Board Members Present: Dorothy Anderson, Peter Bartel, Susie Smith, Patrick Lanning, and Sandra Bishop.
Others present: Randy Berggren, Tom Buckhouse, JoAnn Andersen, Dick Helgeson, Marty Douglass, Lance Robertson, Ken Beeson, Scott Spettel, Jim Origliosso, Jim Wiley, Dick Varner, and Krista Hince of the EWEB staff; Kim Young, City of Eugene Minutes Recorder; and members of the public.
President Anderson called the Work Session to order at 5:30 p.m.
DISTRIBUTED GENERATION
Ken Beeson, Energy Resource Project Manager, and Scott Spettel, Power Management & Planning Manager, joined the Board for a presentation on distributed generation. Copies of the presentation were provided to the Board.
Mr. Beeson prefaced the presentation by characterizing distributed generation as a brand new conception of the grid, or a new model for energy systems. Rather than power flowing in one direction from one source, power now could flow in all directions in a complex, interconnected grid. The energy network would be "smarter," and would include diverse and environmentally acceptable sources of generation. Distributed generation could allow customers to become energy vendors. Mr. Beeson anticipated that distributed generation would take hold over the next 10 to 20 years.
Mr. Beeson defined distributed generation as technologies that generate electric energy at or near the customer's point of use. The technology may be customer- or utility-owned; located within the utility distribution system or connected to the system; and can range in size from a few kilowatts to several megawatts. He described several types of distributed generation technologies, including fuel cells and wind solar photovoltaics.
Responding to a question from President Anderson, Mr. Beeson said that anyone could install a generator inside the city limits if they complied with certain regulations and codes. He noted that for some installations, depending on the size, EWEB was required to connect to it.
Responding to a question from Commissioner Lanning, Mr. Beeson said that his information about the costs associated with the various distributed generation technologies was taken from the current literature.
Mr. Beeson identified benefits to customers as including reductions in energy costs and increased efficiencies; the benefits to the utility could include reduce reliance on outside transmission, increased stability in the distribution system, and reduced need for capital investment. He emphasized that central generation was not obsolete, but distributed generation could help reduce a utility's exposure.
Mr. Beeson discussed issues related to distributed generation, including the more complex equipment and practices required for operation, potential environmental impacts associated with installation and operation of generation sources; difficulties in accounting for customer-owned generation, the potential for stranded investments; and the need for additional rate structures.
Vice President Bartel asked about the operation, maintenance, and lifespan of distributed generation technologies. Mr. Beeson said that some of the technologies that existed, such as internal combustion engines, have long histories and track records, and there were vendors that provided products that were easily installed, cost-effective, and had a long service life. Other technologies, such as fuel cells, were relatively expensive and it was not clear what the operations and maintenance costs would be over time.
Mr. Beeson discussed the status of distributed generation at EWEB. He said that to this point, participation in distributed generation was minimal, but industrial customers were increasingly interested in the concept. Three or four customers were connected at this point. He reviewed the utility's solar photovoltaic programs and its fuel cell partnership program. Mr. Beeson noted that EWEB had established some requirements defining conditions for distributed generation installations.
Mr. Beeson reviewed a proposed distributed generation policy statement:
Position the utility and community to adopt and take advantage of distributed generation technologies that will provide enhanced reliability, reduced environmental impacts, and increased reliability for customers.
Mr. Beeson identified the following policy issues and questions related to distributed generation:
The Board briefly discussed the probable need for regulation governing the use of distributed generation technology in residential neighborhoods. Mr. Beeson noted that in the case of generators, for example, there could be regulatory issues raised by the Lane Regional Air Pollution Authority. Commissioner Smith suggested the possibility that a carbon tax could be assessed on transmissions from such technologies.
Mr. Beeson called attention to a series of strategies developed by staff related to distributed generation:
Commissioner Smith said that the utility already had a lot to do, and she questioned the priority and timing of the discussion and how distributed generation fit into the Board's work plan. She expressed frustration about not being able to move forward more quickly with the utility's renewables goal, and questioned whether more staff resources would move that project along faster. She wanted more information about the relative priority of the item as it related to the work plan.
Commissioner Smith said that to the degree the issue was driven by industry, she wanted to see it in terms of its relationship to the Board's cost center around providing service to industry, and to avoid placing the costs of research and planning that would primarily benefit industrial customers on the residential customers.
Commissioner Smith suggested that the Board consider whether EWEB needed to be the pioneering utility in this area, or if it should take a "wait and see" approach and let other utilities lead. She said that EWEB should be prepared to be responsive to requests, but she questioned whether it should be pro-active.
Vice President Bartel believed the strategies before the Board represented a major commitment. He indicated that he shared Commissioner Smith's concerns. He said he would be more inclined to make the required investments if the utility's energy costs were higher.
Vice President Bartel clarified that he did not want to squelch the initiative of staff. He thought the topic important, but wanted to consider how the Board could keep in touch with the subject, and see how it progressed with others taking a lead. Mr. Beeson emphasized that the staff had included some time in the 2002 budget to more fully develop the work plan, and was not proposing to set up a full scale department. He said EWEB did not have to be on the cutting edge. He acknowledged the Board's concerns, and said that there were things the staff could do to be in position when customers came forward with requests.
President Anderson did not think it was inappropriate to set policies related to the topic at some time in the near future. Mr. Beeson indicated that staff was scheduled to return in another Work Session in mid-year 2002, and the Board could discuss the policies at that time. He said that if energy costs were high at that time, it would be good to have a sense of how the Board wished to proceed.
President Anderson was not convinced that the Board needed to rush "full speed ahead" on the topic but thought the Board could do the needed policy work in the near term.
Commissioner Bishop said that the Board needed to consider how to balance the economic and environmental impacts of distributed generation. She did not want to see distributed generation used to save money at the expense of the environment, and hoped staff could come up with a policy that addressed her concern. She did not feel as though she had all the information she needed to have to feel comfortable about the subject in terms of the legal implications the Board faced when someone requested to connect to its system. She agreed that the Board needed to have policies in place to address the issue, and did not think it should take long to do that work.
Commissioner Lanning thought it important that the utility continue to study the subject, and agreed that the Board should consider the policy issues soon.
Commissioner Smith said that she supported becoming educated on the topic and creating policies to guide future action, but was not prepared to adopt the strategies proposed by staff or move forward in any aggressive way. Vice President Bartel concurred. He said that the strategies represented too much of a commitment at this time.
General Manager Randy Berggren said he thought it important that the Board follow the issue and continue to inform itself about technology advances that were potentially as significant as retail competition and deregulation. He termed it a "strategic watch issue." He said that technology advances could occur quickly, and there was value in building strategies and policies to meet those challenges. Commissioner Lanning agreed. He said that the acceleration of technology advances meant that now was the time to talk about policies.
PRIEST RAPIDS CONTRACT
Mr. Spettel said the decision before the Board was whether to sign the Grant contracts by December 31, 2002. He provided a presentation on the issue, reviewing the annual project benefits, overviewing the details of the three contracts offered, and noting the positions taken by the other utilities involved. He reviewed the criteria for competitive license applications used by FERC. Mr. Spettel also reviewed the developments that had occurred since the Board discussed the issue at its September 4 Work Session, saying the issues identified then were resolved. He recommended approval of the contracts.
Responding to a question from Commissioner Bishop, Mr. Spettel said that he was unaware of a successful relicensing challenge.
The Board acknowledged that action would occur on the contracts at the regular session of the Board later in the evening.
The meeting adjourned at 7:25 p.m.
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Assistant Secretary President