TCL&P Budget
As has been reported, the City Commission did not approve the TCLP budget for 2011-2012 at their June 6th meeting. Per the City Charter, the City Commission must approve or disapprove the TCLP budget. The required five votes to approved the budget fell short with a 4-3 vote. The commission also failed to disapprove the TCL&P budget via a 3-4 vote. The TCLP budget was tabled until their June 20th meeting. If no budget is in place before July 1st, TCLP is not authorized to expend any monies in the operation of the utility.
The Mayor asked the Commission to give specific feedback on what Commissioners would need to approve the TCL&P budget. The three Commissioners who voted against the budget (as well as one who had voted FOR the budget) identified three primary concerns:
- Assurance that a Rate Stabilization Fund would be instituted ASAP (more on this below).
- Concern about the proposed additional staffer for expanded Energy Efficiency programs.
- Concerns about the proposed Community Liaison position.
Commissioners suggested the option of contracting some of the work associated with these positions. Several specifically stated that they were not opposed to what TCLP was trying to accomplish but were concerned about the organization taking on additional full-time employees.
The TCLP board meets this Tuesday at 5:15 pm at the Governmental Center. We will be addressing these three concerns. TCLP’s Executive Director has recommended to NOT fill the two staff positions (see page 25 of PDF – 15 MB). TCLP included monies for these positions in the proposed 11-12 budget with the explicit understanding that details (an updated organizational chart, position descriptions, pay ranges, etc.) and final TCLP board approval for the positions would come at a later date (if there’s majority support to do so from the board). The funds associated with these positions (and the incremental monies budgeted for energy efficiency) remain in the budget. Perhaps the proposed functions associated with these positions will be contracted out.
TCLP’s budget generated much public comment at the City Commissions June 4th meeting. Over 70% of the speakers supported passing the budget. Over 90% stated they supported energy efficiency. This showing of support for TCLP from the community demonstrates a turn from City Commission meeting of twelve months ago.
At the bottom of this post is the statement I gave to the Commissioners prior to their vote. This lays out my position as to why consideration of these positions within TCLP are justified. More importantly, it lays out why TCLP should prioritize and invest in energy efficiency and community engagement.
Rate Stabilization Fund
The idea of a Rate Stabilization fund (or other similar benefit for some/all of our ratepayers) has been discussed for over three years. The idea has two main goals: Provide relief from increased costs during the current economic environment and to provide a benefit to the owners of the utility. Given the increased costs of power (more on this later) momentum has built to act on this idea. Adding to this, TCLP has been receiving more Net Income in recent years than expected.
The concept was discussed at a study session in June where all six of the present board members expressed an interest in acting on this idea. Only minimal discussion has occurred regarding how to do, who benefits and how much. The board will be discussing this further at Tuesday’s meeting. A resolution will also be in front of the board to assure the City Commission that the TCLP Board is genuine in its interest in pursing a Rate Stabilization fund or similar benefit (see page 31 of PDF – 15 MB).
Speaking for myself, I am in favor of providing such a benefit for Traverse City Residents (the owners of TCLP). All rate payers are important to the utility and non-city residents continue to receive high reliability and rates significantly below those of other area electric providers. But ultimately, it is the citizens of Traverse City who own the utility. Last falls election created a turning point for me as a board member to recognize that TC residents are the ultimate owners of the utility.
The Mayor makes a strong case on his blog for taking action specifically for Traverse City Citizens. What do you think?
Renewable Energy Update
Also at the June 14th meeting, staff will be providing an update on TCLP’s Renewable Energy Plan. Michigan Public Act 295 requires a bi-annual report to be filed with the MPSC. Having this update as part of a public meeting is important to inform the community on TCLP’s progress in renewables. Staff is reporting that TCLP is projected to have 13.5% of its generation coming from renewable sources by 2015. As a point of reference, TCLP had ~1% of its generation from renewable energy when I joined the board in 2008. For details on TCLP’s Renewable Energy Plan, see the meeting packet starting on page 33 (PDF – 15 MB).
What questions do you have about TCLP’s renewable energy plan?
Bonus: In 2010, Michigan ranked #27 in energy efficiency by ACEEE. As a reminder, ACEEE is where Dr. Kushkler, recent Grand Vision Energy speaker, works.
