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HomeMy WebLinkAbout2012-04-18 RMLD Power and Rate Committee MinutesReading Municipal Light Department (RMLD) Board of Commissioners Power & Rate Committee Meeting Regular Session D April 18, 2012 }. ',r t C i F 1{ K Start Time Regular Session: 7:00 p.m. End Time Regular Session: 8:45 p.m. ZO 1 Z J11 2N P 2: 49 Attendees: Committee Members: Mses. Snyder and O'Neill, and Mr. Pacino RMLD Staff: Messrs. Cameron, Seldon, and Carpenter and Ms. Parenteau Public: Mr. Robert Soli, Commissioner of RMLD Chair Snyder called the meeting to order at 7:00 p.m. Sustainable Energy Policy Chair Snyder said that the committee members have a copy of the RMLD General Manager and staffs draft of the Sustainable Energy Policy. Ms. Snyder began with a question as to what the committee wants this policy to do? Mr. Pacino said that he thought the policy should give the RMLD General Manager and staff the direction for obtaining sustainable power projects, set parameters for the department in terms of what to look for each year, where we should be going and what to do to get there. Ms. O'Neill thought the policy should provide a percentage target for what the RMLD should attain for renewable energy in its portfolio. Renewable energy should be defined as including renewable energy certificates, RECs. Ms. O'Neill said that she felt that the draft could not be re- worked and so drafted an alternative proposal for a Renewable Energy Policy that simplifies the policy. She felt it should be called a renewable energy policy and not a Sustainable Energy Policy. Ms. O'Neill went on to explain that her proposal follows what is in the RMLD's Strategic Plan and proposes percentage targets that the RMLD should meet from 2012 through 2017. Ms. O'Neill said that her policy has a target of 5% in 2012, which increases 1 % each year until 2017, when it will be reviewed by the Power & Rate Committee. Mr. Pacino asked if the Green Choice Program could be part of the policy. He noted that he'd like to see the Green Choice program re- invigorated and that he's heard from customers who shy away from it because it's confusing. Discussion followed to note that this policy had the advantage that it is simple; it keeps some RECs and sells some; puts some money back - but in a simple, straightforward way; and aligns both with the Board's strategic plan and with the generally accepted practice with respect to defining renewable energy - it's not a niche definition. The sense of the committee was that the Green Choice Program was separate from the Renewable Energy Policy. Chair Snyder asked how the RECs would be counted in the policy. Ms. O'Neill explained that in 2012, the RMLD would have a goal to retire an amount of RECs equal to 5% of the RMLD's energy sales. It is similar to the Renewable Portfolio Standard in Massachusetts only the 2012 RMLD percentage is 5% in 2012, not 7% as applied to the Investor Owned Utilities. Ms. Parenteau asked if the RMLD could sell the amount of RECs over the target. Ms. O'Neill replied that that is the intent, yes. ' Mr. Cameron asked if any of the Green Choice RECs could be used to meet the target of retired RECs. Ms. O'Neill said no, that the Green Choice Program was not proposed to be a part of this policy. Mr. Cameron asked if the RMLD could purchase RMLD RECs, not retired under this policy, for the Green Choice Program. Discussion followed. Power & Rate Committee Minutes April 18, 2012 It was the sense of the committee that the RMLD could purchase RMLD RECs, not retired under this policy, for the Green Choice Program which might be more attractive to customers, although the general sense of the sub - committee is that the Green Choice program needs to be reviewed and that there might be a better program that could be developed. Mr. Soli stated that he thought that the Renewable Energy Policy presented here forced every RMLD customer into the Green Choice Program. Mr. Soli went on to say that he thought the policy should be more reflective of the Cap and Trade program presently in place to control emissions. Ms. O'Neill asked if there were any edits or changes to the policy, as constructed. Discussion followed. Based on discussion, Ms. O'Neill said that the first sentence of Section III A. should be removed and the last word in that section should be them and not this. Ms. O'Neill said she could send the policy to Mr. Cameron and have him make the changes recommended by the committee and also put the policy into the RMLD's policy form. Mr. Cameron said that he would. Mr. Pacino made a motion seconded by Ms. O'Neill to recommend the Renewable Energy Policy, with edits as discussed, to the Reading Municipal Light Department's Policy Committee. Motion passed 3:0:0. Mr. Pacino made a