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HomeMy WebLinkAbout07-12-16 Utilitiesy OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK UTILITIES Committee Members Present: Committee Members Absent: Other Council Present: Others Present: Agenda: JULY 12, 2016 5:30 P.M. Dr. David Varner, Oliver Davis Regina Williams- Preston, Randy Kelly Jo M. Broden Joseph Molnar, Kathleen Cekanski - Farrand, Adriana Rodriguez, Jodi Perras, Steve Francis, Matthew Satterwhite, Mark Robinson Bill No. 16 -57 — Reasonable Transition to Clean Energy Committee Chair Dr. David Varner called the Utilities Committee meeting to order with one (1) item on the agenda. Committee Chair Dr. David Varner introduced Jodi Perras from the Sierra Club and Mathew Satterwhite from I &M who will both be speaking today on their versions of the resolution. Committee Chair Dr. Varner stated regarding energy he believes in an `all of the above' strategy and has no real hard feelings one way or another. Affordability and reliability are incredibly important especially in a community like South Bend which has many people of very modest means. Committeemember Oliver Davis stated he is thankful that he has been given the opportunity to speak and converse with both sides. There have been emails exchanged since the last Utilities Committee meetings from both sides and we are making progress towards a common goal. He has looked at the changes and what is nice about what is happening today is that this is more of a resolution sponsored by an outside group which is different than our normal process. Sometimes we have Councilmembers who come in to push a certain agenda but instead this is something where all parties can really work through the issue and come to some common ground. Committeemember Davis thanked both groups for coming and working together. Committee Chair Dr. Varner invited Ms. Perras to speak to the Committee. Jodi Perras, Sierra Club 1100 West 42nd Street Indianapolis 46208, spoke about her version of the resolution. At the last committee meeting about thirty (30) people showed up and some 455 County -City Building • 227 W. Jefferson Boulevard • South Bend, Indiana 46601 Phone 574- 235 -9221 • Fax 574- 235 -9173 • TDD 574- 235 -5567 • www.SouthBendiN.gov JENNIFER M. COFFMAN ALKEYNA M. ALDRIDGE EMILY SEXTON CHIEF DEPUTY/ CHIEF OF STAFF DEPUTY/ DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK spoke, many more people in this community care about this issue. More than 2,000 I &M customers have signed petitioners to I &M to move as expeditiously as possible to move away from coal to cleaner energies. Ms. Perras submitted a working resolution to the Council and Clerk's Office that uses as a starting point the resolution that was originally filed and has new edits. Ms. Perras informed the Committee that the areas shaded in blue is language where there is agreement with I &M. The items in grey are areas where there is still disagreement, I &M deleted from their resolution a number of paragraphs from the resolution that was originally filed. There is some agreement on the `now therefore' clauses but there is also disagreement as well. Ms. Perras stated it is Sierra Club's belief that the Common Council should call on I &M to transition away from coal as expeditiously and cost effectively as possible. The Council should also support renewable energy as well in the final resolution. Committee Chair Dr. Varner asked if `cost effective' and `affordability' are the same thing. Ms. Perras responded not necessarily. Committee Chair Dr. Varner stated he agreed with her because `cost effective' can actually be very expensive solutions versus something that would affect rates. He asked if affordability was factored into their resolution. Ms. Perras responded in the first clause it does say "cost effective and affordable ". The Sierra Club version also calls on I &M to develop expanded cost effective programs to weatherize and improve efficiency in homes, especially related to low- income and fixed - income households. This is as opposed to their proposed language which only asks I &M to continue working with stakeholders to hear ideas. Ms. Perras stated I &M's energy efficiency program is controversial in how it is being implemented and the Sierra Club's language would better meet the customer needs here in South Bend of many low - income households. There have been numerous studies across the country that show energy efficiency can help this transition take place and keep bills affordable for those lower income customers. The Sierra Club also wanted to make sure the workers at I &M especially at the Rockport plant were mentioned in the third clause and they are willing to work on that language. Ms. Perras stressed that the Rockport Plant is the essential question that I &M and AEP face in the next few years. The Indiana Utility Regulatory Commission recently acknowledged that and acknowledged that all the major stakeholders believe the plant is a central question facing I &M. This resolution should speak to that question as the lease on one (1) unit is expiring and as they face the cost of putting on scrubbers and also the cost of putting on pollution controls. If the resolution doesn't speak to that issue, the Council would just be telling I &M to continue doing what they are doing and that is not what the folks gathered here today want the Council to do. This is an opportunity for the Council to add their voice to all of those who are calling for the transition away from coal to take place and to do it in an expeditious and cost effective way. Council Attorney Kathleen Cekanski - Farrand asked Ms. Perras if this issue is time sensitive related to the overall purpose of engaging the Council. She asked if there is something pending before I &M or any other public agency. W Ms. Perras responded that there is not a current deadline with a pending case or process before an agency. This is a natural continuation of the Integrated Resource Plan process that the Mayor commented on. It also reflects that despite the different