HomeMy WebLinkAboutAgenda Packet 06/09/2015 Utility Advisory Committee
Jack Pittis Conference Room
City Hall
321 E. Fifth Street
Port Angeles, WA 98362
June 9, 2015
AGENDA
L Call To Order
II. Roll Call
III. Approval Of Minutes For April 14, 201
IV. Late Items
V. Discussion Items:
VI. Information Only Items:
A. Residential Exchange Program Update
B. Morse Creek Emergency Water Rights (verbal report only)
C. Morse Creek Hydroelectric Project Update
VII. Next Meeting Date: Joint Meeting with City Council, 7 July 2015 @ 5:00 p.m.
VIII. Adjournment
N:AUAC\MEETINGS\UAC2015\UAC060915\060915 Agenda.docx
Utility Advisory Committee
Jack Pittis Conference Rooms
Port Angeles, WA 98362
April 14, 2015
3:00 p.m.
L Call To Order
Vice Chairman Lee Whetham called the meeting to order at 3:00 p.m., and then surrendered the
gavel to Chairman Lynn Bedford at 3:01 p.m.
IL Roll Call
UAC Assigned
Councilmembers Present: Lee Whetham, Dan DiGuilio
Other Councilmembers Absent: Sissi Bruch, Dan Gase, Brad Collins, Cherie Kidd,Patrick
Downie
UAC Members Present: Lynn Bedford (3:01), Betsy Wharton (3:04)
UAC Members Absent: Rob Feller, John LeClerc
Staff Present: Craig Fulton, Phil Lusk, Mike Puntenny, Nathan West,
Heidi Greenwood, Jonathan Boehm, Gregg King, Kathryn
Neal, Dan McKeen (3:16)
Others Present: 2 Citizens
III. Approval Of Minutes
Chairman Lynn Bedford asked if there were any corrections to the minutes of March 17, 2015.
Lee Whetham moved to approve the minutes, and Betsy Wharton seconded the motion. Minutes
were approved 3-0, with Dan DiGuilio abstaining.
IV. Late Items: Morse Creek Update
V. Discussion Items:
A. Simple Steps Agreement
Gregg King, Power Resources Manager, reviewed the new Master Services Agreement for the
"Simple Steps-Smart Savings" energy efficient product promotion with the Bonneville Power
Administration's contractor, CLEAResult. All City expenses under the Agreement are eligible
for reimbursement under the Bonneville Power Administration's Energy Efficiency Incentive
resulting in no net program cost to the City. Discussion followed.
Dan DiGuilo moved to recommend City Council approve and authorize the City Manager
to sign a Professional Services Agreement with CLEAResult in an amount not to exceed
$30,000, and to make minor modifications to the agreement,if necessary. Lee Whetam
seconded the motion,which carried 4-0.
B. Professional Services Agreement with Herrera Environmental—NPDES Code and
Standards Update
Jonathan Boehme, Stormwater Engineer, reviewed the Agreement. The City's stormwater
NPDES permit requires the City to perform a comprehensive update of all pertinent City codes,
ordinances, development standards,public works standards, etc, related to Phase II requirements
to eliminate barriers and implement low impact development (LID) as the commonly-used
approach to site development. This update requires that the updated codes and standards have a
formal public process in order to seek input from the community, developers, and industry as
part of the approval process. A lengthy discussion followed.
Lee Whetham moved to recommend City Council approve and authorize the City Manager
to sign a Professional Services Agreement with Herrera Environmental in an amount not to
exceed$115,371 and to make minor modifications to the agreement,if necessary. Betsy
Wharton seconded the motion,which carried 3-0,with Dan DiGuilio abstaining.
C. A Conversation about Responsibilities of Public Officials and the Open Public
Meetings Act
Heidi Greenwood, Senior Assistant City Attorney, reviewed the Responsibilities of Public
Officials and the Open Public Meetings Act. Changes in state law and City ordinances require
that all City officials receive ethics training.
Information Only Item
A. 2016 Capital Facilities Plan (verbal report only)
Information only. No action taken.
B. Morse Creek Appraisal Update (verbal report only)
Information only. No action taken.
Vi. Next Meeting Dates: May 12, 2015
Vii. Adjournment. 4:30 p.m.
Dan DiGuilio, Mayor Sondya Wray, Administrative Specialist 11
TN'
'ORT ELES
WASHINGTON, U. S. A.
Utility Advisory Committee Memo
Date: June 9, 2015
To: Utility Advisory Committee
From: Phil Lusk, Deputy Director of Power and Telecommunication Systems
Subject: Bonneville Power Administration Residential Exchange Program Litigation Update
Summary: In July 2011, the Utility Advisory Committee forwarded a favorable recommendation
to City Council to proceed with defending its claims related to refund amounts provided through
the REP-12 Settlement Agreement of the Bonneville Power Administration (BPA) Residential
Exchange Program. The City was represented through its membership with the Western Public
Agencies Group (WPAG). Based upon the favorable recommendation and other factors, Council
authorized the WPAG to proceed with defending the City's claims related to the refund amounts.