note with respect to this Renewable Energy Policy, if the Reading Municipal Light Department's Policy Committee made significant changes, he would like to have it sent back to this committee. Swift River Ms. Parenteau said that Swift River owners had contacted her and asked if the RMLD would be interested in taking on two more hydro projects, Collins and Pioneer, which are owned by them. The contract would start in 2013, would be based on the same contract terms as the existing four projects, and would expire on the same date as the other four projects. The projects are 3 MW total and are located in western Massachusetts. Ms. Parenteau said that she thought these were good projects for the RMLD's power supply portfolio. The sense of the committee was to move forward on discussing these two projects with the owner. Mason Bay Ms. Parenteau said that she has been contacted by the developer of a 14 MW wind farm located in Maine. The contract with this developer is in the early stages and Ms. Parenteau said that she would like to explore this more. The sense of the committee was to continue to talk with this developer. Solar Energy Hub The RMLD has been contacted by this company relative to placing a 230 kW solar installation on a building in Wilmington. This is the same company that is developing a 1.6 MW solar installation at another location in Wilmington. Ms. Parenteau said they would agree to have this contract similar to the contract recently signed by the RMLD for the 1.6 MW solar installation. Discussion followed. Mr. Cameron said that he would like the Board to make a motion to allow him to negotiate and sign a contract with Solar Energy Hub for this new project. Power & Rate Committee Minutes April 18, 2012 3 Ms. O'Neill made a motion seconded by Mr. Pacino to recommend to the Reading Municipal Light Department (RMLD) Board of Commissioners to authorize the General Manager of the RMLD to finalize negotiations and execute a contract with Solar Energy Hub for the purchase of not more than 250 megawatts of solar power but not including the RECs in a term not to exceed 20 years, on a site on Upton Court, Wilmington, Massachusetts based on the recommendation of the General Manager. Motion carried 3:0:0. Executive Session At 8:20 p.m. Mr. Pacino made a motion seconded by Ms. O'Neill to go into Executive Session based Chapter 164 Section 47D exemption from public records and open meeting requirements to discuss confidential, competitively- sensitive or other proprietary information and return to Regular Session Session for the sole purpose of adjournment. Motion carried by a polling of the Board. Ms. Snyder, Aye; Mr. Pacino, Aye; and Ms. O'Neill, Aye. Motion carried 3:0:0. At 8:45 p.m. Mr. Pacino made a motion seconded by Ms. O'Neill to adjourn. Motion carried 3:0:0. Renewable / Sustainable Enerev Policv Considerations The following points should be considered in the development and adoption of RMLD's policy for renewable or sustainable energy. 1. There is no current requirement for RECs to be held by municipal utilities; therefore, the disposition of the RECs must be made considering the best interests of the ratepayers as the top priority, based on our fiduciary responsibility as Commissioners. 2. Clear guidance has been provided to the Board of Commissioners that a solution should include both sale and retirement of the RECs. Feedback has been received from: a. CAB motion, voted unanimously in March 2012 b. Letter from Reading Town Manager on behalf of Board of Selectmen in March 2012 c. North Reading Board of Selectmen attendance and comments at RMLD Board of Commissioners meeting in January 2012 d. Voters of Reading in the March 2012 election results for RMLD Commissioner 3. The level of RECs to be retired should be tied to some level of ratepayer directive. Currently, this is reflected by participation in the Green Choice program (with less than 1% usage). Future indicators could be tied to new customer survey with a request for feedback related to cost tolerance for renewable energy. A set target should be established in alignment with public feedback and ratepayer direction. 4. Current level of RECs is 2.5% of energy supply which is considerably less than the Power & Rate Committee proposal of 5% for 2012. This would result in retirement of all currently held RECs and a need to spend additional funds to purchase RECs to be retired. This in not in alignment with feedback received from the CAB, Reading and North Reading BOS or Reading voters. 5. All decisions related to RECs must be made at least annually since they have a market -based value that fluctuates daily. Long term decisions without regard to value are irresponsible to ratepayers since the future market direction cannot be known. 