Idaho Falls Utility Board Meetings

October 12, 2022 The Idaho Falls Power Board of the City of Idaho Falls met Wednesday, October 12, 2022, at the Idaho Falls Power Boardroom, 140 S. Capital, Idaho Falls, Idaho at 7:45 a.m. Call to Order, Roll Call, and Announcements: There were present: Mayor Rebecca L Noah Casper (via Zoom, left at 8:27 a.m.) Board Member Michelle Ziel-Dingman Board Member Jim Francis (via Zoom, left at 8:27 a.m.) Board Member Jim Freeman Board Member John Radford Board Member Lisa Burtenshaw Absent: Board Member Tom Hally Also present: Bear Prairie, Idaho Falls Power (IFP) General Manager Stephen Boorman, IFP Assistant General Manager Chase Morgan, Power Supply Dispatcher Josh Roos, City Treasurer Randy Fife, City Attorney Linda Lundquist, IFP Board Secretary Council President Ziel-Dingman called the meeting to order at 7:48 a.m. Calendar, Announcements, Events and Updates Council President Ziel-Dingman reviewed the Idaho Falls Power (IFP) Board announcements, future events and pointed out the new IFP Annual Report. Board Member Radford gave the Policy Maker’s Council (PMC) report, emphasizing funding impacts on Low Income Home Energy Assistance Program (LIHEAP). He said he’s planning on participating in the listening sessions on how funds will be implemented and added that he feels American Public Power Association (APPA) is monitoring the legislation and responding accordingly. Board Member Freeman said he noticed an announcement for a new company near Salmon, Idaho that will be mining cobalt and nickel for a car manufacturer. Assistant General Manager (AGM) Boorman said he thought the load for the mine would be around 7 MW, which will come from BPA since they local utility is a Co-op. Mayor Casper said the city of Kemmerer, Wyoming, is the first community converting a coal plant to nuclear (funded by Bill Gates’ Terra Power and PacifiCorp which is Warren Buffet) and is sending an Energy Futures Initiative delegation to Idaho Falls to discuss the city’s involvement in the Carbon Free Power Project (CFPP). She mentioned that the former U.S. Energy Secretary Moniz is heading up a subgroup to look at energy transition and the role of nuclear and the impediments to funding small modular reactors (SMRs). She said a meeting would likely occur by the middle of November 2022. AGM Boorman gave an update on IFP’s items for consent in the next City Council meeting. Board Member Radford asked if the Florida storms had any effect on receiving transformers in a timely manner and AGM Boorman said that larger utilities are sitting pretty good as they generally have been ordering extra supplies and materials due to the continuing supply chain issues resulting from COVID-19 and noted that rebuilt transformers don’t last as long as the new ones and thought that Florida may see more rebuilds in their future. General Manager (GM) Prairie touched on the articles and policies sent for review last week and noted the updates reflect on the growth and evolution of the fiber business, capital improvements and building the reserve fund by another $5 million. He played a new video created to inform and educate the public on the value and benefits of hydropower and the history of the 1  October 12, 2022 utility. Board Member Burtenshaw asked about the wayfinding signs that IFP had been working on and Board Secretary Lundquist gave the locations of the first four signs installed this past spring and noted that the remaining signs are in the design phase with the marketing company. Board Member Radford mentioned that an accompanying interactive model turbine in a children’s park would be ideal. GM Prairie requested approval by the Board to record two items on the agenda for future training purposes as Mayor Casper and Board Member Francis were due to exit the meeting early. The request was granted unanimously. Carbon Free Power Project (CFPP) Update GM Prairie said the preliminary cost estimates of the CFPP aren’t looking very good and noted they will likely breach the projected/contracted $58 per megawatt hour (MWh), but pointed out that the project will arrive at another decision point prior to the next phase. He explained that the project management committee (PMC) could decide to continue/discontinue with the CFPP and the participating utilities will also be faced with an offramp decision of how and whether or not to proceed. Board Member Radford asked if the $58 MWh took into consideration the dollars expected from the Tax Reduction Act and GM Prairie said that it did in the latest projection from UAMPS that was given in executive session to the PMC committee at UAMPS and it equated to roughly one-third the price or about $30 per MWh potentially. He explained that he created a formal liability account to track the liability committed thus far by the Idaho Falls Power to the project and added that the utility may not have to pay it with the exception of a few items they are still responsible for depending on what the PMC decides to do. If the PMC decides to terminate the project because of price being over the $58 the members are refunded by NuScale the development costs to date according to the DCRA between UAMPS and NuScale. Board Member Radford asked if the project has to be fully subscribed to move forward and GM Prairie stated it was his option that it would prove difficult to secure financing without a fully subscribed project. Board Member Freeman asked what the costs would be if IFP exited the project and later wanted back in once built and GM Prairie said IFP would have to buy their way back in if shares were available. He continued to point out that the construction and cost over- runs risk are what utilities are wary of and added that the project is in the stage of finalizing NuScale and Fluor’s costs to a solid class 3 engineering estimate and noted that the increased costs have been shocking to both partners. GM Prairie pointed out the reasons for the Fitch bond rating upgrade for the Municipal Electric Authority of Georgia (MEAG) Vogtle project and explained that the utility in Georgia is about the size of Idaho Power and Rocky Mountain Power combined with millions of customers who own about 40% of the project. He said that Georgia Power absorbed most of the cost overruns and likely saved the MEAG members from a lot of the cost overruns when they refinanced their bonds. He emphasized that the financing, the contractual development and construction of the Vogtle is very different than the CFPP so drawing exact parallels is not prudent but there are lessons being learned. Resource Options Discussion GM Prairie said the Northwest region (primarily hydropower) is weathering the energy transition at a much lower risk than most other utilities in the country. He explained that IFP is short on capacity versus utilities in other regions that are faced with replacing half of their energy resource at a higher cost and risk. He