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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 N:AUAC\MEETINGS\UAC2015\UAC060915\Morse Creek Hydroelectric Project-June 2015 Update.docx Morse Creek Hydroelectric Project Update June 9,2015 Page 2 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. N:AUAC\MEETINGS\UAC2015\UAC060915\Morse Creek Hydroelectric Project-June 2015 Update.docx