Recommendation: Information only. On 22 May 2015, the 9th Circuit issued its decision. The
Court held that our petition was rendered moot by virtue of the 2012 BPA Residential Exchange
Settlement.
Background/Analysis: In 1980, Congress enacted the Pacific Northwest Electric Power
Planning and Conservation Act(Northwest Power Act). The Northwest Power Act established the
Residential Exchange Program (REP) to address wholesale rate disparity between the region's
investor-owned utilities (IOUs) and consumer-owned utilities (COUs). The Northwest Power Act
authorizes Northwest IOUs to exchange their generally higher-cost power for an equivalent
amount of BPA lower-cost power. Under the REP, no actual power is exchanged; instead, the BPA
makes cash payments to the participating ("exchanging")utilities based on the difference between
their respective average system costs and BPA's power rate for the exchange, referred to as the PF
Exchange rate.
Its roots go back to the 1970s when electricity rates between public and private utilities began to
diverge sharply. The right of first preference of COUs for the low-cost power from the federally-
based generation system is at the heart of the debate. The City is one of the numerous REP
stakeholders, since it shares the cost by providing the benefits of this low-cost power to higher-cost
utilities that are eligible to participate in the program.
Depending on the assumptions used, the REP methodology can produce a range of results. This
led to a constant battle over the exchange and several court challenges were made. The 2012 REP
1 Customer Load Eligibility Guidelines for the Residential Exchange Program's Residential Purchase and Sale Agreements and
Residential Exchange Program Settlement Implementation Agreements. (April 2015). Bonneville Power Administration. SEE:
littL)://www.bL)a.gov/Fiiiaiice/ResideiitialExcliaiigePrograiii/DocLiiiieiits/REP%20CLEG 04-24-15.L)df
N A UAC�MEETINGS\UAC2015\UAC060915�BPA Residential Exchange Program Litigation-2015 Update.docx
June 9,2015
Residential Exchange Program Settlement Agreement Update
Page 2
Settlement Agreement promulgated by BPA is very complicated, and it will affect future
wholesale electric power costs through the end of the City's power purchase agreement with BPA
on 30 September 2028. The 2012 Settlement Agreement developed the REP Refund to compensate
COUs for overcharges that were incurred 10 or more years ago.
After due consideration in 2011, City Council directed that the City of Port Angeles become one of
the last REP litigants. Known as WPAG group, the City and a final total of 10 other COUs sought
additional restitution for the damages customers suffered. On 22 May 2015, the 9th Circuit has
issued a decision on the motions of the Settling Parties seeking to dismiss the WPAG petition
regarding the damages our consumers suffered due to BPA's settlement with the IOUs. In its
memorandum opinion, the Court held that our petition has been rendered moot by virtue of the
2012 BPA Residential Exchange Settlement, and dismissed our petition.
Although this is a disappointing result, legal counsel noted that WPAG group can be confident that
every possible action was taken, and that every available legal means was exhausted, to obtain all
of the refunds to which our consumers were entitled.
Regarding questions on how the monthly REP Refund is passed on to consumers, a copy of the
January 2015 BPA power bill is attached. The bill shows the REP Customer Refund as an $81,967
negative adjustment to the total monthly bill. During BPA FY2015 (1 October 2014 — 30
September 2015), the City will receive a total REP Refund of$980,364. Highlighted in yellow on
the bill's second page is the monthly REP Refund ($81,967),which reduces the City Utility's
monthly wholesale power payment to the BPA. The BPA uses an identical process (a negative
adjustment to the monthly bill)with its other 133 COU customers.
When future City electric utility rates are calculated, the monthly refund is built into the rate
development process. The effect is that the refund reduces industrial, commercial and residential
electric consumption rates. Because the refund is based on historical energy use patterns (kWh),
the bulk of the refund is allocated to the larger electric consumers. The BPA's provision of REP
Customer Refunds will conclude on 30 September 2019.
More information can be found on BPA's website at:
ham://www.bpa.gov/Finance/ResidentialExchangeProgram/Pages/default.aspx
U.S. Department of Energy B o N" e v a► oNe
Bonnevi",
POWER ADMINISTRATION
T ION
COMBINED BILL
FINAL
Port Angeles, City of Bill ID: JAN15-PAT01-10087
ATTN: Phil Lusk, Deputy Director of Power Systems Issue Date: February 3, 2015
PO Box 1150 Bill Period: January 2015
Port Angeles, WA 98362-0217 Period Ending: January 31, 2015
PAYMENT SUMMARY
Total Amount of This Bill $1,559,327
Total Amount Due $1,559,327
AMOUNT DUE TO:
Bonneville Power Administration $1,559,327
Due Date: February 23, 2015
Please remit payment to BPA electronically. For instructions and payment options, refer to
http://www.bpa.gov/Doing%20Business/howtopay/Pages/default.aspx.
Late Payment charges will be assessed according to applicable contract provisions if payment is not received by close of business on the due date.
Past due amounts are subject to collection actions as required under applicable rates and Federal laws and regulations.
