients where his duties included business case and plan development, scenario analysis for various financial strategies, trending analysis, capital investment analysis, and due diligence. Terry Dahlquist, P.E., Electrical Engineering Manager, City of Port Angeles Terry Dahlquist has a Bachelor's degree in Electrical Engineering with 39 years of experience in the design of medium voltage power distribution systems. He started with Public Service Company of Colorado designing overhead and underground distribution in the metropolitan Denver area, and became the lead engineer in charge of the network system serving downtown Denver. Subsequently, he worked with several consulting firms on utility and primary metered military and industrial systems throughout September 30, 2010 Page 13 City of Port Angeles Commercial and Industrial DR Pilot Projects the Rocky Mountains. He is a licensed professional engineer in ten states and has been an expert witness in several court cases relating to utilities. He has been with the City of Port Angeles since 2006. Bob Williams, Electric Services Foreman, City of Port Angeles Bob Williams has 35 years experience with electric utilities including City of Port Angeles, Snohomish County PUD, Clallam County PUD and Lee County Electric Co -op (Ft. Myers Florida). Positions include Substation and Meter Supervisor, Relay Technician, Wireman, Senior Meterman, and Meterman. At the City of Port Angeles, Mr. Williams installed and configured a small AMI pilot project in downtown Port Angeles. He also supervised and participated in the installation of a SCADA system providing control to seven city -owned substations. Job responsibilities also include all metering, substation control, and electric system dispatcher. Bob also had conducted seminars for Northwest Public Power Association, Northwest Electric Meter School, and has provided training for the City's apprentices. Richard G. Hostetler, Customer Service Manager, City of Port Angeles Richard Hostetler has been employed with the City of Port Angeles for more than 28 years. He is the employee most familiar with the City's utility billing software, and associated policy and procedures. Richard is familiar with all City functions as a whole because of his 28 years experience and is quite familiar with all of the City's neighborhoods and streets. Mr. Hostetler played a key role when meter reading transformed from paper to handheld computers. He also was the main resource related to utility billing when the City installed its current integrated finance system software. Bob Kajfasz, Commercial Energy Analyst, City of Port Angeles Bob Kajfasz holds a Certified Energy Manager certificate from the Association of Energy Engineers. Mr. Kajfasz started work with the City of Port Angeles in 1996 and has been administering the City's energy conservation program since 2001. Over the past nine years, Bob has designed, implemented, administered, and provided reports on the City's conservation program fulfilling the requirements of Bonneville Power Administration's Conservation and Renewables Discount, Conservation Acquisition Agreement, Conservation Augmentation Agreement, Multi- sector Standard Offer, Conservation Rate Credit, and the Energy Conservation Agreement. 9.2 EES CONSULTING EES Consulting is a multidisciplinary management consulting and registered professional engineering firm providing a broad array of services to clients involved in electric, water, wastewater, telecommunications, natural gas and other natural resource related businesses. EES Consulting has assisted clients in meeting the challenges in evolving competitive, regulatory and technical environments. For this project, EES Consulting proposes that project management be performed by Kevin Smit with day -to -day analytical tasks performed by Steve Andersen, Kelly Tarp and Amber Nyquist and quality control and oversight provided by Gary Saleba and Anne Falcon. If necessary, the expertise of other staff members can be drawn on for specific technical assistance. Resumes of all key EES Consulting project team members are available upon request. 9.3 CAPACITY PROVISIONING, INC. Capacity Provisioning Inc. (CPI) is the largest fiber optics service provider on the Olympic Peninsula of Washington State, maintaining and serving systems and networks for organizations including the City of Port Angeles, Clallam County, Olympic Medical Center, the Port Angeles School System, Peninsula College and hundreds of area businesses. CPI was created in 2001, from a partnership between Excel Utility Construction Inc. and Angeles Communications Inc. In 2002, another partnership was formed that brought government and private business together to provide high -speed fiber optic data access to the City of Port Angeles and the surrounding area. The venture formed between the City of Port Angeles, September 30, 2010 Page 14 City of Port Angeles Commercial and Industrial DR Pilot Projects Northland Cable (now Wave Broadband) and CPI, provided an interconnecting fiber optic ring within the community and provided a high quality outer - connecting fiber optic link with the global community. Resumes of all key CPI project team members are available upon request. 9.4 AMI SYSTEM VENDOR - The City is in the process of selecting an AMI system vendor capable of providing the DR equipment specified in this proposal. The City has requested pricing for the DR equipment proposed for the C &I DR Pilot Project. If this project is funded, the selected vendor will provide and install the necessary equipment on the time schedule outlined in this document. If necessary, the City will use other vendors to install C &I DR equipment that is beyond the scope of its AMI system. 10. BUDGET The City proposes a project having a total budget of $745,115. This includes a $384,520 budget request from the BPA. The City will contribute a total of $360,595, with $72,390 budgeted for in -kind services and $288,205 provided as a cash match. As the proposal results in a 52% cost -share for the BPA, the proposed budget plan provides a good cost value to BPA and to its ratepayers. Please see Attachment B for the proposed budget and Attachment C for the budget justification. September 30, 2010 Page 15 Date: PART NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo November 9, 2010 To: Utility Advisory Committee From: Phil Lusk, Power Resources Manager Larry Dunbar, Deputy Director of Power Systems Subject: Energy Conservation Program Increase Summary: The Northwest Power and Conservation Council's 6 Northwest Power Plan will result in a 67% increase in the Bonneville Power Administration conservation program beginning October of 2011. An increase to City staff will be needed which qualifies for 90 -100% administrative reimbursement. An increase to City staff is recommended in January 2011 to increase low - income weatherization, demand response, take advantage of new programs, prepare for a significant program increase due to the 6 Power Plan, contribute to the local economy, and help the Electric Utility and its customers postpone exposure to Tier 2 power supply purchases. Recommendation: Forward a favorable recommendation to City Council to add one full time equivalent employee needed to support increased activities under the energy conservation program as part of the 2011 proposed budget beginning January of 2011. Background /Analysis: During the last thirty years the Bonneville Power Administration (BPA) has provided conservation programs to the Electric Utility, which in turn provides conservation programs and incentives to Port Angeles electric customers. Over the years BPA funding has ranged from minimum viable to aggressive levels. BPA has also altered the conservation measures that are available, the material and installation specifications, and incentives to encourage customer participation. The last time BPA offered conservation program funding at an aggressive level was shortly after the Western U.S. Energy Crisis of 2000 and 2001. BPA conservation funding has been at a stable level for several years and will continue at a similar level through September of 2011. The City currently receives a credit on its BPA wholesale generation bill that annually provides about $400,000 for operation of the conservation program. The credit provides from 90 -100% of the cost of program administration, and provides incentives to encourage customer participation in the range of 20 -70% of cost. If the City was not able to fully use its credit, any unspent funds would have to be returned to the BPA. Last year as a result of the Northwest Public Power Association Tier 2 Power Supply Workshop for the Utility Advisory Committee and City Council, the direction to staff was to double the conservation program to postpone future Tier 2 power supply purchases. N \UAC \Final \Energy Conservation Program Increase doc Conservation Program Increase November 9, 2010 Page 2 As part of the 2010 budget City Council approved a $300,000 increase in conservation activities which are funded by the Electric Utility. Earlier this year City Council amended the Conservation Fund to incorporate appropriate references to State law that allow electric utilities to fund conservation activities. Energy conservation is the least cost power supply resource, can be obtained at a lower risk compared to other resources, and funding levels can be increased or decreased as necessary. The minimum 1 year cost benefit ratio of the current conservation program is 6, over a 10 -year period the cost benefit ratio is 17. The City ranks the second most effective operator of BPA conservation programs in Washington State and is currently on track to use the BPA credit available through September 2011. Conservation funding contributes to the local economy and the estimated economic multiplier effect is $2,000,000 per year. The City's Tier 2 exposure could dramatically increase if there are any reductions to the federal based system, if we experience higher than normal customer growth, or if there is a new large single load. The City's Tier 2 exposure could also dramatically decrease if there is a curtailment of one or more large customer loads. The City's next Tier 2 decision will need to be made by September 30, 2011 for the time period of October 2014 through September of 2019. Based on the 2010 Resource Plan the planned rate of conservation acquisition will postpone Tier 2 power supply purchases through year 2016. Due to the Northwest Power and Conservation Council's (NPCC) 6 Northwest Power Plan (that increases BPA obligations to acquire conservation by 67 %) BPA is developing and offering new conservation and demand response programs to its Electric Utility customers. New programs and dramatic increases to funding levels are anticipated to begin October of 2011 and should continue for five- years. So far this year the City has been awarded a $908,520 increase in BPA funding. Future increased conservation activities due to the 6 Power Plan will require an addition to City staff in 2011. Although the increased conservation activities due to the 6 Power Plan won't begin until October of 2011, staff recommends that an addition of one full time equivalent employee be added in January of 2011. Prior to the end of 2013 a review will be conducted to determine if the position is still required. The staff addition will focus on low- income weatherization, demand response, and other residential energy conservation efforts. The staff addition will enable the City to pursue BPA funding for new programs, provide some lead time to prepare for increased activity due to the 6 Power Plan, and has no Electric Utility ratepayer impact. As a backstop to BPA administrative reimbursement, the Energy Conservation and Renewable Energy Program Fund has adequate reserves available to fund personnel expenses. On August 10, 2010, staff requested guidance on the proposed staff addition from the Utility Advisory Committee and was directed return to the Committee at today's meeting. If the Utility Advisory Committee supports staffs recommendation, it is requested that a favorable recommendation is made to City Council to add one full time equivalent employee needed to support increased activities under the energy conservation program as part of the 2011 proposed budget beginning January of 2011. Columbia Telecommunications Corporation • 10613 Concord Street • Kensington, MD 20895 301.933.1488 • fax: 301.933.3340 • www.CTCnet.us Via Electronic Mail Mr. Larry Dunbar Deputy Director Public Works and Utilities Department 321 East Fifth Street Port Angeles, WA 98362 -0217 Re: CPI Oversight Proposal Dear Mr. Dunbar: 111 ■■CTC 1I COMMUNICATIONS ANALYSIS ■ ■ ■ FOR THE UBLIC INTEREST October 31, 2010 This letter is a follow -up to our discussions concerning the City's need for additional technical support in its oversight of the CPI upgrade and cable plant extension. Under the terms of its contract with the City, CPI is required to upgrade the network to 10 Gb operation and construct and implement redundant paths for critical portions of the network. Additionally, they are required to provide documentation for the upgrade and meet certain minimal performance standards. Columbia Telecommunications