comments that have come in, I &M has stated they are sticking with their original plan. This is a continuing process where customers can engage and tell the agencies and I &M what they value. Committeemember Oliver Davis stated there was talk related to a July or August date pertaining to an upcoming meeting. He asked Ms. Perras to address that issue. Ms. Perras responded the Sierra Club has been anticipating that I &M would file a case with the IURC by the end of June but they have not done so yet. While there might be a hearing later in the summer, we are still waiting on them to file that case to add some pollution controls to the plant. Steve Francis, 52174 Juday Lake Drive South Bend, stated he is a local representative for the Sierra Club and on behalf of more than 1,000 members in the greater South Bend area we have an interest in this resolution. This is not just something that is coming from outside but there is widespread support both within the Sierra Club and also the other environmental and sustainability groups within South Bend for a value statement on clean energy. Councilmember Jo M. Broden entered the meeting at 5:45 p.m. Matthew Satterwhite, 101 South Ohio Street Indianapolis, spoke as a representative for I &M. They had a handout for the Council which is on file in the City Clerk's Office. Mr. Satterwhite gave a comparison of their rates to the national and state averages. Approximately 60% of the power I &M distributes to their customers is emission free power. Mr. Satterwhite questioned the claim from Ms. Perras that their energy efficiency programs are controversial. The only way I &M receives recovery for funds from efficiency programs is through the IURC. We have the largest open to the public program that there is and look at all ideas for cost - effective programs that we can implement. I &M has a refrigerator recycling program, home energy rebates, income weatherization, online checkups for peak demand reduction options, and also a program which helps people weather proof their homes for better energy efficiency. All of these programs have to be approved by the IURC. We have quarterly meetings that everyone is invited to and can bring ideas. Ultimately, we take those ideas to the Commission and they are the ones who approve the programs. Committee Chair Dr. Varner asked on what criteria does the Commission approve the programs. Mr. Satterwhite responded they look at a number of factors and do tests to see if they are cost - effective or not. I &M presents the programs as a portfolio because a lot of the low- income programs on their own merits wouldn't be cost effective but I &M thinks they are still worthwhile. We might have something like an industrial focused program and we include that with a low- income program and we ask the Commission to approve it all as a portfolio because this gets us to overall better energy efficiency. 3 Committeemember Davis asked if there was any way to view the meetings live if you do not live in Indianapolis. Mr. Satterwhite stated if there was an interest and if somebody wanted to be more involved but couldn't get there I &M would be open to including more people. There is no pride of authorship with these programs, if we can make the numbers work and get the Commission's approval we want to know what those ideas are. Ultimately we can only do what the Commission will allow us to do but they all originate at that table which is completely open. We also have quarterly meetings to analyze the programs to see what is working and what is not working as expected. The Sierra Club took all mention of this process and its successes out of their resolution. Mr. Satterwhite stated out of four (4) of five (5) pricing scenarios, the lowest -price option is to continue operating both Rockport units. This includes adding the pollution controls on the plant and the long -term plans. There is a million different parameters on how these pricing scenarios work and the only one (1) where closing Rockport would be the cheapest would be assuming very high carbon taxes and really low PJM prices. Based on the Integrated Resource Plan, closing both Rockport units and going carbon free adds $9.40 a month for twenty (20) years to a typical electric bill. That number is based on the average usage which is approximately 1,000 kilowatt hours per month. Currently, I &M is planning on increasing hydro, wind, and solar energy by 12% by 2026 and increase energy efficiency by 6 %. This is based on our favored plan. I &M will have 14.7 MW of solar energy by the end of 2016 and by 2035 they are planning to add approximately 2,000 MW of wind and solar energy. Regarding the resolution in particular, Mr. Satterwhite stated I &M is supportive of renewable energy and a transition of their fleet. As can be seen in the IRP we are increasing renewables and have no problem doing so. In addition to renewables, natural gas fits in that equation as well as sort of a cleaner energy which is a non -coal option. Committee Chair Dr. Varner asked if I &M ever sees a scenario where they are 100% renewable in our lifetime. Mr. Satterwhite responded he doesn't know if scientifically that's possible at this point in time. If we were doing that, we would be relying on the PJM market to give us all of our power so that we can say we are renewable. The capacity factors don't as of yet fit where you can have renewable energy 24/7 on the grid. Renewables are very good things and we want to support and expand them and it is possible that with increased battery storage in the future we could do that but right now we have to always have power on the grid. There are actually penalties from PJM, which is the regional transmission organization which all utilities have to be a part of, if you don't have power on the grid. Committee Chair Dr. Varner asked if Mr. Robinson from I &M would like to add anything. Mark Robinson, 61470 Mayflower Drive South Bend IN, stated there are concerns with complete renewable energy on the grid. Mr. Robinson referenced an article related to Germany where that country