Questions concerning this bill may be directed to the Revenue Analyst, Mary Hansen in Customer Billing at 503-230-5142 or at mahansen(Ebboa.00v.
Bonneville Power Administration,P.O. Box 3621,Portland,OR 97208-3621
Thank you,we appreciate your business,
COMBINED BILL
Customer Name: Port Angeles, City of Bill Period: January 2015
Bill ID: JAN15-PAT01-10087 Period Ending: January 31, 2015
Issue Date: February 03, 2015
POWER
Rate Service Contract Service Service Amount
Schedule Description Number Amount Unit Rate $
PF-14 Composite Charge LF 13093 1,961,053 DOL @ 1.19930 2,351,891
PF-14 Non Slice Charge LF 13093 (301,568)DOL @ 1.19930 (361,671)
PF-14 HLH Load Shaping 13093 (15,258,454)KWH @ 0.03780 (576,770)
PF-14 LLH Load Shaping 13093 162,840 KWH @ 0.03067 4,994
PF-14 Demand 13093 0 KW @ 11.17000 0
REP Customer Refund 12322 1 MO @ (81,967.00000) (81,967)
Sub Totals $1,336,477
TRANSMISSION
Rate Service Contract Service Service Amount
Schedule Description Number Amount Unit Rate $
NT-14 NT Service Charge 12443 89,280 KW @ 1.74100 155,436
ACS-14 SCD NT Long Term Firm 12443 89,280 KW @ 0.30000 26,784
ACS-14 GSR NT Long Term Firm 12443 89,280 KW @ 0.00000 0
ACS-14 Reg &Frequency Response 12443 53,360,630 KWH @ 0.00012 6,403
ACS-14 Spin Reserve Requirement 12443 1,631,234 KWH @ 0.01086 17,715
ACS-14 Supp Reserve Requirement 12443 1,631,234 KWH @ 0.00995 16,231
GRSP-14 PFP Lagging Ratchet 12443 1,005 WAR@ 0.28000 281
Sub Totals $222,850
Total $1,559,327
Questions concerning this bill may be directed to the Revenue Analyst, Mary Hansen in Customer Billing at 503-230-5142 or at mahansen(Ebboa.00v.
Bonneville Power Administration,P.O. Box 3621,Portland,OR 97208-3621
Thank you,we appreciate your business,
NGELES
W A S H [ N G T O N, U. S. A.
Utility Advisory Committee Memo
Date: June 9, 2015
To: Utility Advisory Committee
From: Craig Fulton, P.E., Director of Public Works and Utilities
Subject: Morse Creek Hydroelectric Project Update
Summary: On 8 July 2014, the Utility Advisory Committee made a unanimous
recommendation to City Council for its consideration that the City sell the Morse Creek
hydroelectric project and all property in its present condition after declaring them to be surplus to
the City's needs. This recommendation was stipulated on an analysis of the water rights and a
review by the City's Real Estate Committee.
Recommendation: Information Only. No action requested.
Background/Analysis: Following the discovery that the generator bearings required
replacement, staff has made a number of presentations to update the Utility Advisory Committee
and City Council:
• 12 June 2012 regarding the high cost of operating and maintaining the Morse Creek
hydroelectric project.
• 10 July 2012, staff shared that a $100,000 cost estimate was received for the
generator repairs necessary to enable operation. Due to the repair costs and future
operating risk, staff recommended that the retirement or sale of the project and
property be considered. Staff notified stakeholders about possible retirement of the
project and requested they share their needs and interests.
• 14 August 2012, staff summarized the stakeholder responses received, and the UAC
asked staff to complete an economic analysis.
• 13 November 2012, staff presented the economic evaluation, which determined that
the project's operating costs are significantly higher than purchasing additional
wholesale power from the Bonneville Power Administration. The UAC then
recommended to the City Council that it consider options for the project other than
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Morse Creek Hydroelectric Project Update
June 9,2015
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continued operation.
• 20 November 2012, City Council directed that the project be placed in standby mode
to minimize costs, and to return later to the City Council with additional information.
• 8 July 2014, after a further year of extensive analysis and due consideration, staff
requested that the UAC recommend to City Council that the City sell the project and
all property in its present condition after declaring them to be surplus to the City's
needs. An appraisal of the real estate's value was conducted and completed in late-
March 2015.
The results were presented to the Real Estate Committee on 4 May 2015. After discussion, the
Real Estate Committee recommended that consideration of the City selling the Morse Creek
hydroelectric project and all property in its present condition, after declaring them to be surplus
to the City's needs, be returned to the full City Council for its consideration. Staff intends to take
this consideration request to Council at a meeting in the near future.
A Request for Proposals (RFP) for the Morse Creek hydroelectric project has been prepared and
can be released following Council's decision. The RFP was primarily prepared to solicit
Proposals from a qualified Developer to buy or lease the existing hydroelectric plant and return it
to operational service. Though operation of the hydro project is one preferred option, alternative
development proposals for City-owned land and facilities will also be considered by which the
City obtains best value at lowest risk. Regardless of proposed activity, the City will stipulate the
retention of its consumptive water right during a standby water emergency.
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