Corporation (CTC) proposes to assist the City in its ongoing work of overseeing the implementation of pertinent technical requirements included in the City's contract with CPI. In September, we inspected the core facilities associated with upgrading the network, this work will focus on meeting operational and functional requirements. The attached statement of work defines specific tasks that we will undertake as an amendment to our current contract to provide technical support to the City. We will attempt to combine travel for this project with travel for other projects we have with the City; our estimated cost for travel expenses has been reduced accordingly. We appreciate the opportunity to work with the City and to provide continuing technical support on this project. Please do not hesitate to call me with any questions about this proposal. Very truly yours, 4t Lee Afflerbach, PE California • Illinois • Maryland • Minnesota • North Carolina Tennessee Valley • Washington, D.C. • Wisconsin Mr. Larry Dunbar October 31, 2010 Page 2 of 15 Proposed Statement of Work This scope of work is a proposed amendment to CTC's existing contract with the City to provide ongoing technical support for oversight of the City's Metropolitan Area Network (MAN) services agreement. CTC proposes to address additional technical support activities required to verify CPI's compliance with the terms of its contract with the City. Under this amendment we propose to provide the following technical support services: • Review CPI technical plans for installing redundant fiber network paths required under the contract agreement • Provide on -site inspection of fiber cable plant construction associated with redundant fiber paths • Review all CPI as -built documentation of system upgrades and fiber plant associated with City facilities • Assist City staff in reviewing and performing tests on network performance for the purpose of verifying requirements established in the contract agreement. Mr. Larry Dunbar October 31, 2010 Page 3 of 15 Project Cost CTC proposes a not -to- exceed cost of $7,500 for the tasks _listed above, with an additional $2,400 estimated for out -of- pocket travel expenses. CTC work will be billed at the following hourly rates: Director of Engineering $160 Principal Engineer /Analyst $150 Senior Project Engineer /Analyst $140 Senior Engineer /Analyst $130 Staff Engineer /Analyst $120 Engineer Aide II $ 65 Services to clients are billed on an hourly basis. CTC's billing rates are inclusive of all routine expenses including administrative, accounting, and computer support, telephone calls, and photocopying. Non - routine expenses and long- distance travel are recovered at direct cost with no mark -up. Payment is due within thirty (30) days of invoice. Mr. Larry Dunbar October 31, 2010 Page 4 of 15 Project Team Our proposed project team comprises three engineers who have assisted the City on previous projects: Lee Afflerbach, P.E., Matthew DeHaven, and Eric Wirth. Resumes for each are below. Additional resumes and references are available on request. Mr. Larry Dunbar October 31, 2010 Page 5 of 15 LEE AFFLERBACH, P.E. Principal Engineer Lee Afflerbach is a telecommunications systems engineer with 40 years of experience serving federal, state, and local government clients. Mr. Afflerbach's expertise covers a wide range of broadband (video, voice, and data) communications technology. He has designed, tested, and planned numerous wireless, coaxial cable, telecommunications, and fiber optic networks for government, public safety, educational, and non - profit clients. Mr. Afflerbach's extensive experience and expertise in both wireless and wired technologies results from years of evaluating and meeting emerging communications needs for government in general —and public safety agencies in particular. He has designed command and control centers for transportation agencies, has designed 911 systems, has developed communications design and requirements for highway systems; and has developed standards and assured compliance with standards for public safety communications equipment. During the period of November 1976 through June 1981, Mr. Afflerbach served as an on -site technical advisor in Frankfurt, Germany under contract to the Bundesansalt fuer Flugsicherung (German FAA) to oversee the design and implementation of a national flight data network and real -time database to oversee air traffic in Germany. He is a nationally recognized authority on wired and wireless communications. Mr. Afflerbach has served as a consultant and expert witness for public sector clients and has taught numerous courses in broadband communications technology, both in the United States and abroad, including United Kingdom, Germany, Netherlands (Amsterdam). Mr. Afflerbach is a licensed Professional Engineer. Communications Network Enzineering Mr. Afflerbach has planned and designed communications networks for numerous municipalities, including Montgomery County, MD; New York City; Baltimore; Cincinnati; Tampa; Santa Monica; Ventura; Tucson; Austin; and St. Paul. These stand -alone broadband networks employ a range of wired and wireless technology to provide video, voice, and data capability within and between municipal facilities. Mr. Afflerbach has assisted local governments in the cable franchise renewal process, providing technical expertise on state -of -the -art network technologies. He has presented workshops to network users on requirements analysis and system solutions. He has conducted requirements analyses, prepared system -level network designs, provided construction coordination with the cable operator, and supported network integration with existing municipal networks. Mr. Afflerbach provides technical franchise renewal support to such communities as Los Angeles, San Francisco, and San Jose. Over the course of his long career in broadcast engineering, Mr. Afflerbach has conducted feasibility analyses to support the authorization of new broadcast facilities. Activities included Mr. Larry Dunbar October 31, 2010 Page 6 of 15 the study of groundwave and skywave propagation in the 550 kHz -900 MHz spectrum range; and evaluation of potential interference areas, service area losses, and compliance with international treaties. Some select examples of his work include: • Planned, designed, and built City -wide fiber network for agency needs for New York City. Designed and integrated video and data applications for criminal justice, financial management, and education/training purposes. On 9/11 in Lower Manhattan, every network but one failed - the surviving network was designed by CTC. • Design and integration solution for cablecast channel for Monterey County. Analyzed the existing audio visual and broadcast systems and developed recommendations for future development. Designed an IP -based video server system capable of recording and airing live meetings and scheduling cable /broadcasts. Completed on -site integration, testing, and training on the video server system. • Prepared a design for a video transmission and switching system for the City of Santa Clara. The system provides links between multiple sites for video programming that is transmitted over the channel on the cable system. The system is also designed to allow basic video conferencing between the origination locations. • Prepared the design for the fiber optic network interconnecting Gilroy, Hollister and San Juan Bautista to a shared programming center. In addition, the design allowed the interconnection of the communities for data networking and potential video conferencing. Public Safety Network Interonerability and Interconnection Mr. Afflerbach has been instrumental in the development and implementation of an Enhanced Traffic Advisory Radio System (E -TARS) for the State of Delaware that uses statewide radio signals to distribute traffic and emergency information collected by Delaware's Intelligent Transportation Management System (ITMS). He was also involved in similar efforts for the Georgia Department of Transportation; Arlington County, VA; and Howard County, MD. Mr. Afflerbach developed a design and deployment strategy for the Howard County Office of Emergency Management and the Arlington County Office of Emergency Management for an AM broadcast radio system to disseminate information to the public during emergency situations. In Howard County, he assisted the County to obtain AM broadcast radio licenses and developed candidate system designs. Land - Mobile Communications System Design Under funding provided by the Law Enforcement Assistance Administration (LEAA), Mr. Afflerbach performed and managed communications design studies for federal, state, and local law enforcement agencies, including the Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), New York State Police, and Georgia State Police. Tasks involved user requirements analysis, system design, and specification preparation for land - mobile radio, computer- assisted dispatching, and 911 emergency telephone systems. Instruction/Exnertise Mr. Afflerbach has prepared training courses providing information on communications designs, Mr. Larry Dunbar October 31, 2010 Page 7 of 15 applications, and operations. The courses have been presented at: • George Washington University • ITS America • University of Maryland • COMNET • Amsterdam • Frankfurt • London • University of Alabama • National Security Agency o Headquarters o UK EMPLOYMENT Since 1983 Principal Engineer, Columbia Telecommunications Corporation (CTC) 1983 Established CTC 1981 - 1983 Vice President of Engineering, The Bertman Group, Vienna, VA 1971 - 1981 Group Leader, MITRE Corporation, McLean, VA and Frankfurt, Germany 1969 - 1971 Project Manager, Kelly Scientific Corporation, Washington, D.C. 1966 - 1969 Staff Engineer, Federal Communications Commission EDUCATION Bachelor of Arts, Electrical Engineering, Drexel University, 1966 PROFESSIONAL CERTIFICATIONS/LICENSES • IL Professional Engineer • DE Professional Engineer • MD Professional Engineer • WA Professional Engineer • District of Columbia Professional Engineer HONORS /ORGANIZATIONS • National and Maryland Societies of Professional Engineers (NSPE) • Institute of Electrical and Electronic Engineers (IEEE) -- Broadcast and Computer Societies • National Association of Telecommunications Officers and Advisors (NATOA) SELECTED PUBLICATIONS/PRESENTATIONS /COURSES • Principal author, "Telecommunications and ITS: What You Need To Know," web -based course module, prepared for University of Maryland Center for Advanced Transportation Technology, 2002. • "Telecommunications and ITS: What You Need To Know," prepared curriculum for two - day training course for the University of Maryland, 2001. • "Telecommunications and Intelligent Transportation Services," two -day training course, presented in multiple cities for ITS America, 1999. Mr. Larry Dunbar October 31, 2010 Page 8 of 15 • "Building Integrated Voice, Data, and Video Networks for the Local and Wide Area," two -day training course, presented for the University of Maryland, College Park, Maryland, April 29-30, 1999. • "Integrated Data, Video & Voice Broadband Networks," week -long training course, presented at the COMNET Exposition, Washington, D.C., January, 1999. • "LANs: Design and Installation of Networks that Support Voice, Data, and Video Applications," multi -day training course, presented for the George Washington University Continuing Engineering Education Program, September 1983 through May 1999. • "Integrated Data, Video & Voice Broadband Networks" and "Design & Implementation of Metropolitan Area Networks (MANs)," presented at the COMNET Exposition, Washington, D.C., January, 1998. Mr. Larry Dunbar October 31, 2010 Page 9 of 15 Matthew DeHaven Principal Engineer Matthew DeHaven specializes in wired and wireless communications and broadband telecommunications technology for public safety and other institutional needs. He has more than a decade of extensive engineering experience designing, developing, installing, and overseeing the integration of local and wide area networks for institutional, public safety, ITS applications, video networking solutions, and peer -to -peer information systems. Mr. DeHaven is experienced in providing clients with reviews and solutions for network interoperability, reliability, and security issues. He serves as CTC's lead engineer on numerous wide area network projects. Mr. DeHaven has experience at many levels of network design, procurement, and implementation for high - capacity metropolitan -area networks to support converged video, voice, and data communications. He assists in network design and the preparation of specifications for competitive bid processes, and he oversees implementation and testing for a wide range of government clients. Mr. DeHaven prepares designs and cost models to support decision - makers in the deployment of a range of data network technologies, traditional telephone systems, voice - over-IP (VoIP) networks, one -way video distribution, and two -way videoconferencing. His data network experience includes work with SONET, Ethernet, and ATM networks using a range of fiber optic, copper, and wireless technologies. Wireless Communications Mr. DeHaven assesses