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City of Port Angeles

City of Port Angeles. Strategic Planning Presentation June 7, 2011. Presented by: Gary Saleba, President EES Consulting, Inc. A registered professional engineering corporation with offices in Kirkland, WA; Bellingham, WA; and Portland, OR

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City of Port Angeles

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  1. City of Port Angeles Strategic Planning Presentation June 7, 2011 Presented by: Gary Saleba, President EES Consulting, Inc. A registered professional engineering corporation withoffices in Kirkland, WA; Bellingham, WA; and Portland, OR Telephone (425) 889-2700 Facsimile (425) 889-2725 saleba@eesconsulting.com

  2. Agenda • Introductions and Session Objectives • Background on EES Consulting, Inc. • Financial Impacts Of: • Impact of the BPA Rate Increase • Demand Side Management (DSM) • Demand Response (DR) • Other Financial Considerations • Cost of Service Study (COSS) • Key Performance Objectives • Salient Comments and Closing

  3. About EES Consulting, Inc. Registered Professional Engineering and Management Consulting Firm Formed in 1978 Offices in Bellingham, Kirkland, and Portland 30-40 Professional Staff – ½ Engineers, ½ Other Professionals Clientele Consists of Utilities, Large Industrial Customers, Regulatory Commissions throughout North America Primary Lines of Business Engineering design/construction management Resource and strategic planning Regulatory affairs/expert witness Rates / cost of service Demand side management Background of EES Senior Consultants

  4. Impact of New BPA Rates on the City New TRM Rates from BPA Beginning October 2011 “Tier 1” rate for lower-cost federal power resources (HWM) “Tier 2” rate for new load growth at market rates New TRM demand charge priced at market prices Charges the incremental demand above grandfathered amount (CDQ) Load following charge Charges and credits based on difference between City energy use and BPA’s hydro / thermal resource shape Overall power supply increase estimated at 12% starting October 2011 Equates to at least a 6% retail rate increase Will be adjusted every two years going forward Overall transmission rate change estimated at 0%

  5. BPA Tiered Rate Methodology (TRM) Rates • TRM Includes a Large Flat Monthly Customer Charge (~90% of bill) in Addition to the Demand and Load Shaping Charges Below

  6. Impact of BPA Rate Increase

  7. Impact of New BPA Rates on the City How to Deal with Growth Energy efficiency Demand response Everyone pays New Large Single Load Policy Financial Reserve Levels Significant power bill fluctuations (monthly variation up to $2 million) Existing rate stabilization fund Existing unrestricted cash balance

  8. Electric Unrestricted Cash Balance

  9. Demand Side Management • Demand Side Management has Two Primary Components: • Energy efficiency • Demand response • The Target for Energy Efficiency could be to Keep the City’s Total Electricity Requirements Under HWM and Out of Tier 2 • The Target for Demand Response could be to Control Peak Demand and Therefore Reduced TRM Demand Charges. Also Helps Reduce Capacity of Local Distribution Facilities. • Effective DSM Can Optimize Low-Cost Tier 1 Power from BPA and Reduced or Eliminate Demand Charges

  10. Energy Efficiency • Objective – The Objective for Offering Energy Efficiency Programs is to Delay or Avoid the Need to Purchase Tier 2 or Market-Priced Electricity • In 2009 EES Consulting Completed an Energy Efficiency Potential Assessment to Determine the Amount and Cost of Energy Efficiency Available to the City • The potential assessment indicated that 0.34 aMW of energy efficiency is available per year from the residential and commercial sectors at $30/MWh • Another 0.4 – 0.5 aMW per year is available from the industrial sector • In 2012 a Conservation Plan Will be Required by BPA

  11. Energy Efficiency– Strong Performance by City

  12. Energy Efficiency– Summary • The City has a Strong History of Energy Efficiency Achievements • Low cost, high impact programs to date • The City is one of the leaders in terms of savings per customer • Effective Energy Efficiency Programs Can Further Delay the Need for Tier 2 Purchases, Subject to Any New Large Single Loads • The City has Significant Energy Efficiency Potential • Energy Efficiency Programs May Cause Upward Rate Pressure Initially • Initial program and incentive costs ($500K - $1M) • BPA to double funding in October 2011 • City has spent $300,000/year of ratepayer funds each of the last 2 years • Those who participate will pay less, even if rates increase • In the long run, rates will be lower • Overall the City Can Serve More Customers with the Same kWh