Statement to City Commission, June 6, 2011:
Good Evening, Commissioners:
First, I was not planning on touching on this, but I have received a lot of positive feedback on the “Resident Dividend” or rate-stabilization concept in the last 24 hours since it has been in the paper. Knowing that it has been supported by our board, the city commission (“CC”) as well as the city residents, I believe that is a good thing. That is something we’ll be addressing in more detail at our meeting on June 14th.
As TCLP approaches its 100th anniversary, our community faces an energy environment that grows in complexity every year. This growing complexity of providing electricity continues to demand more institutional expertise and a diverse pool of solutions. No longer do we simply build as much coal generation (e.g., on the bay) as needed to meet our peak demand. That’s just not going to happen.
This budget, proposed and supported by TCLP staff, has my strong support and was passed by a majority of the TCLP Board. As presented to the city commission three weeks ago, our proposed budget represents two strategic themes:
- Energy Efficiency (“EE”)
- Community Engagement
A vote FOR this budget is a vote in favor of energy efficiency and community engagement. A vote AGAINST this budget is a vote against energy efficiency and community engagement, which our residential customers, commercial & industrial customers, local environmental groups, and the chamber universally strongly endorsed where we are going with these programs.
TCLP has supported EE long before it was required. The two possible new staff positions proposed in this budget are intended to grow and expand institutional expertise in EE and Community Engagement.
Hiring outside experts is a viable alternative in the short-term, including possibly contracting communications work, but at some point TCLP is going to need to grow its in-house staff resource in these areas.
We are not building a dynasty here. We’re moving community supported objectives forward. TCLP’s board and Executive Director work to staff TCLP as needed to meet today’s complex energy landscape. It’s easy and visible to see new positions, including those transferred from the city operations, but rarely does the public notice positions removed from our organizational chart. In the three years since I’ve been on the board and Ed Rice has been the Executive Director, we’ve removed an Assistant Executive Director and Plant Super and we have approximately six union positions that have gone unfilled through attrition. TCLP has had a net loss of staff in the three years since I’ve been on the board.
I should also give you a reminder that all staff positions are scrutinized by our board. The two proposed in this budget will receive the same treatment as we dig into the details of those positions.
We as a community have every incentive to ramp up investment in energy efficiency (i.e. if we can reduce the amount of power we need to purchase from organizations like Lansing Board of Water & Light and downstate coal plants, our community benefits. Here’s why:
- We currently purchase all our power (and the cost of purchasing power is going up)
- EE is cleaner, less expensive and more reliable than traditional generation sources like coal or wind.
- EE being less expensive may not be intuitive at first, but it is well documented. If the City Commission wants to see the evidence, that’s easy. It’s proven in every state. The Michigan Public Service Commission just put out a report showing that EE costs about 4 cents/kWh. Today we pay anywhere from 4 to 5 cents for coal generation and 10.5 cents for wind generation.
Using energy efficiency as a “resource” requires as much staff expertise and financial investment as executing coal contracts or building a power plant. Smart utilities across the country are treating demand side options (EE or demand side management) equal to supply side options (like building new plants for Coal, Biomass or Natural Gas).
If TCLP built a generation plant, TCLP would hire expert staff to run the plant. So why would we not do the same for EE? We’re treating EE in the same way as any generation source.
Historically, TCLP was in a compliance mindset on EE. We were doing great complying with the requirements of the state and even beating them today. However, it is in Traverse City’s interest to go beyond where we are today, this budget demonstrates that TCLP staff and Board are committed to EE an community engagement. It also shows our commitment to respond to community feedback that we received over the last 18 months.
By the way, Energy efficiency should not be lumped in with renewable energy, which is criticized by some to be a luxury. EE is just a prudent investment for a utility that wants to meet its customer’s energy needs in the least expensive way possible.
As another reminder, TCLP is a well-run business. As such, we sometimes do things that are not typical of government (and this is sometimes lost).
In a period of local, state and national austerity, it’s popular and (sometimes but not always) easy to rally against all spending. So I would challenge the CC to view this spending in this budget as investments in our community (which they are) and to help us build upon what TCLP already does well.
EE and community engagement are the first steps to addressing our need for baseload generation. Our community has told us to look to EE first…we’re doing that.
In conclusion, my goal as a TCLP Board Member is to be able to look to our community back when our coal contracts with Lansing expire in 4 years and be able to say,
1) We did everything possible to reduce the amount of power we need to purchase, and
2) We informed our owners about the power purchase options that are available so they can make a wise decision.
Our community expects these goals. This budget reflects a first step towards achieving them.
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