is just backpedaling right now when they got to about 30 % -40% and it is starting to wreck the system. El Committeemember Davis asked what types of issues Germany was experiencing. Mr. Robinson stated there were financial issues where their rates had increased pretty substantially fairly quickly. When renewables are brought on in those numbers the prices will go up even though it was subsidized at a pretty high rate. If you do this it has to be done right and that is why we have these conversations. Being able to keep reliability is important because energy like solar is so volatile where it can fluctuate megawatts in a matter of seconds and that wreaks havoc on energy systems. Mr. Robinson clarified that he is not a subject expert but that is what he knows are the concerns with affordability and reliability with renewables as of right now. Mr. Satterwhite questioned the Council's need to be an advocate to call out an individual plant. I &M thinks that would be inappropriate and it is more reasonable for an advocate group like the Sierra Club to do those things. The Council should be more concerned with overall prices, regulation, the IRP process and those types of issues. I &M included a statement about Rockport in their resolution where it talks about their analysis of taking Rockport off and demonstrates that I &M is considering that. The statement that Rockport "is the second most toxic plant in Indiana" makes it look like the Council is using an attacking word and also does not mention that Rockport is one of the largest units in the country. Things in resolutions like this need to be portrayed accurately and responsibly. I &M also had issue with the proposed resolution blaming them for not using Indiana coal, but the reason they do not use Indiana coal at the Rockport plant is because of the high sulfur content compared to other coal. Committee Chair Dr. Varner asked if the Sierra Club representatives wished to speak again in response and stated that there will be time for public input. Ms. Perras stated this resolution is about jobs. It encourages I &M to retire a costly, dangerous, and unhealthy coal fired power plant and replace it with clean energy that can be here in South Bend. This is really about the advantage of having I &M invest in your community as opposed to out of state investments. Ms. Perras wanted to clarify that I &M's preferred plan would not start adding solar until 2022 and some wind in later years which is not at the levels given by I &M. Those numbers they gave were for AEP in total not I &M. Regarding the costs, the claim that I &M customers would pay less if Rockport was closed is false. Ms. Perras stated that I &M did not choose the least cost plan in their IRP, they chose a more expensive plan. When we are comparing costs we are comparing them to their preferred plan. It is true that retiring half of Rockport would be less expensive than the preferred plan I &M chose which is to put scrubbers and pollution controls on Rockport and add renewable energies. This is opposed to making that transition to renewable energy that could be generated here in your community. Ms. Perras suggested that the Council stay away from complimenting I &M's energy efficiency program. Ms. Perras submitted a letter from the Sierra Club from January of 2016 that highlights the controversial aspects of their energy efficiency programs. I &M has consistently not met the goals set for them in 2012, 2013 and 2014. We want I &M to expand their energy efficiency programs. 5 Mr. Satterwhite responded that it is unfair to characterize this issue the way she has. He stated Ms. Perras' statement ignores what has happened in the General Assembly and the tough situation utilities have been put in. There were problems with having a third parry oversee this program and it is better that now Indiana folks are overseeing this in Fort Wayne. Committeemember Davis asked when people in Indiana began to oversee the programs. Mr. Satterwhite responded it was 2015. Committee Chair Dr. Varner stated the Council gets lots of bits and pieces of information from everyone's perspective and that seems to be what this sounds like. Ms. Perras stated this whole issue of Demand Side Management is a hornet's nest of problems and she could send lots of information to the Council from state agencies who are critical of I &M's program and their oversight of it. Also, Ms. Perras wanted to tell the Committee she was at a ribbon cutting ceremony in Indianapolis today for a twenty (20) megawatt battery project. The company which owns the plant is marketing these batteries at a cost lower than a natural gas plant. Energy storage is not that far into the future. The cost of renewable energy, energy storage and energy efficiency are beating the cost of coal. Those from the public wishing to speak on Bill 16 -57: Jerry Mohegri, 50805 Ravenna Drive South Bend, had two (2) questions for I &M. First, what is the power generation for the Rockport Plant? Second, what is the carbon footprint of that generation? Committee Chair Dr. Varner stated he is not sure if we could get an answer to that today but it is probably safe to say Rockport is not running at 100% efficiency. Those are technical questions that we have to get to. It is a carbon plant so there certainly is a carbon footprint. Chris Cobb, 215 East Pokagon Street South Bend, stated there is a lot he feels moved to say in response to what I &M said today but Ms. Perras has responded to most of their statements. In terms of talking about efficiency and 1,000 kilowatts being the estimated usage of a home, Mr. Cobb stated he lives in a 1,800 square foot house and uses 540 kilowatts on average a month. There is no reason that if we had a serious efficiency program we couldn't cut that average very significantly in this region. I &M is not going to change unless the people push them. It is the people's job to push I &M because we are the ones who are caring about our community. Also, there was talk about too much power from renewables could damage the energy system but our real