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Kevin Gaden of Municipal Energy Agency of Nebraska

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Kevin Gaden, Director of Wholesale Operations for the Municipal Energy Agency of Nebraska discusses issues involved in municipalization for a Boulder, CO audience. Following the expiration of a franchise agreement with Xcel Energy, Boulder is considering municipalization.

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Kevin Gaden of Municipal Energy Agency of Nebraska

  1. 1. Nebraska Municipal Power Pool (NMPP) Municipal Energy Agency of Nebraska (MEAN) City of Boulder, Colorado January 27, 2011 Kevin Gaden Director of Wholesale Electric Operations 1Friday, January 28, 2011
  2. 2. NMPP Energy NMPP Energy is a nonprofit, member-owned organization providing electricity, natural gas and utility related services to nearly 200 member communities across seven Midwestern and mountain states. NMPP Energy promotes the benefits of joint action and local utility control among its member communities. NMPP Energy consists of four entities: Nebraska Municipal Power Pool (NMPP) Utility-related services Municipal Energy Agency of Nebraska (MEAN) Wholesale electric supply National Public Gas Agency (NPGA®) Wholesale natural gas supply Public Alliance for Community Energy (ACE) Retail natural gas choice 2Friday, January 28, 2011
  3. 3. MEAN  Formed in 1981 under provisions of the Municipal Cooperative Financing Act and is a political subdivision of the State of Nebraska  Provides wholesale power supply to public entities throughout the region via the Electrical Resources Pooling Agreement (ERPA) 3Friday, January 28, 2011
  4. 4. MEAN’s Primary Mission  To provide long-term, reliable and economical power supply resources and utility-related services to MEAN member communities 4Friday, January 28, 2011
  5. 5. 5Friday, January 28, 2011
  6. 6. Advocacy  MEAN membership and active involvement in outside organizations  American Public Power Association (APPA)  Utility Wind Integration Group (UWIG)  Western Area Power Administration (WAPA)  Colorado Association of Municipal Utilities (CAMU)  Solar Electric Power Association (SEPA)  Western Electricity Coordinating Council (WECC)  Transmission Access Power Study Group (TAPS)  Western States Power Corp (WSPC)  Rocky Mountain Generation Coop (RMGC) suspended  Rocky Mountain Reserve Group (RMRG)  Southwest Power Pool (SPP)  Midwest Independent Transmission System Operator (MISO)  State and federal legislation 6Friday, January 28, 2011
  7. 7. = Member Generators = Baseload resources = Future resource (WEC 2) SOUTH DAKOTA e id . tS es .. W East Side 7Friday, January 28, 2011
  8. 8. BLANK SLIDE 8Friday, January 28, 2011
  9. 9. MEAN is a leader in Nebraska public power renewables.  Built the first wind farm in Nebraska MEAN Wind Project at Kimball (Kimball, NE in 2002)  MEAN owns, participates in, and purchases 43.5 MW nameplate capacity  Largest proportion of renewable energy (both in terms of system capacity and energy) among all Nebraska utilities  There are currently no State or Federal mandates applicable to MEAN, however  Aspen, CO (Service Schedule M Participant) was the winner of the 2008 Wind Power Pioneer Award, given annually by the US Department of Energy 9Friday, January 28, 2011
  10. 10. Transmission  MEAN is transmission dependent  Utilize 8 different transmission systems to serve member loads 1. NPPD 2. OPPD 3. Tri-State G&T 4. Western - Rocky Mountain Region 5. Western - Salt Lake 6. Xcel Energy – Colorado 7. Black Hills Power & Light 8. MidAmerican Energy 10Friday, January 28, 2011
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  12. 12. Macro issues to consider in municipalizing an electric utility  Acquisition issues  Costs (state regulated)  Service area (state regulated)  Finance  Bond ratings  Official statements  Business plans  Governance  City council  City council over Board of Utilities 12Friday, January 28, 2011
  13. 13. Macro issues to consider in municipalizing an electric utility  Autonomous Board of Utilities  How is governing body selected Elected vs. appointed  Power Supply  There are applications for all types of resources  But there are limits  Can’t store electricity  Must produce and deliver simultaneously 13Friday, January 28, 2011
  14. 14. Operational Issues  Power Supply  Types of Resources  Natural gas  Coal  Nuclear  Renewables  Hydro  Demand Side Management  Types of Power Suppliers  Investor owned – PSCO  Rural cooperative G & T – TSGT 14Friday, January 28, 2011
  15. 15. Operational Issues  Municipal Joint Action  MEAN  Platt River  Independent Power Suppliers  Calpine  Southwest Generation  Municipal Self Supply  Colorado Springs  Lincoln, NE Electric System 15Friday, January 28, 2011
  16. 16. Operational Issues  Length of Supply Agreements  Short-term (1-5 years)  Medium-term (5-20 years)  Long-term (20 years or more)  Each has pros and cons  Distribution System (115kV & below)  Ring Bus is like expressway  System sectionalizing  Improve reliability  Reduce outage times 16Friday, January 28, 2011
  17. 17. Operational Issues  Distribution substations  Loading too high/too low  Distribution feeders  Overhead vs. underground  Service drops to customers  Metering  Smart metering  Changing technologies 17Friday, January 28, 2011
  18. 18. Operational Issues  Transmission Issues: (115 kV & up)  Who will transmission supplier be?  Xcel  TSGT  WAPA  Who will maintain equipment  Specialized trade  Specialized equipment 18Friday, January 28, 2011
  19. 19. Other Operational Issues  Staffing  Where will they come from Might need 200+ employees  Utility management structure  Utilities management experienced at what Generation Transmission Distribution Business management All or some of the above  Safety  How will staff maintain safe system  How will you comply with NERC standards Growing issue  Mutual aid Who will help in a storm » Snow / wind / tornado / ice 19Friday, January 28, 2011
  20. 20. Finance  How will utility cash flow?  Bad debts / write-offs  Payment lag timing  Bond reserves  Debt service coverage  Bond ratings affect cost of debt  Rating agency relationships  Asset management 20Friday, January 28, 2011
  21. 21. Finance  Office Operations  Metering tied to billing system  Implement new billing, business management system  Service disconnect policies  Customer service obligations  Where does utility obligation for infrastructure end and then begin for customer Consistent with Xcel?  Office and maintenance shop locations  Where  How many  Hours of operations 21Friday, January 28, 2011
  22. 22. Summary of Issues  Operational Issues (safety and reliability)  Power Supply  Transmission  Acquisition Issues  Long-term Operational Issues  Business Management Issues  Finance 22Friday, January 28, 2011
  23. 23. Summary of Discussion  The power business is a very complex business.  People depend on you 24/7  Most take it for granted until it fails  Business is getting more complex  Customers  Colorado PUC  FERC  NERC  Financial community  State laws on carbon 23Friday, January 28, 2011
  24. 24. Who can help?  Initially  Consultants – CAMU  Lawyers  Other municipals  Specialized contractors  Acquisition team  Finance experts  Power suppliers  Trade associations  APPA  CAMU  NMPP Energy 24Friday, January 28, 2011
  25. 25.  This is a very significant effort to undertake.  Some of your customers will not help.  Power suppliers can’t do it all.  Most supply is bid to meet RFP standards  Others will quietly hurt your efforts. 25Friday, January 28, 2011
  26. 26. Questions? Kevin Gaden kgaden@nmppenergy.org www.nmppenergy.org 26Friday, January 28, 2011

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