LSBGHORZ

AGENDA MEMORANDUM

 

 

Meeting Date:           November 9, 2009

 

From:                          Paul Kalv, Electric Director

 

Subject:                      Ordinance establishing a new Load Reduction Credit Rider

 

 

Staff Recommendation:

Staff recommends adoption of the Ordinance establishing a new Load Reduction Credit Rider to become effective December 1, 2009.

 

Analysis:

In the staff report recommending the retrofit of City owned emergency generators to reduce wholesale power supply costs; an additional strategy mentioned in “future actions” was offering large commercial and industrial customers an opportunity to partner with the City for load reduction during the City’s coincident-peak billing hour each month.

 

In the staff report dated May 27, 2009 staff recommended the City Commission favorably consider the Load Reduction Credit Rider strategy for customers taking service under the General Service - Demand rate schedule.  The Commission subsequently directed staff to develop this strategy more fully.

 

In this strategy, the City proposes to notify those customers taking service under the terms of the Rider of the days and hours during which to exercise their emergency generator or curtail load by other methods.  The City has no financial obligation in the transaction and the resulting power supply cost savings are shared equally with the customer.

 

Staff has contacted the Central Florida Health Alliance, Embarq, and Publix Supermarkets and all have expressed an interest in learning more about the proposed Rider.  At current FMPA Demand rates it is anticipated that all will participate if the Rider is approved.  Also, at current and projected FMPA Demand rates, a compelling case can be made for customers to procure additional customer-owner emergency generations funded principally by the proposed load reduction credit.

 

The following example outlines the anticipated savings as proposed.

 

 

 


 

Example of a Load Reduction Credit

 

Customer Average Daily Non-Coincident Demand:               2,500 kW

Minus Customer Coincident-Peak Period Demand:                -1,000 kW

Customer Coincident-Peak Load Reduction (kW):                  1,500 kW

 

FMPA Adjusted Rate for Demand Charges: $18.00/kW

Load Reduction Credit Rate:                           $ 9.00/kW

 

FMPA power purchase savings to the City:     1,500 kW x $18.00/kW = $27,000

Customer Load Reduction Credit:                   1,500 kW x $  9.00/kW = $13,500

Savings retained by City                                  1,500 kW x $  9.00/kW = $13,500

 

Staff recommends that the effects of this project and similar proposed projects remain Revenue Neutral as they relate to Leesburg Retail Rates.  Staff recommends that the savings retained by the City accrue in an Electric Department Reserve Fund for financing additional Energy Efficiency, Conservation, and Demand Response projects.

 

Because the monthly Coincident-Peak Period and the FMPA Adjusted Rate for Demand Charges are not generally known until the 10th day of the following month, staff recommends applying the Load Reduction Credit earned in each month to the following month’s billing statement.

 

Options:

1.  Adopt the Load Reduction Credit Rider as presented; or,

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

Power supply savings potential will vary based on the actual demand reduced by customers participating in the Rider and FMPA demand rates.  Based on expressions of interest received and an average FMPA demand rate of $18.00 per kW, annual wholesale power supply savings of $400,000 are currently achievable with growth to $1,000,000 annually.

 

Submission Date and Time:    11/19/2009 4:47 PM____

 

Department: _Electric________________

Prepared by:  _Sabrina Hubbell________                     

Attachments:         Yes_X__   No ______

Advertised:   ____Not Required _X____                     

Dates:   __________________________                     

Attorney Review :       Yes___  No _X__

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head _Paul Kalv

 

Finance  Dept. ______JB__________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________


 

ORDINANCE NO. 09-_____

 

 

AN ORDINANCE OF THE CITY OF LEESBURG, FLORIDA, AMENDING SECTION 22-196 OF THE CODE OF ORDINANCES PERTAINING TO ELECTRIC SERVICE RATES; ESTABLISHING A NEW RATE RIDER FOR ELECTRIC SERVICE; PROVIDING FOR THE RIDER TO BE EFFECTIVE DECEMBER 1, 2009; PROVIDING FOR CONFLICTS; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. 

 

 

BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA, that:

 

SECTION 1.

