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HomeMy WebLinkAboutCC Minutes - 02/16/10 Joint Meeting with EWEB EUGENE WATER & ELECTRIC BOARD WORK SESSION th EWEB Training Room – 500 East 4 Avenue February 16, 2010 5:30 p.m. Board Members Present: John Brown, President; Rich Cunningham, Vice President; Ron Farmer, Bob Cassidy, Joann Ernst, Commissioners. City Councilors Present: Kitty Piercy, Mayor; Mike Clark, George Poling, Andrea Ortiz, Chris Pryor, Betty Taylor, Jennifer Solomon, Eugene City Councilors. City Councilors Absent: Alan Zelenka, Eugene City Councilor. Others Present: Randy Berggren, Debra Smith, Sheila Crawford, Lance Robertson, Jim Wiley, Clay Norris, Tom Buckhouse, Gene Austin, Jeannine Parisi, Mark Freeman, Mike Logan, Cathy Bloom, Patty Boyle, Tom Williams, Felicity Fahy, Mark Oberle, Bill Welch, Will Bondioli, John Yanov, Megan Capper, Steve Mangan, and Judy Chase of the EWEB staff; Jon Ruiz, Ethan Nelson, Jeff Petry, Brenda Wilson, Beth Forrest, City of Eugene staff; Bob Parker, University of Oregon; Ruth Atcherson, City of Eugene minutes recorder. President Brown convened the joint work session of the Eugene Water & Electric Board (EWEB) and the Eugene City Council. Mayor Kitty Piercy convened the Eugene City Council. Welcome and Agenda Review President Brown welcomed the Eugene Councilors to the table and asked those present to introduce themselves. Mayor Piercy noted that Councilor Alan Zelenka was out of town and not able to be present. Steam Transition Project Update Ethan Nelson, City of Eugene Building and Permit Services Division, initiated the presentation of the Downtown Eugene Retrofit Program , with PowerPoint, hard copies of which were provided to everyone present. He underscored that the three objectives of the Downtown Eugene Retrofit Program (DERP) were to transition existing steam customers off the system, to increase financing options, and to leverage and coordinate public and private resources. He stated that the federal funding sought to achieve two goals: to fundamentally and permanently transform energy markets in a way that made energy efficiency and renewable energy options the first choice and to sustain projects beyond grant monies. He said City of Eugene staff had worked in coordination with EWEB staff on a proposal for funding, and the proposal for assistance for the steam transition project had been included as a sub-applicant in a City of Portland grant. Mike Logan, Key Accounts Program Manager for EWEB, reviewed the project area. He stressed that the grant funding, if awarded, would aid in leveraging other funding mechanisms. He stated that efficiency retrofits Work Session February 16, 2010 Page 2 would allow EWEB to address the inefficient steam system built in 1932, position it to be taken off line and cut energy usage by 40 percent for the buildings themselves by 2012. Mr. Nelson highlighted the federal grant request. He said the financial products would include credit enhancement which would help participants secure loans, direct credit distribution and the establishment of a revolving E-Loan program, the loan terms for which would be linked with those offered by the Oregon Department of Energy (ODOE) loan program. He noted that the E-loan was limited by the Energy Efficiency and Conservation Block Grant program which directed that no more than 20 percent be allocated into revolving loan programs. He stated that $207,000 would be allocated for building audits, to be completed by a third party, estimated to be $1,000 each, and $40,000 would be dedicated to an outreach campaign. Mr. Logan stated that in addition to the steam production savings and distribution losses, by taking the all-fuels approach, leveraging the programs and working with the agencies, they were identifying a potential energy savings of 17 million kilowatt hours (kWh). He explained that this translated to the amount of energy that it would take to power 1,300 homes for a year. He also related that the consultant had estimated that 800 jobs would be created by this work, over the course of six years which was believed to be conservative. Mr. Nelson outlined the funding sources and what funding was projected to come from them and the grant funding, from a slide entitled “Ramping Up for Retrofits” Leverage. Mr. Logan showed a graph of how an actual large customer would be affected by a change from steam usage that indicated a 50 percent savings, should the customer change to a heat pump. He discussed the implications of the three-year contract with PeaceHealth. He said the contract gave EWEB the ability to work with its other steam customers, including the City of Eugene. He reviewed the projected timeline. He stated that the primary source of funding would be the ODOE through its Small Scale Energy Loan Program (SELP) and once the building reports were delivered, EWEB would be working with each customer to move immediately to the design and construction phase when they were ready. He noted that EWEB was paying $250,000 for the engineering study and they were positioning customers with the recommendations for least- cost options, which ODOE wanted