clients' existing and projected wireless broadband needs and recommends potential strategies for using new technologies to enhance and improve network operations and services. Some select examples of his ongoing projects include: • Developing a strategic plan for a wireless data network to meet public safety and local government needs in Seattle, WA. CTC previously conducted a feasibility study that identified these needs. • Providing an updated assessment and review to Cincinnati, OH of the City's current networks and recommended updates to the long -term strategic plan originally prepared in 2004. This project involves assessing and identifying new department and network application needs, assessing the current networks to meet identified needs, assessing emerging fiber and wireless technologies, recommending wireless strategies, and providing recommendations and strategies for meeting foreseeable needs. • Conducting a needs assessment of the current network in Port Angeles, WA, and reviewing identified public safety mobile data communications considerations. Some examples of past projects include: • Design of a broadband wireless network for Annapolis, MD that will serve as a backbone to link all city facilities and ultimately provide connectivity for a citywide video surveillance system. The network will also have substantial reserve capacity to support the addition of new video requirements, expand toll - quality IP -based voice and data services, and, potentially, provide backhaul for a future mobile wireless solution. Mr. Larry Dunbar October 31, 2010 Page 10 of 15 • Oversight of the design and implementation of a "wireless downtown" for Skokie, IL to enhance economic development and Internet accessibility for residents and visitors. • Project oversight in developing an infrastructure plan to support the implementation of WiFi services throughout a downtown area targeted for economic development in Rockville, MD. The plan focuses on deploying a flexible architecture of physical support infrastructure to enable a wide range of wireless connectivity options for visitors, residents, and business tenants while maintaining the aesthetics of the development. • Evaluation of bids from wireless service providers who responded to the city of Mesa, AZ's RFP. CTC also, in an earlier phase of the project, provided an assessment of WiFi technology and potential expansion of the fiber -optic infrastructure via mass wireless communications — potentially for an intelligent transportation system application and for free Internet access for citizens. • Research on current and future wireless technologies and evaluation of the feasibility of implementing a secure public safety wireless network in Prince George's County, MD. Designed and implemented a pilot project to test the feasibility of a public safety network. A successful solution was deployed to enable Mobile Data Computers in emergency response vehicles to securely roam from a carrier CDMA network to private, County- operated WiFi hotspots. Public Safety Networking In Anne Arundel County, MD, Mr. DeHaven recently assisted with the deployment of emergency traffic surveillance cameras. He provided analysis of candidate technical solutions for cameras using the County's high -speed fiber -optic I -Net to transport video and control signals. Mr. DeHaven was also involved in the planning and implementation of a statewide network in Delaware for the purpose of providing traffic information and traffic control capabilities to transportation management facilities. Such a network allows remote control of traffic signal systems and variable message displays, while providing real -time traffic surveillance in the form of video images and microwave sensor data. He has developed expertise in the numerous forms of technology used in this type of project, ranging from fiber optics to wireless digital spread - spectrum communications. Mr. DeHaven serves as CTC's lead engineer with respect to the Delaware Department of Transportation's Advanced Traffic Advisory Radio System, the first Advanced TARS system in the country. In that capacity, he is responsible for training and advising on -site staff, specifying and installing new equipment, and monitoring performance of the system. Video and Broadcast Communications Engineering Mr. DeHaven's experience includes the management, design, and procurement of video, voice, and data networks. Some select examples of his recent project work include: • Analysis of the technical options to allow The Rockville Channel (Rockville, MD) to support live cablecasting from multiple facilities, including the implementation of an IP- based video and audio transmission system. He also managed the relocation of the master control and studio production systems for The Rockville Channel. CTC successfully executed the relocation during the tight window of opportunity between live production Mr. Larry Dunbar October 31, 2010 Page 11 of 15 events, while making enhancements to system layout and cabling infrastructure and keeping the channel "on -air" during the process. • Development and implementation of videoconferencing and teleconferencing tools for the 21 jurisdictions in the National Capital Region (DC, MD, VA) Emergency Operations Centers (EOCs) and Emergency Communications Centers (ECCs) over a state -of -the -art fiber -optic and microwave network. CTC developed the systems' designs and oversaw implementation under a grant from the Department of Homeland Security Urban Areas Security Initiative (UASI). • Preparation of system -level design recommendations and cost estimates for an extensive, countywide system to support interactive and on- demand video training communications for the Anne Arundel (MD) County Fire Department. CTC also developed the design for a video display system for the Fire Department's new dispatch center, intended to allow key sources of information to be prominently displayed throughout the facility. • Preparation of system -level design recommendations and cost estimates for an extensive, citywide system to support interactive and on- demand video communications for training, emergency collaboration, and routine meetings between Mesa, AZ Fire Department personnel. CTC also integrated a pilot videoconferencing system to demonstrate certain capabilities of the system design. • Development of a videoconferencing system for homeland security applications on behalf of Arlington County, VA —the site of the September 11, 2001 Pentagon attack. The system links numerous public safety and other government users and aims to ensure uninterrupted emergency communications in the event of a terrorist attack or natural disaster. Instruction /Expertise Mr. DeHaven led the CTC research team in preparing a Web -based Intelligent Transportation System (ITS)- Communications course on behalf of the University of Maryland Center for Advanced Transportation Technology. He currently serves as an online instructor for that course. EDUCATION Bachelor of Science, Electrical Engineering, in progress, The Johns Hopkins University, Baltimore, Maryland PUBLICATIONS /COURSES • "What's the Fuss About Fiber? A Comparative Analysis of Fiber and Copper Physical Media," Journal of Municipal Telecommunications Policy, Spring 2009. • "Deploying Public Safety Networks: Costs and Benefits – 4.9 GHz for Video Surveillance," presented at annual SEATOA Conference, April 2008. • "Busting the Technology Myths," presented at the annual NATOA Conference, October 2007. • "WiFi and Beyond: Taming Technology for your Community," presented at the annual TATOA Conference, August 2007. • "Looking Beyond Traditional I -Nets: NSCC Case Study," presented at the annual TATOA Conference, August 2007. • "Magical Solutions for Public Safety Wireless," presented to the National Association of Mr. Larry Dunbar October 31, 2010 Page 12 of 15 Telecommunications Officers and Advisers, September 2006. • "VoIP and Enhanced 911 Services: A Primer on the Technology and its Limitations," Journal of Municipal Telecommunications Policy, Fall 2005. • "IP Technologies: An Overview for Local Government," presented at the annual NATOA Conference, September 2005. • "The IP Revolution: what does it mean for PEG programmers and how can we prepare for the future ?," Journal of Municipal Telecommunications Policy, Summer 2005. • Instructor for "Introduction to Telecommunications" and "Telecommunications and ITS: What You Need To Know," offered on -line by University of Maryland Center for Advanced Transportation Technology, 2005. • "Homeland Security Applications Over the I- Net," presented to the National Association of Telecommunications Officers and Advisers, September 2002. Mr. Larry Dunbar October 31, 2010 Page 13 of 15 Eric Wirth Senior Project Engineer Mr. Wirth has more than five years of communications engineering experience and specializes in the evaluation of broadband (video, voice, and data) telecommunications networks and analysis of broadband technology. He also specializes in the design of broadband networks for institutional uses and in analysis of emerging broadband technologies. In addition, Mr. Wirth is conducting extensive and ongoing research on applications for Internet Protocol (IP) technology, including video over IP for video transmission over wide area networks and video conferencing, voice over IP (VoIP), and other telephony applications for cable systems, as well as on emerging cable hardware technologies. Wireless Communications Mr. Wirth has extensive experience working on numerous wireless networking projects, from analysis and feasibility to design and implementation. These networks range in scope from small hot spots to area -wide and regional networks. Some representative examples of his projects include: • Assisting Ames, IA with review of existing architecture, development of a network design, and preparation of detailed cost estimates for the acquisition and installation of WiFi hot spots and supporting infrastructure. This project has now moved into implementation preparations. • Acting as lead engineer for the design and implementation of a microwave network to enable patient tracking by the public safety and public health communities in the 19- jurisdiction National Capital Region (DC, MD, VA) in the event of an emergency. This innovative inter jurisdictional microwave network was designed to mesh with a fiber- optic network connecting the D.C. metro jurisdictions and area hospitals. This multi -year project is funded by grants from the U.S. Department of Homeland Security Urban Areas Security Initiative (UASI) and the Department of Commerce Public Safety Interoperable Communications (PSIC) Grant Program. This project is currently in the implementation phase. • Designing and specifying the equipment needed for a wireless network of hot spots in the central business district in Northbrook, IL. • Reviewing a conceptual design, the proposed business plan and staffing requirements, and a cost - benefit analysis for the development of a city -wide wireless network in Bountiful City, UT. • Designing a cost - effective broadband wireless network for Annapolis, MD. This network will serve as a backbone to link all city facilities, and ultimately will provide connectivity for a citywide video surveillance system. The network will have the capacity to meet all current needs, provide 99.999% availability, and have substantial reserve capacity to support the addition of new video requirements, expanded toll - quality IP -based voice and data services, and support backhaul for a potential mobile wireless solution. Mr. Larry Dunbar October 31, 2010 Page 14 of 15 Public Safety Networking Some representative examples of Mr. Wirth's projects include: • Lead engineer for the design of a fiber optic public safety interconnection network, NCRnet. NCRnet is the 19-jurisidcition regional interoperability network in the National Capital Region (DC, MD, VA). Fiber routing, site surveys, cost analysis, network design, and vendor selection have been completed. Fiber construction, site activation, and as- built documentation are underway. • Performed radio frequency (RF) coverage analysis and prepared design recommendations for improving public safety radio coverage for Warren County, PA. Included analysis of the County's existing public safety radio system and recommendations to improve coverage for both the County's public safety radio system and commercial cellular coverage. • Collaborated on the development of a master telecommunications plan for the Delaware Department of Transportation. The plan acts as a guide for the department to consolidate several disparate network environments into a unified communications network capable of supporting current and future transportation and public safety applications. Part of the plan involves developing a system -level design that incorporates fiber optics, microwave, and land - mobile radio. The plan requires coordination among a variety of state agencies to develop a network that meets the department's critical public safety requirements. Fiber Optic Communications Mr. Wirth's experience includes the design and implementation of a variety of fiber optic communications network. Some select examples of his work include: • Design and feasibility analysis for the Murfreesboro Electric Department of Murfreesboro, TN. The project consisted of developing a plan and cost estimate to construct fiber to key department facilities. The project goal was to increase communications for improved SCADA functions and newer high- bandwidth applications. Mr. Wirth also developed materials lists and construction manuals to allow the department to construct fiber with its existing personnel. The project is currently in the implementation stage. • Design and implementation of a fiber optic network for Norwich Public Utilities of Norwich, CT. The project consisted of developing detailed fiber optic route design and costs estimates, network electronic design and costs estimates (including SCADA transportation), and developing an RFP for Norwich's use in selecting a contractor to complete the installation. In addition to serving the utility's needs, the fiber optic network was designed to serve additional city, schools, and hospital users. • Fiber optic network and electronics design and RFP development for the City of Dover, DE Electric Department. Mr. Wirth developed a fiber optic network design to provide additional redundancy and functionality to the existing city fiber optic network. In addition, he developed a network electronics design to leverage the new fiber optic communications links to increase the reliability of the City's network. • Fiber optic network design and feasibility analysis for the City of Palo Alto, CA. The City is examining several fiber optic construction projects to expand its existing fiber optic network to further meet the needs of the City and surrounding school districts, and Mr. Larry Dunbar October 31, 2010 Page 15 of 15 to increase the footprint of its commercial fiber optic network. As a municipal electric, Palo Alto is exploring several options for fiber optic design. Video and Broadcast Communications Engineering Mr. Wirth's experience includes the design and implementation of video, voice, and data networks. Some select examples of his work include: • Developed a design and integration solution for cablecast channels for Monterey County, CA. Analyzed the existing audio - visual and broadcast systems and developed recommendations for future development. Designed an IP -based video server system capable of recording and airing live meetings and scheduling cable/broadcasts. Completed on -site integration, testing, and training on the video server system. • Developed recommendations for a broadcast and videoconferencing system for the Mesa, AZ Fire Department. Prepared system -level design recommendations and cost estimates for an extensive, citywide system to support interactive and on- demand video communications for training, emergency collaboration, and routine meetings between Mesa Fire Department personnel. Also integrated a pilot videoconferencing system to demonstrate certain capabilities of the system design. • Designed and implemented state -of -the -art videoconferencing and teleconferencing tools for the 19 jurisdictions in the National Capital Region (DC, MD, VA) Emergency Operations Centers (EOCs) and Emergency Communications Centers (ECCs). CTC developed the systems' designs and oversaw implementation to interconnect the EOCs and ECCs throughout the region, under a grant from the U.S. Department of Homeland Security Urban Areas Security Initiative (UASI). EDUCATION Bachelor of Science, Electrical Engineering, University of Virginia, School of Engineering and Applied Science, Charlottesville, Virginia, 2004. PUBLICATIONS /COURSES • "Leveraging Existing Assets for Municipal Broadband Projects." Presentation to eNATOA — Webinar, 2007. • "Using IP networks to Enhance Digital PEG Capabilities." Presentation to eNATOA — Webinar, 2007. PRIOR TO COMING TO CTC IN 2004 1998 -2003, Technician, Schnabel Engineering, Inc., Baltimore, Maryland pcRTjGELEs W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Larry Dunbar, Deputy Director of Power Systems Subject: Bonneville Power Administration Residential Exchange Program Settlement Agreement Summary: A settlement agreement is being prepared for City Council consideration regarding the Bonneville Power Administration's Residential Exchange Program. A meeting has been arranged on December 15, 2010 to discuss and clarify the advantages and disadvantages of the settlement agreement. Recommendation: Determine the Utility Advisory Committee and Councilmembers that will attend the December 15, 2010 meeting to discuss the settlement agreement. Background /Analysis: A settlement agreement is being prepared for City Council consideration regarding the Bonneville Power Administration's Residential Exchange Program. The settlement agreement is a very significant issue for the Electric Utility and will affect future wholesale power costs for the next twenty years. A factsheet dated 2007 providing a history of the Residential Exchange Program is attached for additional information. Through the City's memberships with the Western Public Agencies Group and the Public Power Council, a meeting has been arranged for Utility Advisory Committee members and staff on December 15, 2010 to discuss and clarify the advantages and disadvantages of the settlement agreement. The meeting facilitator is Terry Mundorf and the host utility is Mason County Public Utility District No. 1, a total of 7 regional Electric Utilities have been invited to attend. The settlement agreement should be available prior to the meeting, and it's anticipated that City acceptance would be required by the end of this year. The meeting will be held at the Alderbrook Resort located in Union, WA from 9am to 1pm. Travel to the meeting would be by City vehicle which would leave City Hall at 6am and return by 4pm. The estimated cost is $50 per person for the room, lunch and refreshments. Staff recommends that a delegation of the Utility Advisory Committee members, Councilmembers, and staff attends the meeting. Staff requests that the headcount be determined at today's meeting if possible. Attachment: Factsheet, A History of BPA's Residential Exchange Program N \UAC \Final \BPA Residential Exchange Program Settlement Agreement doc B O N N E V I L L E P O W E R A D M I N 1ST R A T I O N factsheet. A history of BPA's Residentia Exchange Program On May 3 :-2007; the US. Ninth Circuit Court:o Appeals ruled ontwo lawsuits that have significant - implications for the Bonneville PowerAdministra -, tion s ResidentiallExchange Program (REP):, In, light of the: Courts decision and the heightened - interest'it has: created, over, the REP. BPA has pre- pared;this : history and background of the REP. The REP was'established' in Section 5(c) of the PacifreNorthwest Electric ,Power Planningand Conservation Act of 198,0 (known commonly as_the, Northw'VestPOwerAct): The goal of the program - has been 'to provide. rate:'relief to Northwest residential '• and small farm customers served by high- cost.. investor -owned utilities,'as well;asto residential and small -farm customers 'servedby high - cost' F rom its start, the Residential Exchange Program (REP) has been a source of nearly continuous controversy. Its roots go back to the 1970s when electricity rates between public and private utilities began to diverge sharply. Public preference was at the heart of the debate between public and private interests. Historically, private and public utility rates had been comparable. This changed after 1973 when, faced with likely energy shortages, BPA halted firm power sales to the region's investor -owned utilities. The rates of some IOUs then began to rise sharply. Oregon drafts DRPA legislation At that point, Oregon's Public Utility Commissioner awarded a 90 -day contract "to find a legal way to overturn ... the preference clause,' thus qualifying Oregon's private utility customers for the same June 2007 utilities with preference rights_- At the same, time, Congress intended to' limit-the financial exposure `of piiblic-utilities to certain costs occurring under the Northwest Power.Act. In .craftingSection `(5), Congreskdirected that-the;, benefits of the FederallColumbia River Power: Sy tern () would be shared with ,those= -: Northwest utilities whose'average system cost.or ASC (average cost of resources) was high relative to BPA 's applicable Pr' iority,Firm Exchange rate. The benefits BPA.provides through the program _must be passed on:.toeach.utility's residential and small-farm ; customers; and,cannot be used for any _ other- purpose,' as pro fi_ or, to subsidize ot ter '= ; as`pects; of a, u tili t y ' s business ' Section 4 of the Bonneville Project Act of 1937 grants public bodies and cooperatives priority access to federal power This is known as the preference clause electricity rates that public power customers enjoy." When it appeared preference could not be overturned legally, the state turned to an innovative solution. In 1977, the Oregon state legislature approved form- ing the entire state into a Domestic and Rural Power Authority (DRPA), which was to lay claim as a publicly owned utility to federal hydropower to benefit all of the state's citizens. DRPA was to be- come effective March 1, 1979, if no federal energy bill addressing the problem had been passed. The deadline later elapsed because, by that time, it appeared national legislation was imminent. In 1977, the Pacific Northwest Utilities Conference Committee (PNUCC), which includes both public and private utilities, presented draft legislation "for discussion purposes" to the region's congressional delegation to address multiple issues precipitated by growing concern about power shortages. Fearing their right to first call on federal power would be curbed, Snohomish PUD and Seattle City Light broke ranks and opposed the draft. Snohomish introduced rival legislation aimed at protecting public preference. Public preference challenged As various proposals emerged, the fight over prefer- ence heated up. Washington Governor Dixie Lee Ray dubbed it "a regional civil war." Idaho threatened to follow Oregon's lead to create a domestic and rural power authority. The executive director of the Washington Public Utility District Association declared DRPA "nothing but a facade to protect the profits of private power companies serving his [Oregon governor's] state." In February 1978, the governors of Oregon and Idaho declared BPA "must honor the commitments in acts of Congress that domestic and rural customers have first call on energy from the Federal dams that are even more basic than those of what BPA calls prefer- ence customers." BPA Administrator Sterling Munro strongly defended preference. His view was that the way to get cheap federal power to the three "have -not " states was to increase the size of the resource pie, rather than do away with preference. Oregon Congressman Robert Duncan responded, "If the preference clause isn't changed, then we'll bust the sonofabitch in a lawsuit. The people of the Northwest, all of the people of the Northwest, are entitled to similar energy rates, and they should share the burden of those costs." By the late 1970s, a number of proposals were coalescing into what eventually would culminate in the Northwest Power Act. Any legislation would have to pass through the Senate Energy and Natural Resources Committee, headed by Senator Henry "Scoop" Jackson. Jackson, who was from Washington 2 state, was an advocate of public power and not overly sympathetic to the public - private power rate disparity arguments. Eventually, however, he realized that, if the legislation was to have any chance, it had to deal with the issue. Otherwise, the principle of preference would be at risk. DSI "subsidy" paves way for exchange A breakthrough came when the direct - service indus- tries, facing expiration of their contracts, agreed to pay significantly higher rates for a limited period in return for new 20 -year contracts. At the time "assured supply" was more important to them than price. Under this arrangement, public power would continue to get first call on federal power, but a "subsidy" from the DSIs (the higher rates the industries were willing to pay) would offset and lower IOU rates. This "money deal," which only covered five years, paved the way for an "exchange clause" in the new legislation. The exchange provision allowed BPA to offer IOUs and certain public power entities that owned higher - cost generating facilities a quantity of power at BPA's standard rates equivalent to the total needs of those utilities' residential and small -farm customers. In exchange, BPA would accept from these utilities an equal quantity of power at their average system costs. No power needed to change hands; in reality, it was primarily a monetary paper transaction. Under the exchange, the utilities were required to pass on the benefits to their residential and small -farm customers in the form of lower rates. Section 7(c)(1) of the Act addressed the DSI provi- sion saying that DSI rates shall be established for the period prior to July 1, 1985, at a level sufficient to recover the costs of resources required to serve the DSIs' loads and "the net costs incurred by the Admin- istrator pursuant to Section 5(c) of this Act." Section 5(c)(1) stipulates the exchange of power with eligible utilities requesting such an exchange. 