 

Section 22-196, of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to include a new paragraph (12) to read as: 

 

Load Reduction Credit Rider

Rider LRC-1

GENERAL

 

Load Reduction Credit Rider (Rider LRC-1) is offered by the City of Leesburg (City) to a qualifying non-residential customer (Customer) that can be called upon by the City to reduce Customer’s electrical load during the Coincident-Peak Hour, as defined below. Such load reduction must enable City to reduce its wholesale power costs from Florida Municipal Power Agency (FMPA). This Rider LRC-1 enables the City to share a portion of the Monthly Wholesale Power Cost Savings, as defined below, with Customer by applying a Monthly Load Reduction Credit to Customer’s electric bill, under the terms and conditions described herein.

 

AVAILABILITY

 

Rider LRC-1 is available only to a non-residential customer that meets the following criteria:

 

1. Customer is currently served under a non-residential rate schedule with a non-coincident monthly billing demand: for example, General Service – Demand (GSD); and

2. Customer is able to demonstrate a reduction of its electrical load by at least 100 kW when called upon by the City.

 

APPLICATION FOR RIDER LRC-1

 

Customer must make an initial written application to City in order to begin receiving credits under Rider LRC-1. In determining whether to approve the application of Customer, City may consider the number of customers already being served under the rider, City’s expected Monthly Wholesale Power Cost Savings, anticipated changes in City loads, effects of other load management programs, and any other considerations deemed important by the City. City is under no obligation to approve applications for credits under Rider LRC-1.

 

 

 

TERM OF RIDER LRC-1

 

The initial term of Rider LRC-1 shall be twelve (12) billing months.  Thereafter, either the Customer or the City may discontinue the application of Rider LRC-1 to the Customer by giving written notice to the other party at least sixty (60) days prior to any such termination date. 

 

REDUCTION OF CUSTOMER ELECTRICAL LOADS

 

During the term of this Rider LRC-1, the Customer may reduce its electrical loads during the Peak Management Hours, as defined below, through shift changes, powering down machinery, chillers and other motors or electrical loads, or exercising installed emergency generation.

 

Peak Management Hours are defined as those hours during which the City has determined a high probability exists that the Coincident-Peak Hour for the billing month may occur and during any part of which the City has called upon the Customer to reduce its electrical loads through the notification process described below.  The City will endeavor to minimize the number of Peak Management Hours.  However, the City gives no assurance regarding the number of Peak Management Hours, which could occur during multiple hours in the same day, consecutive days of the week and on multiple days throughout the month.  It is expected that Peak Management Hours will occur every month.  The City also gives no assurance that the Coincident-Peak Hour will occur during a Peak Management Hour.

 

The Coincident-Peak Hour is defined as the one hour of each month during which the aggregated total maximum energy is delivered by the FMPA All-Requirements Project (ARP) to its member utilities.  The Coincident-Peak Hour has historically occurred most often during the following time periods:

June through September: 2:00 PM to 6:00 PM

December through February: 7:00 AM to 9:00 AM and 2:00 PM to 6:00 PM

Remaining months: 7:00 AM to 9:00 AM and 2:00 PM to 8:00 PM

 

The Customer is under no obligation to reduce its electrical load during Peak Management Hours and will incur no penalty for failure to do so.  The Customer will only receive the Monthly Load Reduction Credit defined below for load reduction, if any, that occurred during the Coincident-Peak Hour, whether or not such Coincident-Peak Hour occurred during a Peak Management Hour.  The Customer will not receive credits for any load reductions during any other hours of the billing month.

 

NOTIFICATION PROCESS

 

The City will provide notification of Peak Management Hours to the Customer by automatic signal or another method as mutually agreed. The City will use diligent efforts to identify Peak Management Hours and will provide notice to all Customers served under this Rider of Peak Management Hours. However, the City does not guarantee that such Peak Management Hours will include the Coincident-Peak Hour for the month or that such notice will be received.  The Customer will hold the City harmless in connection with its response to notification or the lack thereof.

 


 

DETERMINATION OF CUSTOMER COINCIDENT-PEAK HOUR LOAD REDUCTION

 

For each month, City will analyze the Customer hourly metered kW loads to compute the Customer Coincident-Peak Hour Load Reduction as follows:

 

1.      Determine the Customer Coincident-Peak Hour Demand (kW) as energy (kWh) delivered by the City during the Coincident-Peak Hour. This computation will be made for that Coincident-Peak Hour, regardless of the Customer’s action or inaction to reduce loads during the Coincident-Peak Hour.

