Idaho Falls Utility Board Meetings

May 25, 2017 The City Council of the City of Idaho Falls met in Special Meeting (Idaho Falls Power Board), Thursday, May 25, 2017, at Idaho Falls Power Conference Room, 140 S. Capital, Idaho Falls, Idaho at 8:30 a.m. Call to Order and Roll Call: There were present: Councilmember Ed Marohn Councilmember Michelle Ziel-Dingman Councilmember Barbara Ehardt Councilmember Thomas Hally Councilmember John B. Radford Councilmember David M. Smith (arrived at 8:34 a.m.) Absent: Mayor Rebecca L. Noah Casper Also present: Jackie Flowers, Idaho Falls Power Director Bear Prairie, Idaho Falls Power Assistant Manager Stacy Scott, Accountant II Dana Briggs, Economic Development Coordinator Randy Fife, City Attorney Kathy Hampton, City Clerk Mayor Pro Tem Hally called the meeting to order at 8:30 a.m. and turned the meeting to Director Flowers. Director Flowers introduced Tim Blodgett, Hometown Connections, for the second session of Idaho Falls Power (IFP) Strategic Planning. The first session was held March 23, 2017 and the third and final session is scheduled to occur in conjunction with the July 27, 2017 IFP Board Meeting. Mr. Blodgett presented the following presentation with general discussion throughout: IFP Strategic Planning Update: Mr. Blodgett stated the current step of strategic planning will focus on strategic areas, followed by IFP staff End Statements and Goals. Step One: Board Commissioning – IFP Regional/Local Issues and Opportunities: •Rate structure •Fiber •BPA (Bonneville Power Administration) contract •CA market – oversupply issues (solar) •EV, solar, larger battery storage, CHP •Sell out to RMP (Rocky Mountain Power) •Longevity of Lower Snake Dams •Power supply risk mitigation •Economic development/INL •Staff retention, acquisition and competitiveness •Energy Efficiency & declining demand/load •FERC relicensing •Integrated customer programs •Regulatory (National & State) •EIM – impacts, role, risks in power supply •Transmission development/reliance on RMP •Increased education/communication •Board (City Council) turnover Vision for the Future: IFP in the next 10 years - the vision drives the rest of the plan, goals must be achieved. •Increased ownership in power supply •Business model addressing loss of demand & customer needs •Have a micro-grid •Fiber-to-home/other broadband options to customers •Enhanced rate structure •Geothermal/Bio •Achieve cash reserve policy •Appropriate relationship with BPA or have alternative •More preparedness for emergency/disaster recovery •Economic Development officer in IFP •SMR – realized & operational •Deep into FERC relicensing •Updated & renewed system (distribution/generation) •Load growth plan and executing 1  May 25, 2017 •North Loop Transmission – redundancy •Cyber security / integration of technologies •Automated customer service •Executing technology plan •Regional leaders in technology (EV/Storage) •Trained & capable staff •Increased collaboration w/prosumer •Board policies in place •Integrated services to consumers Summary of critical issues: Could have negative impact. •Money & statutory limitations on bonding/financing •Lack of succession planning for both Board and Staff •Lack of acknowledgement (stick head in sand) •Lack of trained workforce & technical retention, recruiting & •Dynamic political landscape - Fed, State, & Local compensation •Eminent domain laws/land use planning •Outdated rate structure •Surrounding investor owned utility – not compatible with IFP (takeover threats, operational collaboration, no leverage for IFP) •Lack of economic development Step Two: Vision, Mission, Values – Proposed Mission Statement: A customer-owned utility dedicated to providing value driven, safe, reliable and high quality services. Proposed tag line: Your utility with its own kind of energy. Director Flowers indicated ‘own kind of energy’ could also include hydro, broadband, etc. Step Three: Customers/Target Markets – Focused on the customer to provide the best possible service and recognizing a common set of needs.  