2 The "have -not states" refers to Oregon, Idaho and western Montana, which, unlike Washington, are served pnmanly by investor -owned utilities that do not have preference to BPA power Not all the DSIs were happy with the arrangement. In August 1978, Reynolds Metals objected, saying the draft bill language placed too much of the burden of exchange costs on the DSIs. At the time, the alumi- num industry had a great deal of leverage as it was providing enormous benefits to the region in terms of wages, freight services and state and local taxes. The industry had provided about 30 percent of BPA's revenues. NW Power Act changes regional landscape After several stops and starts, the Northwest Power Act finally emerged and was signed into law in December 1980. The Act's exchange provision extended benefits of the federal system "at cost" to 2.5 million residential and small -farm consumers of IOUs and a handful of consumer -owned utilities that had relatively high ASCs. To win public power support while the Northwest Power Act was being developed, or at least to counter opposition, an amendment had been added in the form of a rate test to provide some cost protection to the preference customers' rates. This is the 7(b)(2) test, which compares costs developed pursuant to the Act with costs reflecting five specified assumptions listed in Section 7(b)(2). In very general terms, it was designed to ensure public customers would pay BPA no more than if their rates had been developed based on the five assumptions. BPA is required to formulate a hypothetical case to assess what costs would have been by using the five assumptions in Section 7(b)(2). If the rate test shows preference customers would have to pay more for firm power under actual rates than under the hypo- thetical case, the Administrator must lower the rates of public utilities to eliminate the excess costs and shift the burden to BPA's other customers. The Act contains five assumptions under Section 7(b)(2) to be used in determining what the hypothetical world would look like. The language in Section 7(b)(2) is complex and has been subject to differing interpretations. Former BPA 3 e'7Z(b)(2);:rate-tes e:Northwest • Power -A'ct provides, througl ection'7(b)(2), a: complex'formula:(rate #test) _that,in general. terms, shields preference - ersfom Certain n' impacts of the Northwest Power Basically, thisyratetest is designed ensure' >th gip cost the Residential Exchange Pro -' am and -other factors, when considered togeth -` . .er, do not raise tlierates'.of public'utilities,beyond, what they would have been absent` the,North - Power Act.' - Section7(b)(2),includes five- assumptions the y. :Administrator uses; to,develop; a set;of costs that : �is-coinpared with alsetofcosts refecting;the;; .,Northwest, Power`Act. This comparison.is -use .in'setting preference.ratesr(See boxon five- assumptions:), ?If Section 7(b)(2) : "trigger's,'then. an "amount; -of'costs,is allocatedtoirates otler',,than the PF' --(Priority Firm), power rate, =the?rate t; ; applies to - p'r`eference customers ;requirements foads. Consequently;-BPA-develops a' PF Exchange' ;rate for REP loads that includes.costs,fromrany `Section 7(b)(2) is -a - trigger,,the, PF_Exchange rate is higher than.tl -PF.Preference rate, and the difference' between the PF_Exchange rate the',utility7s A multiplied:by the 's residential - and °sma farm` l oad, :determines'the a' `,qualifying utility.: Administrator Peter Johnson said of this section, " ... I know how Alice felt when she stepped through the mirror. We seem to have entered an unreal world. The assumptions direct BPA to hypothesize power supply arrangements between itself and its customers — arrangements that are quite different from reality. The Act bounces us back and forth between what might have been had the Act not been passed and what is." Section includes'five assumptions the Administrator is to observe :°in „setting preference' rates.,These-assumptions envision a world that contrasts'with -the worktunder- the Northwest Power' Act. In' other words, the Administrator m ust assume that in this hypotheticalwold: , 1. BPA is not'engaging'in an =exch "ange of power. t ` with IOUs -and consumer -owned utilities, to provide ' ''rate, relief to those utilities' residential arid' small, farm customers. 2.13PA'spublientilit customers would serve .certain of the direct - service industries With ,100 percent firm power: The industries that would lie served by''the' public utilities.are (a)' those industries served.by BPA and.(b).those that are situated- within or adjacent. to _ the - service territories of'the'public customers.' In 1983, BPA sought to clarify Section 7(b)(2) and, after an initial round of comments, published a "Notice of Proposed Legal Interpretation of Section 7(b)(2)." After adopting the legal interpretation, BPA developed a Section 7(b)(2) Implementation Method- ology. BPA published the Implementation Methodol- ogy, which reflected its legal interpretation of 7(b)(2), in the Federal Register in March 1984. Subsequently, BPA developed computer models, in consultation with customers, for the rate test. The 7(b)(2) rate test has triggered several times. In BPA's 1996 and 2002 power rate cases, the upward pressure on the PF Exchange rate was significantly more than in previous years. In the WP -96 and WP -02 rate cases, due to high 7(b)(2) triggers, the PF Exchange rate was 8.3 mills per kilowatt -hour and 13.7 mills per kilowatt-hour higher, respectively, than the PF Preference rates. ASC Methodology established BPA established its initial Average System Cost Methodology in 1981, issuing a Record of Decision on Aug. 26 of that year and filing the methodology with the Federal Energy Regulatory Commission 'e ; five'assurnptions ;, 4 3. The preference, customers' load, .including the DSI loads,mentioned* in.the second'assumption, would ' ' ” nth Federal Base System. power.' 4. If,the preference' customers require more power to'serve ,their- loadsthan' federal resources can supply,'the additional ' power to4meetthese would be acquired =froin.certain specified sources: This additional power would be'provided in'a least= cost -first manner.,',_ 5: There are no dollar savings to the preference customers as a.result of- reduced = financing costs: dues to BPA backing of resource acquisitions,' ;and rio; reserve ' benefits; due to ;the-Administrator's actions under the Act Accrue to them: the following day. FERC granted interim approval effective Oct. 1, 1981, and final approval of the ASC Methodology on Oct. 6, 1983 (retroactive to 1981). At its inception, the REP was implemented through Residential Purchase and Sale Agreements (RPSA) first executed in 1981. These contracts established exchange benefits only through July 1, 2001. Between 1981 and BPA's Subscription Strategy proposal, all of the RPSAs held by the utilities that had received REP benefits had been settled, except for one, which was in "deemer" status. BPA's 1981 RPSAs did not require a customer to own generation or transmission facilities to qualify for an RPSA. Utilities were able to include wholesale purchase power expenses and wheeling contracts with third parties as costs to establish an ASC. Distribution costs were excluded from the ASC calculation. 3 BPA used a computer -based model known as the Supply Pricing Model (SPM) The model simulated the rate - setting process 4 BPA's 1981 RPSAs included a provision described as a deemer account. Deemer referred to a status wherein a utility sets its ASC equal to BPAs PF Exchange rate and does not receive positive monetary benefits but accrues a negative balance that must be worked off before resuming receipt of additional monetary benefits Average System' Cost - An ASC represents the average.cost of resourc- - es for ,any given utility. An ASC cannot, by',law, , include additional resource costs to serve large single loads'or extra- regional load'o the.'.. costs of a,resource terminated prior to pommer- cial operation. The calculation:includes'a number of details, but generally, Costs and certain transmission costs are currently , included' in.the ASC, although distriliutiomcosts, are excluded., Customers, with market purchases or those who own their,own generation are most , likely to have ASCs that; arehigher than BPA's PF ,Exchange,rate. Since many, of the North - west's investor -owned utilities:own coal gas - fired plants, historically they have had'higher ASCs�than BPA's PF Exchange rate. BPA's 1981 RPSAs included a number of contractual terms and conditions describing BPA's right to purchase power in lieu of the utility's resources priced at its ASC. These reflected the electric power industry of the period and assumed that a utility would be developing its own resources or entering long -term purchase power contracts to serve its loads. BPA revises ASC Methodology From the start, things did not go smoothly. The DSIs, who were bearing the cost of the exchange through 1985, complained that the IOUs were including inappropriate costs and overhead in their average system costs. In 1983, Northwest Aluminum News wrote, "The main problem — and a monumental one — is that some participating utilities are using the exchange to recover costs other than `resource' costs ... Some of the questionable costs include items such as taxes, overhead, and expenses related to uncompleted or discontinued power plant projects." The IOUs denied the costs were improper. At the same time, public utilities that weren't participating in the exchange complained that attempts to include inappropriate costs in the ASC calculation were driv- ing up the costs of power they were buying from BPA. 5 Beginning in 1983, the DSIs and public agency customers sought a change in the ASC Methodology. They had a number of concerns, including perceived abuses to the system related to the attempted inclu- sion of terminated plant costs. BPA had previously removed terminated plant costs from an ASC filing made by an exchanging utility. BPA Administrator Peter Johnson agreed that the exchange was "not working as Congress intended." A BPA issue alert described the existing methodology as "unworkable, expensive, time consuming, and difficult to administer." Consequently, BPA staff recommended tighter procedures for computing the ASC. Section 5(c) of the Northwest Power Act provides that the Administrator shall develop an ASC Method- ology in consultation with the Northwest Power and Conservation Council, the Administrator's customers and appropriate state regulatory bodies. BPA initiated a consultation process open to the public to begin revising its ASC Methodology to address multiple issues. These issues included the source data for the method- ology, determination of whether transmission costs should be treated as resource costs, subsidization of construction work in progress, treatment of equity return, treatment of income taxes, determination of generating resources that could be included in com- puting ASC, treatment of affiliated fuel costs, includ- able conservation costs and functionalization between subsidized and nonsubsidized accounts. A Federal Register notice on the consultation process was issued in October 1983. 