system is the earth's environment. Using fossil fuels, especially coal fired power, is doing tremendous damage to the system we live in. This is not just for the conveniences that electricity gives us on a day to day basis that our economy is dependent on. We are doing real damage to the earth's system all the time when we are burning coal. We are going to have to think and innovate creatively to get out of this problem and that damage has to be stopped in our lifetimes. It is projected that if we are going to stop runaway climate change we need to stop burning fuels by 2050. The timetables that I &M are proposing are insufficient to move us towards that goal. If it can't be done there will be a lot more trouble than just inconsistent power. It is possible to do G'! both and we want I &M to step up and do this and that is why it is important to speak the truth. It is the truth that coal is dangerous to our environment and it is the truth that Rockport is where I &M is burning coal in large quantities and that problem is not going to be changed until they transition away from Rockport. That is why the resolution should specifically call for closing that plant. Council Attorney Cekanski- Farrand asked if any other communities and their legislative bodies are addressing this issue and being asked to do this. Ms. Perras responded not yet. This was something that when a few councilmembers expressed interest in doing a resolution the Sierra Club took them up on their offer. We did go to the City of Indianapolis during a past campaign and we had the votes to pass it when Indianapolis power announced they would stop burning coal at the local power plant. They converted that plant to natural gas. Committee Chair Dr. Varner stated when Ms. Perras and he first had a discussion on this issue he took away that there is a whole lot of room for disagreement and agreement on this issue. What the biggest disagreement seems to be is over the timeline of how this transition happens. It seems what the vast majority of everyone wants is an eventual transition to these renewable resources and that looks like it will happen eventually. Committee Chair Dr. Varner stated there are many things involved in regards to values of the City. One value would be health, and the other value that exists is public labor at the plants. To the extent that this resolution goes to the Council, it may not be the exact language the Sierra Club wants and they will be free to pull it if that is the case. From that aspect, part of the Council's job is to represent everyone not just the few thousand people in Indiana that are part of the Sierra Club. He expressed his support for a well thought out organized plan where everyone can look at it and say that we are moving forward in a positive way. Committeemember Davis stated he likes Committee Chair Dr. Varner's thoughts on the issue. He stated his opinion that the two (2) sides can keep talking and having dialogue and get as close together as we can on the language. We need to go line by line and get something we are all relatively happy with. Since South Bend would be the first city to specifically address this issue it would nice to have something positive and state where we are on our values. This is the beginning of a coming together from both groups and it's better to have a simple statement that everyone can agree with than to have nothing or something that is divisive. Committee Chair Dr. Varner asked if anyone from the Sustainability office would like to speak. Therese Dorau, Director of the Office of Sustainability with offices on the 13th Floor of the County -City Building, stated she has great relationships with both I &M and the Sierra Club. I &M has been a responsive and supportive partner in regards to our economic development effort and infrastructure that were needed. In her opinion, I &M's renewable energy policies are not as aggressive as you would see in other utilities however they are beholden to their shareholders and state policy is extraordinarily difficult to navigate at this point. The issue with the energy efficiency programs was a disaster for all utilities in the state. I &M is not pushing the most aggressive energy policies but like Mr. Cobb stated it is our goal and job to push them 7 further to a place that makes sense for the market but also makes sense for the community. A resolution is a communications piece that demonstrates values and priorities and to that end it really isn't Sierra Club or I &M's opinions that belong in this resolution it is South Bend's. She encouraged the Council to circle back and think about what it is we want to say to represent South Bend and where we are going with our future. We don't need to be advertising for either organization even though they both bring good information to the table. There is no need to make I &M look bad and no need to look good either but we can recognize the efforts they made so far and gently suggest what we may like in the future for our community. Committee Chair Dr. Varner thanked everyone for coming and participating in the discussion and stated that we have to hear everyone's thoughts and opinions. We will see what we can craft and come to a conclusion on and it's definitely an interesting discussion. He expressed his opinion that it will ultimately be a time -frame discussion on how quick the transition to renewals happens and when certain plants are closed. Councilmember Jo M. Broden asked if anyone could get her numbers for the total amount of collective energy use for South Bend residents, commercial and industrial and the total cost of all that energy. Mr. Robinson stated he would try to get that information. Councilmember Broden stressed that the more information in the resolution that can be South Bend specific the better for everyone because we do represent South Bend. There is a lot in this resolution that we could all get off track on and we need to determine what are our priorities and what do we expect from our public utility. 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