reviewed the resource type chart and said he’s been involved in some interesting geothermal exploration conversations and expects to learn more. AGM Boorman pointed out that in the last 20 years, utilities aren’t building generation as much as they’re relying heavier on the market. GM Prairie reviewed the Lazard charts and noted that pricing is vastly different than a year ago and Board Member Freeman mentioned he was surprised by the cost of coal. There was a discussion on converting natural gas to hydrogen. GM Prairie said there is no clear answer in the industry on these early and emerging technologies. Bonneville County Boat Dock Discussion AGM Boorman showed a map of the location of the Bonneville County boat dock and pointed out that while not in city limits, the city purchased it in the 1980s over river icing concerns. He said recently there have 2  October 12, 2022 been numerous reports of vandalism and loitering. He pointed out the county has already been maintaining and improving it with monies received from fish and game and stated the county is amenable to taking over ownership of the land from IFP/City. AGM Boorman proposed that since the city parks department does not want to maintain it and it is located way outside of city limits that it is IFP’s recommendation to deed it over to Bonneville County. Board Member Ziel-Dingman gave Board direction to move forward with the transfer and Mr. Fife said he would prepare a deed and resolution to bring back to City Council for final approval in the coming weeks. Title 8, Chapter 5, Section 7 Ordinance Amendment Review AGM Boorman explained the need to clarify and add language to the ordinance giving clear direction to staff on when to remove service facilities from a site that is no longer using IFP services. He said the recommended time for removal is 18-months from the cancelled service notice and said the item will likely appear on a November Council agenda. BPA - Post 2028 Contract Briefing Mr. Morgan gave an overview of the Bonneville Power Administration’s (BPA) 2028 contract process and then reviewed the Power Marketing Directives slide. AGM Boorman reviewed the contract timeline and noted there could be significant changes in the new 20-year contract but the overall structure will likely not change in total allocation of the system. Board Member Freeman asked how the uncertainty of the market and of the lower dams come in to play and AGM Boorman said you have to sign the contracts and then the rates are determined later based on costs; noting its similarity to IFP’s structure where customers sign up and the rates are determined by the Board. He explained the difference in the three product offerings and noted that IFP is in the slice/block product. Mr. Morgan explained how the slice/block product works best for IFP and pointed out the big value is in IFP takes more risk but also rewards over load following this value is large in good water years and/or favorable market conditions. He explained how a good water year will yield more power to IFP contrarily to a bad water year. Mr. Morgan reviewed the provider of choice goals and principals and noted that 20-year contracts lend financial stability to BPA. AGM Boorman reviewed the big issues with BPA and pointed out that BPA is looking to reduce capacity which will make the slice contract less valuable. Mr. Morgan explained how ratios play into the contract and pointed out that the more generation you own the less BPA product you get, with the exception of renewable energy, which doesn’t count against generation. He explained the tiered rate system (tier one is generated and tier two is bought on the open market) and noted that BPA wants to grow their tier one system size and forecast rates based on a 30-year period of record versus how it’s currently based on a high-water mark reset every two years. AGM Boorman demonstrated how BPA could determine the size of their tier one (generation). Board Member Freeman asked if there were federal rules in place with the Northwest Power Act that guarantees how much BPA has to distribute and AGM Boorman said the 1980 Power Act specifies that public utilities are preferential customers of BPA and receive power at cost. Mr. Morgan gave examples of how ratios/rates could be derived based on customer high-water marks every two years. Board Member Burtenshaw asked if BPA gives IFP a contract or if there is a negotiation process and AGM Boorman said that BPA is looking to cover their costs and explained how the Public Power Council (PPC) helps negotiate with and on behalf of IFP and public power at large since they are the umbrella organization currently for public power utilities. Board Member Radford asked about the prospect of the west having their own energy authority and AGM Boorman said it was his opinion that a regional transmission organization (RTO) would be great because then it would open up better market access for small utilities like IFP and better utilization of the transmission grid. He noted the two entities competing to be that organizations of at least a minimal organized market, which is not a full blown RTO but can lead to it, are the Southwest Power Pool (SPP) and California Independent System Operator (CAISO). Utility Reports 3  October 12, 2022 Fiber – AGM Boorman said that fiber construction has been going very well with the extended nice weather. Safety – AGM Boorman explained that the utility has gone a long stretch without a loss and noted that the cones put behind parked utility trucks and cars is a constant reminder of safety awareness. Energy Services – AGM Boorman compared the growth of the three electric vehicle (EV) charging stations and pointed out that the IFP public station gets the most usage of the three. Board Member Burtenshaw asked how the charts relate to the number of charges per station per car and AGM Boorman said that is hard to quantify because some cars may just top off, while others remain charging for much longer periods of time. Board Member Radford asked if the new charging stations installed at city hall are “for pay” and AGM Boorman said they have the capability of “for pay” but they’re not set up for that as of now and added that a customer needs to have an app in order to access the pay system. Mr. Roos pointed out that the charging costs are currently split between public works, municipal services and the Mayor’s office. Board Member Freeman asked if level two or three chargers were installed and what the charge time difference was and AGM Boorman said that a level three charger system is a much faster charge but noted that in some ways a level two with slower charging is easier on batteries. He said it takes about 10 minutes per 10- miles on a charge. There being no further business, the meeting adjourned at 10:55 a.m. s/ Linda Lundquist s/ Rebecca L. Noah Casper Linda Lundquist, BOARD SECRETARY Rebecca L. Noah Casper, MAYOR 4