5 In the context of the REP, "in lieu" comes up when the market price of power (or the price of other resources) is less than the exchanging utility's average system cost In that case, the Northwest Power Act allows BPA to purchase power "in lieu" of exchanging at the utility's ASC BPA would buy power at the market or resource rate and sell to the exchanging utility al the PF Exchange rate, thus reducing the level of benefits to the difference between the market price and PF Exchange rate The utility would then have to find something else to do with the high -cost resources that have been "in lieued." Or, instead of being stuck with unwanted power, it could deem its ASC to be equal to the cost of the resource BPA would have acquired and sold to the utility Either way, BPA saves on a unit basis the difference between the utility's ASC and the lower in -lieu resource cost After taking regional comment, BPA published a proposal on a revised ASC Methodology in February 1984 and, after a public comment period, issued a record of decision on its revised ASC Methodology in June 1984. In that year, nine IOUs and 16 public utilities were participating in the exchange. IOUs challenge ASC revisions Although the IOUs challenged the ASC Methodology change in the FERC proceeding, FERC approved the revised methodology. A number of IOUs challenged the change in the Ninth Circuit Court of Appeals, but the Court upheld BPA's decision (PacifiCorp v. Fed. Energy Regulatory Comm 'n, 759 F.2d 816 ((9th Cir. 1986)) in 1986. While the Court's opinion upheld the revised ASC Methodology, it held that it did not "sanction any permanent implementation of these exclusions." Id. at 823. Since then, the IOUs have argued that the Court upheld the 1984 ASC Method- ology as a "temporary" change to address terminated plant cost issues and did not intend a permanent change. The ASC Methodology provides for future changes. Under the ASC Methodology, the Administrator may initiate a consultation process to determine whether to change the existing ASC Methodology at his discre- tion or upon request from three- quarters of utilities with Residential Exchange contracts, three- quarters of BPA's preference customers or three- quarters of BPA's DSIs (which was relevant at the time). Arguments continued into the 1990s as IOUs disputed BPA's calculation of the ASCs and other determina- tions related to the REP. Throughout the decade the disputes were essentially continuous. Key elements of the disputes included benefits under the RPSAs — not enough in the IOUs' opinions and too much accord- ing to the publics and DSIs — as well as BPA's ASC Methodology, utilities' ASCs, deemer balances, "in lieu" transactions and BPA's PF Exchange rate. Region conducts Comprehensive Review The advent of deregulation of the electric power industry in the 1990s changed the industry dramati- 6 cally. Utilities no longer solely constructed generation or made long-term purchases. Increasingly, they purchased power on the wholesale market from independent producers, wholesale marketing entities and others, and some purchases were short-term. BPA began to face tough competitive challenges, and some questioned the agency's ability to fit into the newly deregulated world. In the mid- 1990s, the Depailinent of Energy, BPA and the governors of the four Northwest states all called for a Comprehensive Review of BPA's future role in the Northwest. One of the things that came out of the Comprehensive Review recommendations was a pro- posed Subscription process that would set parameters for allocating federal system benefits. This was pre- cipitated by the fact that power sales contracts custom- ers had signed with BPA were due to expire in 2001. The Comprehensive Review, which published a final report in December 1996, took the opposite stance of an earlier BPA Administrator, Sterling Munro, who had said the way to spread the benefits of the federal system was to increase the size of the pie. Instead, the Comprehensive Review said BPA should get out of the business of acquiring new resources to meet customers' load growth, except in those cases where the customer would bear the additional costs. The Comprehensive Review Steering Committee encouraged BPA and other parties in the region to explore a settlement of the REP with the region's IOUs based in part on a sale of power to them rather than the historic practice of monetary payments. Congress helps stabilize exchange By the mid- 1990s, deregulation of the electric utility industry, spiraling fish costs brought by Endangered Species Act filings and reduced hydro supply had pushed BPA rates up. The most important factor, however, was the decrease in market price of power due largely to the entry of independent power produc- ers selling gas -fired generation. As market prices 6 The formal name of the review was the Comprehensive Review of Northwest Energy Systems. dropped, some BPA customers removed load from BPA. For the first time, BPA's PF Exchange rate was higher than many of the utilities it was exchanging power with. As public power customers sought to exit contracts, concerns arose over whether BPA would have adequate customers to cover its costs. In August 1995, BPA reported "The calculation 7(b)(2) required by the law has forced BPA to make the most significant reduction in Residential Exchange benefits in 11 years. The proposed reduc- tion could cause up to 45 percent of the region's residential and small -farm customers to see an increase in rates." BPA cited increased competition, especially from natural gas, and said "... for the first time in its history, BPA has lost wholesale customers to private utilities. " At the time, BPA had been paying approximately $200 million a year to utilities participating in the REP. BPA's Initial Proposal in its 1996 power rate case indicated a large reduction of benefits under the REP starting in fiscal year 1997. BPA was assuming REP benefits of about $65 million a year. Concern about reduced benefits prompted Congress to take action. The Energy and Water Development Appropriations Act of 1996 specified setting 1997 exchange benefits at the 1996 level of $145 million for the one -year period. BPA was to distribute the benefits to each participating utility at the percentage share each received in fiscal year 1995. In the 1996 Conference Report of the Energy and Water Development Appropriations Act, Congress recognized BPA's authority " ... to implement in lieu transactions, among other actions, which could effect- ively terminate the residential exchange after 2001." The report went on to say, "Consistent with the regional review, Bonneville and its customers should work together to gradually phase out the residential exchange program by October 1, 2001." BPA, however, could not eliminate implementing the REP without direct action by Congress to change the law. In September 1997, BPA and the Northwest Power and Conservation Council jointly launched a review of BPA's costs. The purpose was to set the stage for a 7 8 Puget had a Penodic Rate Adjustment Mechanism (PRAM) to true up rates two years after the end of each rate penod In 1991, BPA and Puget formulated a "true -up" mechanism to permit an accurate determination of Puget's ASC benefits in conjunction with the Washington Utility and Transportation Commission's PRAM PRAM true -up benefits were to be paid two years after the end of the exchange period successful Subscription process by providing further cost - cutting recommendations to build customer confidence that BPA was doing all it could to contain costs. Among the recommendations, the Cost Review said the REP made no sense in the current market: place and should be eliminated, although this could not be accomplished without legislative change. In early summer 1996, Puget Sound Energy, Pacific Power and Portland General Electric expressed interest in a possible settlement of REP disputes. BPA entered negotiations with the three IOUs regarding a settlement of such disputes but deferred negotiations after failing to reach agreement on the total dolla r settlement. Eventually, BPA settled with Puget in January 1997 and with Pacific in April of that year. BPA settled with PGE, then owned by Enron, a year later in April 1998. These agreements specified that they did not set precedents for how the Residential Exchange would be handled after 2001. Payments to the IOUs for the 1998 -2001 period averaged $59 million annually. As it turned out, 1996 was the last year that exchange benefits were determined through the traditional REP process (i.e., Appendix 1 filings, calculation of ASCs and PF Exchange rates). Congress set the level of exchange benefits for 1997. Following that, benefits were determined through the settlement agreements. Such settlements had been recommended by the Comprehensive Review and Congress. These settle- ments had the advantage of being far less labor intensive. Running the regular REP required abo at 50 BPA staff as well as significant numbers of staff from utilities. 7 In February 1995, BPA listed four key pressures driving up its rates 1) protracted drought, 2) increased salmon costs, 3) generation debt service due to the way refinancing for Wash- ington Public Power Supply System bonds had been structured, and 4) additional generation costs due to short-term purchases and new generation projects including Tenaska, a gas -fired combustion turbine 2000 REP Settlements crafted In the late 1990s, the market began to change as natural gas prices began to rise. BPA's Competitive- ness Project, launched in 1993, - was paying off in { terms of improved financial performance and cus- tomer confidence. BPA's net revenues for 1997 were the best since 1991. In 1998, BPA launched a Sub- scription process generally consistent with recom- mendations from the Comprehensive Review. It was designed to culminate in new 10 -year power sales contracts for the post -2001 period. When BPA does a-7(b)(2) test, - it must hypothetical,case'to, determine what_the costs to pref erence .customers would have been under the-, , five-7(b)(2) assumptions. There are many: arcane issues embedded in this calculation that'have a significant•iinpact oti ,tha-p level, of REP - ;payments. . 'One assumption,(see five - assumptions, box) is if preference customers require, iriore power than federal resources can supply, BPA;would_acquire the additional power to meet these' needs dom.' a - resource stack'in a least - cost =first sequence, This , .,brings up the question- of what can be included,in', , BPA's resource stack in this, hypothetical' world. An example is the Mid - Columbia resources. not dedicated,to public. load (approximately 80114W: of hydropower, which- are.relatively cheap): The publics that, own the Mid- Columbia dains'sold' a , 'significant amount ofthe,power to the IOUs by _. contract. If the Act is interpreted to'mean;that these Mid- Columbia-resour'ces; sold to the IOUs can be ,. s''resource stack in.the hypothetical- "scenario, BPA's resource costs would be„compara- tively'low; That ,would meanr,a surcharge is more ' ' likely to be added to''the'PF'•Exchange.rate'to ensure: - Keyissues can swing REP:.payments' substantially - 'I f the Act means that in the hypothetical` - case those Mid- Columbia resources dedicated to IOU' load are unavailable to BPA, thenBPAwould have to go to the next cheapest resources iri the' resource - stack, ,which is much more expensive than 'the'Mid= Columbia,hydro. ,This makes - 7(b)(2) less - likely to trigger, and therefore means higher REP benefits for the IOUs. The issue of whether the Mid - Columbia resources could be included in the, BPA resource- stack ,came up in 1996- but:turned out to=bemootsince at the time there were enough Federal System resources to Meet public needs without these additional resources. At the time, -BPA assumed that ; only the resources exported could tie included';, the publics aren't paying- more they would have in circumstances' reflecting. the five 7(b)(2) assumptions,•This would REP benefits: 8 As part of the Subscription Strategy, BPA proposed to either continue the traditional REP through agree- ments known as Residential Purchase and Sale Agree- ments (RPSA) or enter into negotiated settlements of REP disputes for the FY 2002 -2011 period. Such settlements were intended to provide benefits for the IOUs in return for their waiver of claims. In the settlements, the benefits reflected possible outcomes of ASC determinations and the effect of Section 7(b)(2) on BPA's PF Exchange rate. r The issue next arose in where it once again became moot Duringthe WP 2007, -power rate case, the issue *was not litigated because of a partial Settlement, However; the next time BPA develops rates this is' likely to be,an it °remains an open question. BPA has calculated that. this issue alone would ,'create a difference between the IOUs receiving '- $30 million annually'versus annually: There '. are other similarly arcane issues that can swing:the benefit levels substantially The concept of substituting a power sale for the "paper" exchange was discussed extensively during BPA's public involvement process for Subscription and was supported by many public utilities and other interests, as well as IOUs. BPA's proposed settlement of REP issues had a value of $140 million a year to be provided in the form of both a power sale and money. BPA estimated that, under its traditional calculation of REP benefits, the IOUs would receive $48 million annually for the FY 2002 -2006 period. The IOUs were advancing a position under which payments could be $323 million or more annually. The IOUs' agreements, which were for 10 years, provided power at a specified rate — to be determined in a Section 7(i) rate hearing — and stipulated monetary benefits were to be paid based on a comparison of the REP settlement power rate and at a rate related to market prices. BPA offered the IOUs 1,800 aMW for the FY 2002- 2006 period with 1,000 aMW in the form of power and the rest as cash payments. BPA also offered to IOU and Public Agency Residential Exchange Benefits (2005 $) O O O 450,000 400,000 350,000 300,000 - , 250,000 - 200,000 - 150,000 100,000 50,000 - 9 provide 2,200 aMW during the 2007 -2011 period. The intent at the time was that the 2,200 aMW would be entirely physical power deliveries, although whether the benefits would be power, monetary or a mixture was not decided. BPA felt that such power deliveries would be possible due to the expiration of existing long -term surplus sales and public power's interest in diversification due to market conditions. This theory did not anticipate the West Coast energy crisis along with its impact on the value of power, public power's willingness to buy from BPA and the impacts on IOU and BPA rates. Through the settlement, BPA hoped to resolve long- standing REP disputes, eliminate the administrative burden of implementing the REP (i.e., processing average system costs, filings, etc.) and align the interests of the IOUs with BPA and its other custom- ers by providing them benefits comparable to what would have been provided within the range of possible REP outcomes. BPA also hoped to prove de longer-term certainty through the settlements. '4. �D,v - �-9r' i i� �Dy �4v - �� r- -0 / 1V4 -4, 2 24 4��4 �4.