to see. They anticipated that the total loan cost would be $12 to $15 million, though not all customers would qualify for credit and they were seeking other means of credit for them. Mr. Logan showed a slide that indicated what phase of the process each downtown building was in. He noted that staff would be making site visits to the Atrium Building and City Hall in March. President Brown opened the floor for questions and comments. Mayor Piercy asked if staff predicted that the grant would be approved. Mr. Nelson replied that they believed the City of Eugene had a very good chance. He said while there was $380 million available throughout the country, the requirements were that energy codes should meet a certain criteria and Oregon was one of only three or four states that had updated its codes and met that requirement. He added that the steam transition project also looked good because it was a mandate and the transition was deliverable. Mayor Piercy related that the Portland project had been mentioned all over the country. She remarked that one question they would hear was in regard to a continued dependence on fossil fuel. Mr. Logan responded that EWEB was burning 2.5 million therms of natural gas at present and much was being lost through inefficiency. He said the technology today was much more efficient and would save fuel. He pointed out that the Work Session February 16, 2010 Page 3 first three loans were for high efficiency heat pumps. He noted that the Hult Center had formerly run with a system that had a 67 percent efficiency rate and now was running with a system that had more than a 90 percent efficiency rate. Mr. G. Brown asked how the steam was being produced at present. Mr. Logan replied that the fuel used was natural gas. In response to a follow-up question, Mr. Logan affirmed that at one time the steam plant had used biomass fuel called hog fuel. In response to a question from Eugene City Manager Jon Ruiz, Mr. Nelson stated that the Federal DOE would make an announcement on March 15 regarding the grant awards. He explained that part of the negotiation with Portland was to be a sub-applicant because it was felt that it would be more beneficial to do so. He said the sub-applicant status meant that if Portland received $75 million, Eugene would receive $6 million, and if Portland received less, Eugene would receive proportionately less. Ms. Ortiz thanked staff for the presentation. She confirmed that the intention was to keep the steam utility in operation at least until the contract with PeaceHealth ended, in 2011. She asked what kinds of programs there would be for those that could not afford to convert. Mr. Logan replied that the steam utility had two boilers. He said he had not calculated what it would cost if they had to reduce the output to one boiler because it was dependent on where an entity that was not off the system was located on the line and how much steam was needed. He stated that they planned to decommission portions of the system, starting at the perimeter and working toward the core. He underscored that they were still moving toward the goal of having the steam utility completely shut down by 2012. While he was not certain of the cost of running only one boiler, he knew it would cost more to continue on that basis. EWEB General Manager Randy Berggren said staff had discussed this and understood that it would not be a wise investment to do so. He thought EWEB would be open to figure out a creative way to avoid this kind of waste. He considered this possibility to be another complexity in a project that was already complex. Ms. Ortiz asked if PeaceHealth was part of the scoping for the conversion plan. Mr. Logan responded that PeaceHealth had not been included in the original scope of work. He said PeaceHealth was interested in having a site assessment completed by the end of the year. President Brown asked if the funds would be allowed to be used to help with asbestos abatement. Mr. Logan replied that the first ODOE loan included a significant portion for asbestos abatement. Mr. Nelson stated that one component of the grant program was to bring municipalities, local jurisdictions, and utilities to work together on a combined approach for energy efficiency. He remarked that whether or not they did receive the grant, the application process had catalyzed the collaboration between EWEB and the City. Mr. Farmer observed that every time a customer went off the steam system, the cost per customer went up; the last customer on the system would receive a “horrendous” heating bill. Work Session February 16, 2010 Page 4 Introduction to Electric Vehicle Initiatives Mayor Piercy invited Eugene Parking Services Manager Jeff Petry, and Bob Parker, from the University of Oregon, to the table. She noted that Nissan had chosen Oregon for a project that involved the deployment of 1,000 electric vehicles and helping to put 2,500 charging stations into place. Jeannine Parisi, Community and Local Government Outreach Coordinator for EWEB, highlighted the Introduction to Electric Vehicle Initiatives with PowerPoint, hard copies of which were provided to everyone