Residential Target Market (general needs = reliability, low cost, safety, customer service, energy efficiency, payment predictability, data access, information/education, additional services, real time access and control, solar) •Bi-directional Distributed Energy Resources - DG & storage (multi-metering) •Bi-lingual •Owned vs rental •Low to moderate income (payment predictability, control, pre-pay) •Electric vehicles  Commercial Target Market (general needs = reliability, low cost, safety, customer service, power quality, energy efficiency, payment predictability, data access, information/education, additional services, real time access and control) •Larger (rate sensitivity, power quality, power factor, engineering support, key account program) •Customer based energy resources - distributed energy resource (net metering, standby service) •Economic Development/Growth (innovative services, shovel ready property, broadband)  Industrial Target Market (general needs = reliability, low cost, safety, customer service, power quality, energy efficiency, payment predictability, data access, information/education, additional services, real time access and control, hot work, key account program) • Large (rate sensitivity, power quality, dedicated substation/feeder, dual source) • Customer based energy resources – distributed energy resource • Economic Development/Growth (innovative services, shovel ready property, broadband)  New Business Target Market (general needs = shovel ready, tax incentives, flexible rate structure/ED rate, reliability, one stop shop for utilities, broadband). This Target Market is State and Federally focused. •Technology •Agriculture •Manufacturing •High Energy Consumption Business  Redevelopment 2  May 25, 2017 •Urban Renewal – Blighted areas, underutilized buildings, vacant lands adjacent to infrastructure. This area contains a broad set of needs although not a concerted effort for new/redevelopment of industrial parks.  Prosumer Target Market (combination of producer and consumer) – Potential expansion/new services. Could be private/public partnerships. May also be driven by continued declining electrical consumption. •Surge Protector •Storage •Security Light •Emergency Generator •Distributed Generation •Fiber Optic •Community Solar •Demand Response •Green Power •Energy Efficiency •Electric Vehicle •Education (Energy Center, Community, Classroom) •Recreation (may affect relicensing)  Stakeholders Target Market – Direct customers that may affect the community •INL (Idaho National Laboratory) •Downtown Business District •REDI (Regional Economic Development Eastern Idaho) •Auditorium District •Developers/Contractors •EICAP (Eastern Idaho Community Action Partnership) •Chamber of Commerce Step Four: Strengths, Weaknesses, Opportunities, and Threats (SWOT) – External, internal, helpful, harmful. Includes customer, workforce, financial, reliability.  Strengths – for the addition of growth  Weaknesses – internal looking  Opportunities – positive approach, external looking  Threats – power supply/BPA Brief discussion followed regarding recent and potential annexations. Step Five: Strategic Areas of Focus – focus on high priority items/where goal development will occur. •Growth (economic development, includes load growth) ◦Land Use •Workforce •Financial •Customer ◦Innovative Solutions •Infrastructure/Reliability Step Six: “Ends” Statements – desirable ends/strategies/outcomes that might support the company focus on Key Strategic Issues identified. Step Seven: Goals – needs to include board members (Council).  Goals are the highest level of measures that reflect the company’s success in fulfilling the outcomes described in the Ends Statements  Goals provide the governing board the means to track success of their CEO, and by extension the company  Departmental workplans, resource allocations and priorities should support strategies  Should be specific, realistic, measurable. Growth – IFP shall anticipate energy needs for the continued vibrancy of the community; Economic Development & Land Use, Load Growth, and Infrastructure Growth (includes fiber). 