���by 41 6 c� J 84 J 6� 8 D / J J' l 9 ! J S 7'Oi > ° I Fiscal Year FYs 2007 through 2011 benefits were computed prior to the May 3, 2007, 9th Circuit decision • All IOUs • All Publics • Puget Sound Energy ❑ PGE • PacifiCorp (UP &L) • PacifiCorp (PP &L) • North Western Energy ❑ Montana Light & Power ❑ Idaho Power • CP National D Avista Cora All six IOUs elected to execute 2000 REP Settlement Agreements. The state public utility commissions recommended how the benefits of the settlement would be allocated among the IOUs and asked for an additional 100 aMW for FY 2002 -2006. BPA's decision making leading to adoption of these recom- mendations involved extensive public review. The publics go to court Within 90 days of the execution of the 2000 REP Settlement Agreements, a number of Northwest public power entities challenged the agreements in the Ninth Circuit Court of Appeals. Some IOUs filed petitions, but the basis for such petitions was resolved shortly thereafter. The petitions were consolidated into Portland General Electric Co. v. Bonneville Power Administration. The public agencies alleged the settlements provided more benefits to the IOUs than the Northwest Power Act allowed. The parties argued that BPA lacked statutory authority to settle disputes under the REP as proposed and that the 2000 REP Settlement Agree- ments must comply with Sections 5(c) and 7(b) of the Northwest Power Act. They said that, by executing the settlements, BPA did not comply because it failed to implement the ASC Methodology, in lieu transac- tions and BPA's PF Exchange rate based on the 7(b)(2) test. BPA believed it complied with the law because it considered all of these factors in establish- ing the REP settlements. West Coast power crisis shocks region By the summer of 2000, West Coast power prices were escalating rapidly. As a result, public power customers were showing increasing interest in placing substantial amounts of load on BPA for the post -2001 period. By the time contracts were signed in October 2000, it was apparent that BPA would need to acquire approximately 3,000 aMW beyond its existing supply to meet its contractual commitments to public utili- ties, IOUs and DSIs with deliveries to begin in October 2001. 10 In the winter of 2001, wholesale power prices explod- ed. BPA estimated that it would need to raise rates 250 percent if it were to acquire the full 3,000 aMW at the then current prices. In the first six months of FY 2001 alone, BPA spent more than $1 billion buying power. Facing this extreme situation, BPA developed a three- pronged load reduction program that included conservation, reductions in power demand by utilities and load curtailments by DSIs. In May and June of 2001, BPA executed 2001 Load Reduction Agreements with Pacific and Puget, eliminating BPA's obligation to deliver power for the FY 2002 -2006 period in exchange for cash payments. The IOU agreements were structured so that BPA's payment in FY 2002 was lower than the FY 2003- 2006 annual payments. These agreements to forego power deliveries in exchange for a cash payment eliminated BPA's need to buy large amounts of more costly power on the market. While the efforts to reduce BPA costs were largely successful, public power utilities still saw their rates go up 45 percent in October 2001. At the same time, IOU REP benefits to Pacific and Puget increased substantially as a result of the load reduction agree- ments. Some public utilities whose rates historically had been much lower than those of neighboring IOUs suddenly found themselves having to raise their residential rates above those of IOUs. Total benefits flowing to the IOUs' residential and small -farm consumers, including payments to reduce load on BPA, rose to about $370 million annually, compared to $58 million annually in the previous rate period. BPA moves to lower public rates An extended drought in the Northwest made it difficult for BPA to recover financially from the West Coast energy crisis and thus to lower power rates for public utilities. BPA looked for new initiatives that could further lower its costs and bring about rate reductions. Such cases are often referred to by the name of the first petitioner In 2003, BPA proposed a global REP litigation settlement with all BPA customers that was designed to provide rate relief for public utilities. The settle- ment was fragile from the start because it required support of nearly 100 preference customers that were parties to various lawsuits. The 2003 Litigation Settlement ROD provided that, among other things, if any preference customer failed to sign the stipula- tion and other settlement documents within 90 days after the effective date (Jan. 21, 2004), the proposed settlement would be void. The proposed settlement would have decreased FY 2004 rates for public utilities by 7 percent (from what they otherwise would have been) by eliminating $200 million in IOU REP benefits and deferring another $270 million of benefits into the five -year rate period beginning in 2007. The proposed settlement also would have settled lawsuits brought by public utility customers regarding the level of benefits going to IOU customers. The settlement proposal failed for lack of sufficient signatures. BPA received support from 86 customers, while six opposed the settlement and others did not respond formally. Settlement "lite" offered After the failure of the proposed global litigation settlement, in 2004 BPA proposed contract amend- ments to the underlying IOU settlements. This came to be known as "settlement lite." In April 2004, BPA sent a letter asking for comment on a proposal in which Pacific and Puget would waive $160 million of payments between 2004 -2006 and defer another $100 million, plus interest, until FY 2007 -2011 when BPA expected to be on better financial footing. The amendments offered similar terms to the other IOUs, and all six signed agree - ments. In return, the IOUs would receive greater certainty about their benefits. The benefits were defined as financial payments, not power deliveries. The proposed agreement established a floor of $100 million a year with an annual cap of $300 mil- lion for FY 2007 -2011. By removing the $200 million 11 from power costs, FY 2005 -06 power rates were 6 percent lower than they otherwise would have been. The majority of commenters approved the proposal. The IOUs agreed to the new settlement primarily because it gave them greater certainty as to how post - 2006 benefits would be calculated. On May 25, 2004, BPA published the 2004 Agreements Regarding Payment ROD adopting the proposal to amend the underlying agreements. Clark requests exchange In June 2005, Clark Public Utilities, headquartered in Vancouver, Wash., sent BPA a letter requesting exchange benefits. Clark had experienced a sharp rise in its fuel costs for its gas -fired plant. Historically, while the bulk of exchange benefits had gone to IOUs, over the years more than 30 publicly owned Northwest utilities had participated in the program. All previously participating publics either had terminated contracts or settled the amount of their benefits. BPA offered Clark an RPSA, which Clark signed in August 2005. This initiated the analysis to determine the utility's REP benefits. The following December, BPA and Clark reached a settlement, with exchange benefits scheduled to go into effect in January 2006. As part of the settlement, Clark returned to BPA's control area and replaced its power purchase contract with a partial service product. REP discussed as part of Regional Dialogue Since 2002, BPA has engaged with the region in a Regional Dialogue aimed at defining BPA's future power sales role after 2011 when current wholesale power contracts with preference customers expire. The future of the REP has been a prominent part of these discussions involving both public and investor - owned utilities. These discussions, extending over five years, focused on forging a regional consensus on 10 Certain provisions for Avista, Idaho Power, NorthWestem and PGE were different from those in Pacific's and Puget's contracts a new financial formula to settle REP disputes for the 2012 -2027 period. While no agreement was reached, the parties did narrow their differences and were prepared to continue discussions. BPA and the IOUs agreed on principles for a new settlement, but further progress was put on hold after the Ninth Circuit decision on May 3, 2007. Ninth Circuit weighs in On that date, the U.S. Ninth Circuit Court of Appeals ruled on two lawsuits that had Residential Exchange implications. The first suit is known as the PGE (Portland General Electric) suit and was filed against BPA by numerous parties challenging BPA's 2000 REP Settlement Agreements with six IOUs (for the FY 2002 -2011 contract period). Public utilities were the primary petitioners, although investor -owned utilities and industrial customers also filed petitions. In the PGE case, the Court held that BPA exceeded its settlement authority and concluded that the settlement was not consistent with Sections 5(c) and 7(b) of the Northwest Power Act, which established the Residen- tial Exchange Program. The Court also said BPA avoided the full statutory scheme of protecting preference customers under Section 7(b)(2). The second lawsuit, known as the Golden Northwest suit, addressed, among other things, BPA's FY 2002- 2006 power rates. In this case, the Western Public Agencies Group, Public Power Council and Grays Harbor PUD had contended BPA improperly allo- cated costs of the REP settlements to the PF Prefer- ence rate. The Court referred to its ruling in the PGE case, noting that the IOU settlements were unlawful. The Court held BPA should not have allocated costs of the settlement as business costs under Section 7(g) of the Northwest Act. BONNEVILLE POWER ADMINISTRATION DOE /BP -3811 • JUNE 2007 12 At the time of the Court's decision, the IOUs had collectively been receiving about $327 million in annual benefits. As a result of the Court's hearing, BPA formally notified the IOUs" in writing of its decision to suspend REP settlement payments imme- diately due to the uncertainty created by the recent Ninth Circuit Court rulings. BPA certifying officials are personally liable if payments are made that are not consistent with law, and, in this case, the Court's rulings created substantial questions over whether additional settlement payments are consistent with the law. These payments amounted to about $28 million each month to investor -owned utilities for their residential and small -farm consumers. The IOUs involved include Portland General Electric, Pacific Power, Rocky Mountain Power, Avista, Puget Sound Energy, Idaho Power and Northwest Energy At the time of the settle- ment, Rocky Mountain Power was part of PacifiCorp, parent of Pacific Power ORT)/NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Larry Dunbar, Deputy Director of Power Systems Subject: Amendment No. 2 to Telecommunications Consultant Agreement Summary: By the end of this year Capacity Provisioning, Inc. will prepare the plans and specifications for additional fiber optic facilities and local area network improvements that are required by the Metropolitan Area Network Services Agreement and will be constructed in 2011. Staff recommends that Columbia Telecommunications Corporation is retained for design review and construction inspection services. Recommendation: Forward a favorable recommendation to City Council to authorize the City Manager to sign Amendment No. 2 to the Agreement with Columbia Telecommunications Corporation in an amount not to exceed $9,900 for consulting services in support of the Metropolitan Area Network, and authorize the City Manager to make minor modifications to the Agreement, if necessary. Background /Analysis: On March 17, 2009, City Council authorized the Mayor to sign a consulting services agreement with Columbia Telecommunications Corporation (CTC) for a network needs assessment and public safety considerations. The consulting services sought were advertised and a total of eight consulting proposals were reviewed at that time, with CTC providing the best qualifications and most responsive proposal. On July 21, 2009 City Council authorized the Mayor to sign an amendment to the consulting services agreement for preparation of a request for proposals for the Metropolitan Area Network and a grant application for the Wireless Mobile Data System. CTC's services have been of high quality and they have been very responsive and supportive of the City's needs. On April 6, 2010, City Council authorized the Mayor to sign the Metropolitan Area Network (MAN) Services Agreement with Capacity Provisioning, Inc. (CPI). At last month's Utility Advisory Committee meeting, staff provided a report on CTC's inspection of CPI's core switching equipment and customer premises equipment replacement within the fiber optic network, which were a requirement of the MAN Services Agreement. The work was inspected by CTC and accepted as complete. N \UAC \Final \Telecommunications Consultant Agreement Amendment 2 doc Amendment No. 2 to Telecommunications Consultant Agreement November 9, 2010 Page 2 By the end of this year CPI will prepare the plans and specifications for the redundant fiber optic facilities, leachate pump stations 1 & 2 fiber optic facilities, commercial and industrial customer demand response fiber optic facilities, and local area network improvements that are required by the MAN Services Agreement. Construction is scheduled to be complete by April 15, 2011. The City's share of this future expense in 2011 is approximately $163,000.00. Staff anticipates that it will report on the status of this project to the Utility Advisory Committee in January and May of 2011. Based on CTC's performance and familiarity with the City's telecommunications needs and agreements, staff recommends that they are retained to provide engineering services to review the design and inspect the construction of fiber optic facilities and local area networks under the MAN Services Agreement. A summary of the proposed scope of work, schedule and not to exceed prices for services are provided below. Scope of work Task 1 — Review plans and specifications Task 2 — Provide on -site inspection Task 3 — Review as- builts Task 4 — Travel expenses Completion by I Price February 25, 2010 May 31, 2010 May 31, 2010 I $7,500 N/A I 2,400 Total I $9,900 Staff recommends that the Utility Advisory Committee forward a favorable recommendation to City Council to authorize the City Manager to sign Amendment No. 2 to the Agreement with Columbia Telecommunications Corporation in an amount not to exceed $9,900 for consulting services in support of the Metropolitan Area Network, and authorize the City Manager to make minor modifications to the Agreement, if necessary. 