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.
Kevin Gaden of Municipal Energy Agency of Nebraska
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
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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
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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)
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4. MEAN’s Primary Mission
To provide long-term, reliable and economical
power supply resources and utility-related
services to MEAN member communities
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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
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7. = Member Generators
= Baseload resources
= Future resource (WEC 2)
SOUTH DAKOTA
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East Side
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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
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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
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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
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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
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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
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15. Operational Issues
Municipal Joint Action
MEAN
Platt River
Independent Power Suppliers
Calpine
Southwest Generation
Municipal Self Supply
Colorado Springs
Lincoln, NE Electric System
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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
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17. Operational Issues
Distribution substations
Loading too high/too low
Distribution feeders
Overhead vs. underground
Service drops to customers
Metering
Smart metering
Changing technologies
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18. Operational Issues
Transmission Issues: (115 kV & up)
Who will transmission supplier be?
Xcel
TSGT
WAPA
Who will maintain equipment
Specialized trade
Specialized equipment
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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
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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
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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
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22. Summary of Issues
Operational Issues (safety and reliability)
Power Supply
Transmission
Acquisition Issues
Long-term Operational Issues
Business Management Issues
Finance
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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
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24. Who can help?
Initially
Consultants – CAMU
Lawyers
Other municipals
Specialized contractors
Acquisition team
Finance experts
Power suppliers
Trade associations
APPA
CAMU
NMPP Energy
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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.
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26. Questions?
Kevin Gaden
kgaden@nmppenergy.org
www.nmppenergy.org
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