present. She said the high level overview was due in part to rapidly changing technology. She remarked that it would not surprise her if the information they imparted was out-of-date in three months. She recommended a website called www.pluginamerica.org which contained pictures of all electric vehicles available on the market. Ms. Parisi discussed the pros and cons of electric vehicles. She noted that one of the cons was the initial cost of a vehicle, which could be $40,000 or more. She said Oregon driving patterns were one reason electric vehicles were well-suited, with most trips in major metropolitan areas well under the national 40-mile average. She noted that Oregon also featured sustainability and clean air initiatives and the Business Energy Tax Credits (BETC) and hybrid tax credits, among others. She noted that Oregon had the highest per capita ownership of hybrid cars in the nation. Ms. Parisi showed a slide of the design concept for the Lane Community College (LCC) electric car charging station. She discussed the three levels of charging that would be required for electric vehicles. Mr. Petry stated that there was about $100 million in grants from the DOE as part of the American Recovery and Reinvestment Act (ARRA). He related that a grant for Oregon cities to install electric vehicle charging stations in 2009 had been applied for and denied because the infrastructure was not ready. He said now, with ARRA funds, Oregon was one of five test sites for a project managed by a company in Arizona called eTec, He explained that it was a three-year grant that had begun in October. Ms. Parisi noted that the cities involved included Portland, Albany, Salem, Corvallis, and Eugene. Mr. Petry reported that eTec expected to have 75 percent of the charging stations installed by October, 2010, but the City still did not know what exactly was being installed. He said the City would be working on localized deployment guidelines and planned to hold a stakeholder workshop in early April. He reviewed the draft timeline, which was projected to culminate in an evaluation to be completed by mid-year 2012. Mr. Parker explained that the University was partnering with the City of Eugene and EWEB to conduct a preliminary investigation into what this meant for the communities. He said the Community Planning Workshop (CPW), through the University, had applied for money from the Oregon Transportation Research Education Consortium (OTREC) and received funding for a local electric vehicle assessment. He related that six graduate students were helping with the project. Mr. Parker reviewed potential implications for cities. He noted that travel behavior could be affected by the economic nature of electric vehicles, though the battery technology was still expensive. He said another issue was infrastructure investment. He related that most manufacturers would send cars out with charging infrastructure, but there was also a need for external infrastructure that was visible and available. He noted that Work Session February 16, 2010 Page 5 one thing to consider was what role would be appropriate for local government. Mr. Parker said there would be implications to the power industry since electric vehicles were shifting the energy burden from the fossil fuel sector to the electric sector. He also pointed out that installation of a number of charging stations in the downtown area, as an example, could overwhelm the system. In response to a question from Mr. Cassidy, Mr. Parker clarified that the capital investment for the batteries required for electric vehicles made a potential station to exchange batteries cost prohibitive. He noted that the batteries for the Nissan LEAF cost between $28,000 and $35,000. He said the current literature suggested that lithium ion technology would not improve quickly enough over the next decade or two to make a big difference. Ms. Ernst considered this to be a great opportunity for utilities. She declared that utilities should be as proactive as possible. She discussed the smart grid technology, which she surmised would mean that the cars could be plugged back into the grid when not in use and the power used. Mr. G. Brown asked what the range of the Nissan LEAF was. Ms. Parisi replied that it could go 100 miles per charge. In response to a follow-up question from Mr. G. Brown, Ms. Parisi stated that it would cost $1 or $2 to drive 80 miles in an electric vehicle and $16 to drive a gas-fueled vehicle the same distance. Mr. Farmer remarked that the challenge for the utility lay in that if electric cars became successful they would have to determine where the power would come from. He explained that the northwest was on the brink of running out of power but was facing a potential increase in demand from electric cars. He related that the Bonneville Power Administration (BPA) contracts for all utilities in the northwest were being renewed in 2011. He said basically the utilities had been allocated the amount of power they were receiving now and anything above that would have to be purchased on the open market, either by the BPA or by the individual utility. He pointed out that