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HomeMy WebLinkAbout07-009 Relating to energy; directing formation of a citizens committe, formation of municipal electric utility, prelim study, and directing CM on tidal energy actions and FERC application RESOLUTION NO. 07-009 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PORT TOWNSEND, WASHINGTON RELATING TO ENERGY; DIRECTING FORMATION OF A CITIZENS' COMMITTEE TO REVIEW AND RECOMMEND ACTIONS CONCERNING ALTERNATE ELECTRIC ENERGY MANAGEMENT FOR THE CITY, INCLUDING, FORMATION OF A MUNICIPAL ELECTRIC UTILITY; DIRECTING PRELIMINARY CONSULTANT FEASIBILITY STUDY; AND, DIRECTING THE CITY MANAGER ON TIDAL ENERGY ACTIONS AND FERC APPLICATION RECITALS: A. City Consideration of Sustainability and Energy Independence. 1. The Legislature has declared that "electricity is a basic and fundamental need" of state residents. RCW 19.29A.005. The City Council of the City of Port Townsend believes it to be in the best interest of the City and its citizens to evaluate available options to provide for that basic and fundamental need through sustainable and renewable resources. 2. The City has previously determined as part of its comprehensive planning to consider the wholesale purchase of electricity. The City's Comprehensive Plan provides in part that the City should (with other providers) "examine the possibility of purchasing wholesale electric power directly from BP A ... as a wholesale customer." Policy 30.10, Capital Facilities and Utilities Element, VII-27. One way to purchase wholesale power is to form a municipal utility. The comprehensive plan also provides that the City should promote the use of alternative energy sources and technologies. Policy 31, Capital Facilities and Utilities Element, VII-27. 3. This resolution directs further actions consistent with established City policy and direction. B. PSE Franchise and Review of Alternative Electric Provision - Formation of Citizen Task Force. 1. The City of Port Townsend and its governmental, commercial and residential users are currently provided electricity by Puget Sound Energy (PSE). A 30-year City franchise with PSE ended in 1999. A City task force put together in 1999 concluded that the City, in renewing its franchise with PSE, should negotiate a limited-term franchise in order to continue to study energy and supplier choices and conditions of service. The task force stated: "PSE should be seen as just one energy option. . .. The City does have a choice to develop one of several possible public power alternatives." "PSE Electric Franchise Citizens Committee Report (June, 2000)" at page 1. ("Franchise Report.") 2. In 2002, the City Manager recommended that it Was premature to establish alternative electric provision, and that the City Council should approve a short-term franchise with PSE to allow time, as recommended by the Franchise Report, to continue study of Resolution 07-009 supplier choice and options. The City Council accepted the recommendation of the Franchise Report and City Manager. Following limited franchise extensions during which negotiations were conducted, the City and PSE entered into a new short-term franchise in 2002 that ends December 31,2010. 3. Options for alternative electricity providers put forth in the Franchise Report included the creation of a municipal utility. Creation of a municipal utility was also an option put forth in "City of Port Townsend Electric Franchise Options Report (November, 1998)," by D. Hittle & Associates, a consultant retained by the City in 1998. The Franchise Report stated: "Municipal utilities have access to tax-exempt financing and preference for BPA power." Franchise Report, page 17. The Franchise Report stated preliminary analysis indicated "that - compared to PSE - a municipal utility could modestly reduce electricity costs." Both Hittle and the Franchise Report noted that PSE's retail rates have been among the highest large-utility rates in Washington. Besides possible cost reduction, the Franchise Report also stated: "Other benefits of public power include: greater control over service reliability, economic development programs, and economizing options." Franchise Report, page 17. 4. In approving a short-term franchise renewal, the City Council tasked the City Manager with developing a time line and process for franchise-related issues before the franchise expiration in December 2010. Based on discussions with consultants in 2002, a realistic timeframe to review electric municipalization issues is several years. For the 2010 franchise expiration, the process needs to start now. Steps include: preliminary and final feasibility study, community involvement, legal preparation, system acquisition negotiations, wholesale power negotiations, planning system operations, and bond funding, as well as voter approval for formation. 5. Formation of a new municipal electric utility does not necessarily mean the City actually operates a utility. Rather, under a "thin muni" model, the City acquires and owns utility assets and contracts some or all of its operation to other entities. The Franchise Report suggested this as one model for provision of future electricity. Further, asking for and obtaining voter approval to form a utility does not mean that the City runs any utility at this time. It is only legal authorization to do so. It serves to create options should further analysis and study show that formation and operation of an electric utility serves the best interest of the City and its electric users. 6. There is a Bonneville Power Administration (BP A) timetable for BP A twenty-year allocations in 2011 (the next major allocation). Applications for allocation need to be submitted to BP A by 2009. Ifthe City, as a municipal provider, was going to apply, a municipal electric entity would need to be formed by the end of2008. Publicly owed providers are entitled to a priority for BP A allocations. 7. F or the foregoing reasons, the City Council determines it appropriate to build on the work and recommendations of the City Manager and Franchise Report. Both recommended further study of alternate electric management (including generation, distribution and provision of wholesale and retail service), including, formation of an electric utility. The Council determines the appropriate next step is to form a citizen's committee to review and update the recommendations and information in the Franchise Report, and explore 2 Resolution 07-009 issues concerning alternate energy management. Specifically the committee should provide a recommendation on whether the City should take steps to form an electric utility. The committee should report back to Council at its earliest convenience, but not later than 180 days after members are appointed and confirmed by the Council. 8. The Mayor, in consultation with the City Manager, is tasked with recommending well- qualified individuals to serve on a committee, for appointment by the Council. Council recognizes that analysis, review, and evaluation on the feasibility of alternative electric management, including formation of an electric utility, will require expert study. The Council tasks the City Manager to solicit proposals for expert feasibility study, for further Council consideration and action. 