6. RMLD's best interested are served by purchasing some level of reasonably priced RECs to provide a hedge against potential future regulation, even if RECs will be sold in the near term. Future regulation that required RECs for municipal utilities could drive up the cost so it is better to purchase them now at a lower cost and determine disposition of the RECs annually based on established guidelines. 7. Current market value of the RECs must be considered as part of any policy related to a sell vs. retires decision process. RECs with the maximum financial benefit should be sold first to provide the optimal benefit to ratepayers. 8. The MA DOER has provided guidance that RMLD can claim to be the site of "renewable energy generation" without holding RECs. A claim of "renewable energy consumption" does require that RECs are held. What value will ratepayers gain by forgoing over $300,000 at current market for this incremental claim of consumption over generation? ➢ RMLD's policy should be developed around the more conservative energy generation framework 9. RMLD staff members are experienced energy industry professionals with years of experience and training. The RMLD Board of Commissioners should leverage their expertise and view their recommendations with a high level of credibility. a. RMLD staff unanimously recommend selling the RECs, including conservation staff b. RMLD recommended policy should be used as the initial draft of the policy 10. GM /Staff proposal to incorporate a sum equal to the REC proceeds into renewal energy development the following year will have a tangible benefit to ratepayers and will make a greater positive impact on the environment than holding /retiring RECs. Development of new renewable sources will provide more direct benefits and have more impact on the environment than the tiny impact made by the removal of RMLD RECs from the wider energy market. 11. Renewable energy sources may provide additional financial benefits to ratepayers that are not reflected in the power rate. Sources that provide energy "behind the meter" may reduce transmission costs or provide energy during peak demand, reducing reliance on more costly energy. In summary, it is critical that we fulfill our fiduciary responsibility to the ratepayers, value the recommendations of RMLD's experienced staff, consider the full costs of decisions made and weigh the overall net benefits to the environment over ideological concepts. The RMLD policy must include a component of cost / benefit analysis related to the RECs and include an annual review and recommendation of the disposition of RECs. To: Bob Soli, Chairman, RMLD Policy Committee Gina Snyder Marsie West From: Mary Ellen O'Neill Re: Points in Response to "Policy Considerations" from Ms. West Date: May 1, 2012 In her above - referenced document, Ms. West refers to the "fiduciary" responsibility of "Commissioners." In the increasingly challenging world we live in, as we face dramatic climate change and resource restriction and degradation, it is imperative for policymakers at the local, state, and national levels to include evaluation of the social and environmental costs, along with the fiscal costs, of the decisions they make. Ms. West's overstated emphasis on "ratepayer directive" and the opinion of RMLD staff overlooks the rights and responsibility of the elected members of the RMLD Board to explore issues and make decisions on what they feel is best now and for the future of the RMLD and its customers. The claim by Ms. West that the retirement of the RECs is not in line with "..Reading voters" is not supported by the local election results in 2012. I was the top vote - getter in all eight precincts; Ms West did not even win her home precinct. The votes cast for the supporters of retiring the RECs from the existing renewable energy contracts (myself and Mr. Hahn) totaled 3,747 with Ms. West receiving 1,676 votes. If there was any answer to a referendum on the RECs in that election, it was to retire the RECs and have a portion of the RMLD power supply be from renewable energy resources. The Swift River hydro projects were authorized for purchase as renewable energy projects by the Board in January 2011. The RECs are part of the cost of that energy purchase and represent a numerical count of the amount of renewable energy generated by those projects. They have no financial value unless the "renewable" attributes are broken out and sold to another party. Putting an equivalent amount of money from the sale of RECs into a local renewable energy development account would require the establishment of yet another fee by the RMLD and belies the fiscal responsibility claims stressed by Ms. West as ratepayers would see an increase in their bills at least equal to what keeping the RECs could mean.