  13. Demand Response (DR) • Demand Response is a Way to Control Utility Peak Demand by Offering Incentives to Shift or Reduce Individual Customer Peaks at Critical Times • Current City DR Project List • Automated Metering Infrastructure (AMI) Installation • Residential DR Pilot • Commercial & Industrial DR Pilot

  14. Demand Response (DR): Advanced Metering Infrastructure • Goals and Objectives • To provide the City the ability to implement DR • Project Summary • AMI installation the first step to implementation of DR • City replacing all electric and water meters with AMI • Installation to be complete by end of 2011 • Total project cost approximately $4.4 million • Project Status • Installation currently under way

  15. Demand Response (DR): Residential DR Pilot • Goals and Objectives • Reduce City’s local demand above its specified CDQ • Reduce wholesale power supply costs to residential customers • Minimize perceived impact (e.g., discomfort) to residential customers • Maximize residential customers’ acceptance of DR • Delay or eliminate BPA transmission system upgrades • DR Project Summary • Perform economic evaluation of DR equipment (e.g., water heater controls, home area networks and thermal storage devices) installed at residential properties against a baseline control group following 1 year of data collection • Expected savings for pilot group = 387 kW/month • Project Status • Delayed until AMI installation and testing complete, data collection to begin 2012 • Project Co-Funding From BPA • $426,000

  16. Demand Response (DR): Commercial & Industrial DR Pilot • Goals and Objectives • Delay or eliminate BPA transmission system upgrades • Reduce the City’s local demand above its specified CDQ • Reduce wholesale power supply costs to the City’s electric utility customers • Work with BPA to reduce demand on BPA’s transmission system using OpenADR communications protocol • DR Project Summary • Evaluate the cost effectiveness of DR equipment (e.g., process controls) installed at 9 commercial and industrial facilities following 1 year of data collection • Expected savings for pilot group = 3.2 MW • Project Status • Customer agreements currently under review • Project Co-Funding From BPA • $298,000

  17. Demand Response (DR): Summary • The City has a Very Active DR Strategy • Infrastructure is being built • Pilot studies underway • The AMI System will Enable the City to Better Optimize and Minimize Customer Peak Demand

  18. Other Financial Considerations • Will The City Purchase the Fiber Optic Network?

  19. Cost of Service Study (COSS) – TRM Study • Cost of Service Study – Performed in July 2010 • Focus on TRM and Retail Rate Design NOT COSS Rates • Revenue requirement study showed - 5.3% increase needed • 2.3% approved by City Council • Cost allocation showed – no major realignment needed • However- does not take into account post-2011 power supply rates • Rate design goals • Collection of fixed costs • Cost based • Price signals • TOU • Demand rates

  20. Cost of Service Study (COSS) • Seasonal Time-of-Use was the City Council Approved Rate Design for All Customer Classes (~200 commercial customers with demand rate) • Winter and summer seasons • Customer base charge • Peak, shoulder, and off-peak energy charge • Inclining block demand rate (only applies to ~200 commercial customers) • Demand rate: 95% similar to current rates, 5% at new demand rate (avg. $9.5/kW) • Similar to City’s current Municipal water pump rate design • Sends Correct Price Signal Without too Much Complexity • Encourages Customers to: • Shift loads to lower-priced off-peak hours • Reduces peak demand and winter energy consumption • Peak and Off-Peak Periods Should Reflect BPA’s Time of Use Periods • Demand may be modified to reflect City’s requirements

  21. Updated BPA Peak Hours, Off-Peak Hours, Shoulder Hours and Demand via 24-Hour Time Clock

  22. Electric Rate Design Including Season Rates (Winter/Summer)

  23. Recommended Key Performance Objectives • Financial • Consider building operating reserves beyond minimums necessary • Energy Efficiency • Cheapest option for load growth • Continue pursuing cost effective programs • Demand Response • Continue implementation • Next is Pilot Program and evaluation • Rates • Future rate increase should be applied only to the base charge to reduce financial risk • Develop New Large Single Load Policy • Survey customers for interest in green energy rate options • Conduct a cost of service analysis in 2013 after TRM is fully in place and 12 months AMI

  24. Conclusions/Salient Comments • If it Was Easy, It Would Have Already Been Done • If You Don’t Do It, Someone Else Will • Better to Have No Business than Bad Business • Better to be Roughly Right, than Precisely Wrong

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