3  May 25, 2017 Workforce – IFP shall maintain its position as an industry leader enabled by talented and trained staff; Compensation Policy (compression), Succession Planning (recruit, grow, train, retain), Safety, Board Development (Board prefers continuous engagement). Financial – IFP will operate in a stable, financially prudent and forward looking manner; Utility Best Practices (example includes: written policies in rates, transfer, cash, risk management, finance), Power Supply/Markets, Regulations. Customer – IFP will serve as the customer’s trusted energy advisor; Service Experience (key accounts & special needs), Integrated Programs (broadband), Education/Communication/Outreach (American Public Power Association (APPA) area of focus) Reliability - IFP will embrace change and technology to ensure a modern, adaptive grid; Maintain (preventative maintenance, CAIDI/SAIFI/SAIDI, FERC relicensing, compliance), Enhance (grid automation, cyber security, technology plan), Future Planning (emergency planning, Capital Improvement Plan, RMP transmission). Step Eight: Action Items. These items would not require approval by the Board/Council but would be implemented. •Business Goals drive work plans of individual departments/functional/xfunctional areas •Assess resource implications and build into annual and/or capital budgets if necessary •Assemble appropriate players to build specific goals and action items around strategies •Develop a plan and timeline for plan •Build a communications process for reaching appropriate stakeholders It was noted IFP staff would present final Strategic Plan for Board/Council approval in July 27. IFP Quarterly Report and Power Supply Update: Director Flowers briefly reviewed both the Financial Report for Q1 and Q2, due to the Q1 report being tabled at the February 23, 2017 IFP Board Meeting. She reviewed revenue and expenditure as follows, indicating there are no concerns regarding the budget: 1st Quarter 2nd Quarter YTD Revenue $12,162,839 $15,239,254 $27,402,093 Expense $12,802,158 $13,590,067 $26,392,225 Cash Balance 1st Quarter 2nd Quarter Idaho Falls Power Fund $8,577,653 $9,289,726 Rate Stabilization Fund $20,534,735 $20,529,070 Capital Fund $10,247,493 $10,247,493 Mr. Prairie stated Q2 Net Power Supply cost is at -16% from the previous year, which amounts to a decrease of $1,060,258. He indicated expenses were down -$1,165,626 Year over Year due to reduced purchase requirements from BPA due to using the bulbs for load service since the power sales contract with BPA was not renewed by BPA. Revenues were up $190,425 due to the early start of water runoff and good hedges. He stated Net Power Supply Cost is 44.16% of the total budget, Q1 was 22.07% of total budget. Mr. Prairie briefly reviewed Retail Loads stating total load = 207,204 MWh this quarter, which is a slight decrease from 204,213 MWh during the previous year. Load forecast = 208,026 MWh, which is still below the forecast. He briefly reviewed Forecast Net Power Supply Costs stating prices are fairly stable from the previous report. He indicated 2017 Net Power Supply Costs are similar in comparison. Mr. Prairie reviewed water outlook, including percent of median snowpack as follows: The Dalles – 126% April through September, was 100% for Q1 report. Snake River Basins – 135% April through September, was 150% for Q1 report. Teacups: Island Park – 96%; Ririe – 99%; Jackson – 70%; Palisades – 31% (heavy refill anticipated); American Falls – 98% Total Upper Snake System – 72% of capacity, was 67% in February 2017 Q1 report. Early runoff was necessary to make room for snowpack. 4  May 25, 2017 Idaho Falls Fiber Quarterly Report: Director Flowers briefly reviewed the report as follows: 1st Quarter 2nd Quarter YTD Revenue $213,331 $167,065 $380,396 Operations & Maintenance Expenditures $70,288 $55,310 $125,598 Net Operating Revenue $143,043 $111,755 $254,798 Net Revenue (Loss) $79,137 $47,850 $126,987 Director Flowers stated there are currently 36 pairs of fiber being leased, with some pairs still available. Approve Payment in Lieu of Taxes (PILOT) Policy: Director Flowers stated the purpose of the policy is to eliminate monetary or in-kind transfers. PILOT for this year (before transfer to Traffic Fund) = $3,477,333. PILOT projection for next year (before transfer to Traffic Fund) = $3,667,115. After brief discussion, it was moved by Councilmember Hally, seconded by Councilmember Smith, to approve the Payment in Lieu of Taxes Policy. Roll call as follows: Aye – Councilmembers Smith, Hally, Dingman, Radford, Ehardt, Marohn. Nay – none. Motion carried. There being no further business, it was moved by Councilmember Marohn, seconded by Councilmember Hally, to adjourn the meeting at 9:53 a.m. s/ Kathy Hampton s/ Rebecca L. Noah Casper CITY CLERK MAYOR 5