9. The Council declares it will not take action on recommendations of the committee without public input and involvement, and declares its intention to hold public hearing(s) on this matter before adopting or rejecting any committee recommendations. C. Tidal Energy Project; FERC Application. 1. In July, 2006, the City became aware of an application filed in June, 2006 by Snohomish PUD to the Federal Energy Regulatory Commission (FERC) for a preliminary permit for an Admiralty Inlet tidal project. The project proposed to locate up to 450 turbines in Admiralty Inlet in waters adjacent to the City of Port Townsend, and (in part) within the jurisdiction ofthe City of Port Townsend. The jurisdiction of the City extends "into and over such waters and over any tidelands ... to the middle of such bays, sounds, lakes, or other waters [that front or are adjacent to the City] in every manner and for every purpose that such powers and jurisdiction could be exercised if the waters were within the city or town limits." RCW 35.21.160. 2. The City Council, to preserve the City's opportunities pending further review of costs and feasibility, approved filing a competing tidal project application with FERC. The City filed its application with FERC in September, 2006. In its filing, the City acknowledged that further study was required concerning site selection, equipment selection, design, performance and cost estimates of both a demonstration test installation and a commercial scale plant; environmental effects; and permitting issues. (Snohomish PUD's application also is based on further studies and analysis.) 3. The City Council determines it appropriate that further study occur of the feasibility of tidal electricity that could serve either the City government's own electric needs and/or the needs of a municipal electric utility if formed by the City following voter approval. 4. The citizens' committee appointed by this resolution should, in connection with its review of alternative electric providers, including the formation of an electric utility, also review tidal electric issues. However, because tidal energy study may be long-term, and would only be a component of electric service, and the need to act on any recommendation to form a municipal utility is timely given BP A allocation timetable and franchise expiration, the Council requests the committee provide recommendation on alternative electric management within the time provided in this Resolution. 3 Resolution 07-009 5. One proposal that has recently come forward to the City is a proposal by Puget Sound Tidal Energy, LLC to partner with the City and state agencies, including, State Parks, and Department of Natural Resources, and others, to develop a demonstration tidal electric project off Point Wilson. The project proposes to rely on grant funding and does not involve City financial contribution. City participation increases the availability of certain funding that is only available to municipal entities. The project proposes a pilot project to produce, test, and deploy a small-scale, inexpensive tidal electrical system to charge a battery bank. 6. The project could also involve steps for the State and City to establish a Tidal Power Testing Range in Puget Sound, covered by a programmatic environmental impact statement, where any tidal power technology developer could test its machines in the water and performance and impacts can be studied. This development would bring technology from around the world to our region for tests and demonstrations, and strengthen important economic development potential for the City. 7. The City Manager is directed to advertise for proposals and studies for tidal energy feasibility study and projects, meet with interested parties and potential partners, explore funding opportunities, including with federal and state authorities, and develop partnering agreements for Council review and action. Approval of consultant contract and partnering agreements is subject to further Council approval. 8. FERC recently asked applicants for tidal power projects for additional information concerning description of technology/equipment intended to be used. FERC also requested applicants to "reduce the area within the project boundary to more realistically represent the actual footprint of your proposed tidal project." FERC Letter to City Manager dated February 5, 2007. The City Manager is authorized to respond to FERC to the effect that answers to these requests requires further collection of data, analysis and study before we can define the appropriate technology and the appropriate footprint; however, it appears that Port Townsend Bay may not be feasible for tidal energy due to lack of sufficient currents, so this area may be excluded; that tidal energy equipment is in the early stages of being developed and has not for the most part been tested in real life conditions, making selection of equipment, and appropriate location of the equipment, at this point unrealistic; and that the City is exploring partnerships for demonstration projects with other agencies to gather information on technology and feasible project areas. NOW, THEREFORE, BE IT RESOLVED by the City Council ofthe City of Port Townsend as follows: 1. Review of Alternative Electric Management - Formation of Citizen Task Force. The City Council hereby: a. Directs that a citizen's committee be formed to review and update the recommendations and information in the Franchise Report, and explore issues concerning alternate energy 4 Resolution 07-009 management. Specifically the committee should provide a recommendation on whether the City should take further steps to form an electric utility. The Committee should report back to Council at its earliest convenience, but not later than 180 days after members are appointed and confirmed by the Council. b. Directs the Mayor, in consultation with the City Manager, to recommend well-qualified individuals to serve on a committee, for appointment by the Council. c. Authorizes the City Manager to solicit proposals for expert feasibility study on alternate energy management, including formation of a municipal utility, for further Council consideration and action. d. Declares it will not take action on recommendations of the committee without public input and involvement, and declares its intention to hold public hearing(s) on this matter before adopting or rejecting any committee recommendations. 2. Tidal Energy Project; FERC Application The Council hereby: a. Authorizes the City Manager to advertise for proposals for potential tidal energy demonstration projects and studies, meet with interested parties and potential partners, explore funding opportunities, including with federal and state authorities, and develop partnering agreements for Council review and action. b. Authorizes the City Manager to respond to FERC's request for information generally as set forth in section B (8) above. ADOPTED by the City Council of the City of Port Townsend at a special business meeting thereof, held this 22nd day of February 2007. Attest: Approved as to form: CJl \. ~-S John P. Watts, City Attorney 5 Resolution 07-009