1 pORT NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee J From: Phil Lusk, Power Resources Manager Subject: Retail Tiered Rate Methodology Study New Large Single Load Summary: The Electric Utility needs to establish a policy for new large single loads to address how marginal power supply costs will be recovered. Staff will be returning to the Utility Advisory Committee no earlier than February of 2011 to consider a proposed new large single load ordinance. Recommendation: For information only, no action requested. Background /Analysis: The Pacific Northwest Electric Power Planning and Conservation Act (Act) defines a New Large Single Load (NLSL) for the Bonneville Power Administration (BPA) to be any new load or expansion of an existing load at a single facility whose power requirements increase by 10 average megawatts (aMW) or more in any consecutive 12 -month period as compared to its consumption during the immediately preceding 12 -month period. For the City's Electric Utility, an appropriate NLSL may be 2 aMW under the new BPA wholesale tiered rate methodology (TRM). Under the BPA wholesale TRM that will become effective on October 1, 2011, load requirements in excess of our "High Water Mark" (HWM) will be purchased at higher market power prices ( "Tier 2 "). If a 2 aMW NLSL requests retail electric service, Tier 2 power costs using today's retail rate setting practices would be rolled into the total Electric Utility's revenue requirement with the potential to increase retail rates by about 1.5% for all of the City's retail electric customers. In contrast, a 10 aMW NLSL could increase retail rates by about 5.9% There are two key NLSL issues: the aMW level the City establishes for it's NLSL, and if the Tier 2 power supply costs associated with serving a NLSL are shared with all retail electric customers. Quite simply, a NLSL could either result in significantly more expensive retail rates for the new customer or a modest retail rate impact for all customers. The issue presents the classic policy trade -off between encouraging economic development by providing competitive rates for NLSL's, or making new customers face the marginal power supply costs that they impose on the system. Bonneville Power Administration (2001) New Lame Smele Load Policy N \UAC \Final \Retail TRM Study New Large Single Load doc Retail Tiered Rate Methodology Study New Large Single Load November 9, 2010 Page 2 Staff is confident that Tier 2 power purchases can be delayed until at least 2014 as long as we continue to experience historical customer growth, maintain our expanded energy conservation program, and there are no reductions to the federal based system. However, a NLSL policy should be developed in the coming months as a safety net in case a large commercial or industrial customer expands or a new one locates in our service territory. Public Works and Utilities staff plans to interact and involve the City's Community and Economic Development Department, the Clallam County Public Utility District No. 1, and the Clallam County Economic Development Council in discussions on NLSL issues. Staff anticipates returning to the Utility Advisory Committee with a proposed NLSL ordinance for consideration no earlier than its February 2011 meeting. ORT NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Larry Dunbar, Deputy Director of Power Systems Subject: Wireless Mobile Data System Grant Business Case Evaluation Update Summary: Last month Police Chief Terry Gallagher arranged a conference call that provided additional information to the Utility Advisory Committee about the realistic cost of operating and maintaining a wireless mobile data system. Staff has updated the assumptions in the business case evaluation and can present a revised summary of the estimated operating and maintenance costs of the proposed wireless mobile data system at today's meeting. Recommendation: For information only, no action requested. Background /Analysis: On May 11, 2010, staff provided the Utility Advisory Committee information on the City's proposed wireless mobile data system that is a sub -grant to the Northwest Open Access Network's (NoaNet) grant application under the Broadband Technology Opportunities Program (BTOP. The Utility Advisory Committee directed staff to provide additional information about the estimated operating and maintenance costs of the proposed wireless mobile data system at a future meeting. Last month staff shared information from other agencies that are experienced in wireless mobile data systems such as the Cities of: Ripon, CA; Lebanon, OR; Prineville, OR; and Brookline, MA. Based on the experience of other cities staff now anticipates a much longer equipment life (previously 7 years was assumed and now from 12 to 20 years is reasonable which is similar to voice radio equipment) and that outsourcing design, construction, operation, maintenance, and services to the public would significantly lower the City's ongoing costs. Mr. Dick Bull, the former Chief of Police for the City of Ripon, CA, joined last month's meeting by conference call and shared his knowledge and experience operating and maintaining a wireless mobile data system. Staff has updated the assumptions in the business case evaluation and can present a revised summary of the estimated operating and maintenance costs of the proposed wireless mobile data system at today's meeting. N \UAC \Final \Wireless Mobile Data System BCE Update doc pORTANGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo Date: November 9, 2010 To: Utility Advisory Committee From: Larry Dunbar, Deputy Director of Power Systems Subject: Advanced Metering Infrastructure System Project Update Summary: Staff is continuing to make progress on the Advanced Metering Infrastructure System project. Recommendation: For information only, no action requested. Background /Analysis: On November 1, 2010, staff learned that it's Commercial and Industrial (C &I) grant application to the Bonneville Power Administration (BPA) for a Demand Response (DR) project was successful. The C &I DR equipment will be integrated into the AMI System and electric utility Supervisory Control and Data Acquisition System. Staff will present information at today's meeting on the potential impacts of a New Large Single Load (NLSL) which was included in the Retail Tiered Rate Methodology Study. A NLSL would have retail rate impacts if the Electric Utility is required to purchase more expense Tier 2 power supply. As part of the presentation staff will provide recommendations to address this policy issue for the Electric Utility. Parker LePla is scheduled to present the Communications Plan to the Utility Advisory Committee at today's meeting. The Communications Plan will include a campaign theme, key messages, and a schedule for various educational and advertising materials for the AMI System. Amendments to the Communications Plan scope of work and fee will be necessary for the residential DR project, which will be considered at today's meeting. Staff plans to request consideration of another amendment to the Communications Plan scope of work and fee will be necessary for the C &I DR project at next month's meeting. AMI System proposals are continuing to be evaluated and over the last month each vendor provided a presentation on their DR proposals, references were checked, and a revision to their proposals was requested. Staff now anticipates that it may be requesting the Utility Advisory Committee's recommendation to City Council on the AMI System Agreement at their December 14, 2010 meeting. An executive summary of the Utility Advisory Committee involvement in the overall project is available on the following page. N \UAC \Final \AMI System Project RFP Update doc AMI System Project Update November 9, 2010 Page 2 Milestones Advertisement Proposal Deadline UAC Consideration City Council Consideration Milestones UAC Consideration City Council Consideration UAC Consideration City Council Consideration 'Revised dates. AMI System 5/10/2010 8/6/2010 I 4/19/2010 I 9/30/2010 I 12/14/2010' I 7/13/2010 I 11/9/2010 12/21/2010' 7/20/2010 11/16/2010 AMI System 12/11/2011 12/18/2011 Request for Proposals Summary BPA DR Projects Commercial Communications Residential & Industrial Plan 2/18/2010 6/10/2010 Scope of Work Summary BPA DR Projects Commercial Residential & Industrial Phase I Construction 3/8/2011 3/15/2011 Phase II Construction 12/11/2011' 12/18/2011 Communications Plan Consultant Report 11/9/2010 11/16/2010 Retail TRM Study 5/10/2010 1/25/2010 7/2/2010 I 3/5/2010 8/10/2010 ( 4/13/2010 8/17/2010 4/20/2010 Retail TRM Study 8/10/2010 8/17/2010 NLSL TBD TBD ORT NGELES W A S H I N G T O N , U.S.A. Utility Advisory Committee Memo November 9, 2010 Date: To: Utility Advisory Committee From: Phil Lusk, Power Resources Manager Subject: Electric Utility Grant Status Report Summary: The Electric Utility has applied for eleven grants over the last two years for projects included in the Capital Facilities Plan. A Grant Status Report has been prepared that summarizes success rates and leverage provided. Recommendation: For information only, no action requested. Background /Analysis: The Electric Utility has applied for eleven grants over the last two years for projects included in the Capital Facilities Plan. A Grant Status Report has been prepared that summarizes the success rates and leverage provided. The highlights of the Grant Status Report include: ✓ 64% success rate obtaining grants (7 out of 11 grant applications were approved, 2 rejected, 2 still under review) ✓ 58% funding success rate ($3,605,967 of grant funding towards a total City project cost of $5,695,390) ✓ $1.75 funding leverage rate ($3,605,967 of grant funding divided by $2,089,423 City cost share) ✓ $37.74 consultant leverage rate ($3,605,967 of grant funding divided by $97,070 in consultant fees to prepare grant applications) For more information please refer to the attached Grant Status Report. N \UAC \Final \Electric Utility Grant Status Report doc City of Port Angeles Public Works & Utilities Power Systems Division Grant Status Report GRANTS AWARDED Grants City Cost -Share TOTAL ARRA Community Block Grant 135,000 300,000 435,000 Bonneville Environmental Foundation 16,661 18,739 35,400 BPA C &I DR 384,520 360,595 745,115 BPA Residential DR 367,000 287,110 654,110 BPA Wind Integration 157,000 0 157,000 BTOP 2,559,036 1,096,729 3,655,765 Shared Resource Conservation Manager 43.750 26.250 70.000 TOTAL $3,662,967 $2,089,423 $5,752,390 GRANTS UNDER REVIEW Grants Cost -Share TOTAL EPA Street Lights 867,500 884,000 1,751,500 Google Fiber for Communities 2 TOTAL 867,500 884,000 1,751,500 REJECTED Grants Cost -Share TOTAL Advanced Hydro 368,104 231,896 600,000 Smart Grid Investment Grant 1.388.000 1.388.000 2.776.000 TOTAL $1,756,104 $1,619,896 $3,376,000 GRAND TOTAL $6,286,571 $4,593,319 $10,879,890 CONSULTING FEES PAID TO DEVELOP PROPOSALS Consultant Advanced Hydro None 0 ARRA Community Block Grant McKinstry 4,860 Bonneville Environmental Foundation None 0 BPA C &I DR EES 12,300 BPA Residential DR EES 12,050 BPA Wind Integration None 0 BTOP CTC 45,000 EPA Street Lights (in review) EES 4,860 Google Fiber for Communities (in review) None 0 Shared Resource Conservation Manager None 0 Smart Grid Investment Grant EES 18.000 TOTAL FEES PAID $97,070 SUCCESS RATE (Grants Awarded / Grants Applied For) 64% SUCCESS RATE (Grants Awarded / Total Grant Bid) 58% FUNDING LEVERAGE (Grants Awarded / City Cost - Share) $1.75 CONSULTANT LEVERAGE (Grants Awarded / Consulting Fees) $37.74 11/5/2010 N \UAC \Final \Grant Summary Report