 

2.      Determine the Customer Prior Demand (kW) as energy (kWh) delivered by the City during the most recent hour that was not a Peak Management Hour prior to the Coincident-Peak Hour.

 

3.      Compute the Customer Coincident-Peak Hour Load Reduction (kW) as the Customer Prior Demand minus the Customer Coincident-Peak Hour Demand. If the Customer Prior Demand is less than or equal to the Customer Coincident-Peak Hour Demand, then the Customer Coincident-Peak Hour Load Reduction shall be zero.

 

DETERMINATION OF MONTHLY LOAD REDUCTION CREDIT

 

The Monthly Load Reduction Credit earned shall be computed as 50% times the Monthly Wholesale Power Cost Savings, as defined below, attributable to the Customer.  The earned credit in one month shall be applied to the Customer’s next monthly electric bill.

 

DETERMINATION OF THE MONTHLY WHOLESALE POWER COST SAVINGS

 

The Monthly Wholesale Power Cost Savings under this Rider LRC-1 shall be computed as the Customer Coincident-Peak Hour Load Reduction (kW) times the Incremental Wholesale Demand Cost ($/kW-month).  The Incremental Wholesale Demand Cost will be determined by the City for each billing month based on the sum of any FMPA rates billed to the City on the basis of the current month Coincident-Peak Hour demand, for example, “Current FMPA Adjusted Rates” for “Demand Charge - Capacity” and “Demand Charge – Transmission.”

 

City will compute the total Monthly Wholesale Power Cost Savings for all Customers receiving credits under this Rider LRC-1 and include such total as a cost to be recovered in the calculation of the monthly BPCA.

 

RESPONDIBILITY FOR METERING OF CUSTOMER LOADS

 

City will install, or cause to be installed, and own the metering and associated metering equipment, communication equipment, and/or telemetry equipment required for measuring the hourly kW demands and energy of the Customer. The metering, communications, and telemetry equipment shall meet functional specifications required by City.  At the City’s option, the Customer’s billing cycle may be adjusted if necessary to coincide with the calendar month.

 


 

Where appropriate to obtain meter readings, Customer shall have the right to install, maintain, and use at the Customer’s expense similar duplicative metering, communication, and telemetry as check meters.  Upon request of Customer, City shall provide Customer with copies of hourly data for the kW demands of the Customer and, upon reasonable prior notice of Customer, City shall provide Customer with copies of any other data, information or reports that City acquires from or produces by the metering equipment or the check metering equipment.

 

In the event the metering equipment is inoperative due to either equipment failure, the performance of necessary maintenance, or otherwise, readings from check metering equipment, if available, shall be used, provided such check metering is functioning properly.  In the absence of meter data and data from station operating logs, City shall estimate the required data in the manner it deems practicable.

 

City and Customer shall coordinate the maintenance of metering, communication, and telemetry equipment and shall endeavor to minimize adverse effects of such maintenance on metering of the hourly demands of the Customer.  At the City’s option, the Customer’s billing cycle may be adjusted if necessary to coincide with the calendar month.

 

SECTION 2.

 

All ordinances or parts of ordinances which are in conflict with this ordinance are hereby repealed, to the extent necessary to alleviate the conflict, but shall continue in effect insofar as they are not in conflict herewith, unless repeal of the conflicting portion destroys the overall intent and effect of any of the conflicting ordinances, in which case those ordinances so effected shall be hereby repealed in their entirety.

 

SECTION 3.   

 

If any portion of this ordinance is declared invalid or unenforceable, and to the extent it is possible to do so without destroying the overall intent and effect of this ordinance, the portion deemed invalid or unenforceable shall be severed here from and the remainder of this ordinance shall continue in full force and effect as if it were enacted without including the portion found to be invalid or unenforceable.

 

SECTION 4. 

 

This ordinance shall become effective upon passage. 

 

PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the ______ day of ______________, 2009.  

 

 

By: _______________________________   

      Mayor

ATTEST:

 

_______________________________­­________

City Clerk