hydroelectric power, though cheap, was not likely to proliferate; it was unlikely that more dams would be built at this point. He said where they would get the power, should the utility be faced with a huge demand, and how much it would cost, were issues to consider. The challenge they faced lay in resource planning. Ms. Ortiz expressed concern that the revenue from the gas tax would fall and this meant there would be less money for streets. She pointed out that EWEB paid a Contribution in Lieu of Tax (CILT) and asked that they consider this drop in revenue when thinking about their budget. Ms. Parisi said this was an issue on the state level, because gas tax revenue had dropped statewide. President Brown surmised that the City would charge franchise fees for infrastructure installed on public rights-of-way. Mr. Parker responded that those were questions that would have to be sorted out. He said at this point it appeared that a number of different entities would jump into the market and it would likely be messy for perhaps the first ten years. Ms. Taylor expressed concern about people whose garages were no longer used to house cars and where they could charge their vehicles. Ms. Parisi replied that a charging station could be outside a house. She said the biggest constraint would be panel capacity, especially in older homes. President Brown passed out a sample of what could be a proposed joint resolution so that the council Work Session February 16, 2010 Page 6 could consider it at a point in the future. General Discussion President Brown stated that they would not be able to discuss the master planning process because of the ex parte contact issue. Mr. Clark had noted that for the present the administrative arm was planned to remain on the current site. He understood that this was the sentiment of a previous board and wondered if the current commissioners were in agreement with this. Mr. Berggren responded that they were continuing the conversation and were still evaluating what it might cost to build an administration building. He believed they would ultimately decide to collocate the administrative arm and the operation center at some point in the future, but he was not certain if they would do so in five years, ten years, or more. Mr. Clark asked if the Board had made any statement on it. President Brown replied that he had challenged the Board to discuss this sooner rather than later and they planned to do so. Mr. Farmer noted that he had been the lone vote in favor of moving the administrative arm to the Roosevelt Boulevard site several years earlier. Mr. Berggren stated that this would be included in the discussion planned for the Strategic Planning Session scheduled for March 23. In response to Mr. Clark, President Brown clarified that if EWEB declared the property surplus, the City would have a 30-day right-of-refusal and then, if the City wanted the property, it would have five years to decide what to do with it. Acknowledgement of the Planned Retirement of Randy Berggren Mayor Piercy recalled that in 1994, Fortune Magazine had featured four transformational leaders and Mr. Berggren had been one of those profiled. She said his management style had been lauded for helping to guide the utility through a rough patch following the dismissal of his predecessor. She underscored that he had been the longest serving General Manager in EWEB’s 99-year history. She shared that under Mr. Berggren’s guidance and innovation, EWEB had approved the largest bond measure in the utility’s history to help fund renewable energy and conservation projects and had done so with 75 percent voter approval, and the utility continued to lead the nation in energy conservation programs leaving customers with more than 60 megawatts (mW) of power, equal to 20 percent of Eugene’s entire energy use. She underscored that under his leadership EWEB had become one of the first utilities to invest in wind energy, had created one of the most robust Low-Income Energy Assistance Programs (LIEAP) in the nation, and had launched a major effort to upgrade the City’s water and electric systems. She also applauded the Roosevelt Operations Center for being a Leading in Energy and Environmental Design (LEED) certified Gold project. She commended him for his leadership through the West Coast energy crisis and for rebuilding reserves since then. She congratulated Mr. Berggren, on behalf of the City and all of EWEB’s customers, for his leadership, vision, and dedication to keeping lights on and clean water Work Session February 16, 2010 Page 7 flowing. She declared that he continued a long history of steady, strong, and solid leadership of the utility. She wished him well in his retirement and thanked him very much. Mr. Berggren received a round of applause and was presented with a commemorative cake. He expressed appreciation for the acknowledgement, but wanted to underscore that he’d had a lot of help. President Brown adjourned the work session of the Eugene Water & Electric Board at 6:50 p.m. Mayor Kitty Piercy adjourned the work session of the Eugene City Council at 6:50 p.m. (Minutes written by Ruth Atcherson)