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12-03-2019 City Council Strategic Planning MeetingA IM IM CITY OF MONROE CITY COUNCIL STRATEGIC PLANNING MEETING 300 WEST CROWELL STREET MONROE, NORTH CAROLINA 28112 DECEMBER 3, 2019 — 4:00 P.M. AGENDA www.monroene.org Energy Services Solar Policy City Council Strategic Planning Meeting December 3, 2019 Page 240 CITY OF MONROE CITY COUNCIL STRATEGIC PLANNING MEETING DECEMBER 3, 2019 MINUTES The City Council of the City of Monroe, North Carolina, met in a Strategic Planning Meeting in the City Hall Conference Room located at 300 West Crowell Street in Monroe, North Carolina at 4:00 p.m. on December 3, 2019 with Mayor Bobby Kilgore presiding. Present: Mayor Bobby Kilgore, Council Member Surluta Anthony, Council Member Elect Freddie Gordon, Council Member Marion Holloway, Council Member Elect Angelia James, Council Member Lynn Keziah, Council Member Franco McGee, City Manager E. L. Faison, City Attorney S. Mujeeb Shah -Khan and City Clerk Bridgette Robinson. Absent: None. Visitors: Bruce Bounds, Pete Hovanec, Ashley Britt, David Lucore, Loretta Melancon and others. Mayor Kilgore called the City Council Strategic Planning Meeting of December 3, 2019 to order at 4:00 p.m. A quorum was present. (40w, Item No. 1. Energv Services Solar Policv. Energy Services Director David Lucore advised that in 2007, the North Carolina Legislature enacted Senate Bill 3, the Renewable Energy and Efficiency Portfolio Standards Act, that required power companies to have a specific percentage of their electricity produced by renewable sources. Mr. Lucore advised that this required investor - owned utilities like Duke Energy to have 12.5% of their electricity produced from renewable sources by 2021 and Municipals and Rural Electric Co-ops to have 10% produced by renewable sources by 2018. He advised that the City of Monroe received its power from the North Carolina Municipal Power Agency #1 (NCMPAI). Mr. Lucore advised that this Agency was comprised of 19 cities in the western part of North Carolina. Mr. Lucore advised that there were basically three methods of billing renewable energy generation used in North Carolina. He advised that the Buy-All/Sell-All where participating customers purchased all of their energy from the utility at the Retail Rate. Mr. Lucore advised that the utility Buys -All of the energy produced by the Renewable Generation and the customer Sells -All of the energy they produce to the utility at an "Avoided Cost" rate. He advised that the "Avoided Cost" was the variable cost to produce energy that the utility would have spent to purchase the same amount of energy from their normal source. Mr. Lucore advised that fixed costs were not included in the Avoided Cost rate as they were recovered from all electric customers through Retail Rates. Mr. Lucore advised that the next method was Net Metering. He advised that participating customers reduced their monthly energy bill by the amount of generation they produced at the Retail Rate. Mr. Lucore advised that if generation exceeded the customer's energy usage for the City Council Strategic Planning Meeting December 3, 2019 Page 241 month, the customer was typically paid for the excess energy at an Avoided Cost rate lower than the Retail Rate. Mr. Lucore advised that the next method was Net Billing. He advised that participating customers reduced their energy consumption by the amount of generation produced that did not exceed their load and the offset was the Retail Rate. Mr. Lucore advised that the excess generation produced at specific time intervals, typically 15 minutes to one hour, was credited based on the time of day the energy was generated. He advised that some utilities carried over the excess generation into the next billing period and others pay the customer at an Avoided Cost rate less than the Retail Rate. Mr. Lucore advised that this method required a "Smart Meter" to capture energy sold and delivered at specific times. He advised that he was not aware of any companies using Net Billing in North Carolina. r+ Mr. Lucore advised that all billing methodologies were approved by the North Carolina Utilities Commission (NCUC). He advised that ElectriCities of NC, Inc. recommended Buy-All/Sell-All to Power Agency cities; however, each individual city made their own policy. Mr. Lucore advised that all of the 19 Cities in the NCMPAI, including Monroe, used a `Buy- All/Sell-All" methodology. He shared that Union Power Cooperative used a "Buy-All/Sell-All" methodology and Duke Energy used a "Net Metering" methodology. Mr. Lucore advised that in 2009, Council approved the "Renewable Energy Credit Rate Rider; Electric Rate Rider RECR-L" He advised that this rate rider applied to all City electric customers in any rate schedule and used the "Buy-All/Sell-All" methodology. Mr. Lucore advised that a customer buys all energy consumed from the utility at the Retail Rate. He advised that for 1,000 kWh's, the average rate per kWh was 11.70. Mr. Lucore advised that the customer sells all solar energy generated to the utility and was compensated at the rate of Avoided Cost to the utility. He advised that Avoided Cost was the variable cost for energy production that the utility would have incurred if they had purchased the energy from their normal supply source. Mr. Lucore advised that the City's Avoided Cost was 3.04¢/kWh which was paid to the customer for all of the energy generated by their solar panels. Mr. Lucore reviewed purchased power cost distribution. He advised that the total cost of purchased power included variables and fixed costs. Mr. Lucore advised that Production Variable was the actual fuel that was used to produce energy generation. He advised that this was the Avoided Cost to the utility. Mr. Lucore advised that customer -owned generation could offset this cost. Mr. Lucore advised that Production Fixed was the capital costs of utility -owned generation facilities. He advised that customer -owned generation could not offset this cost. Mr. Lucore advised that Transmission Fixed was the capital and labor cost of all high -voltage lines and structures that transmitted energy long distances. He advised that customer -owned generation could not offset this cost. City Council Strategic Planning Meeting December 3, 2019 Page 242 Mr. Lucore advised that Distribution Fixed was the capital and labor costs of all high -voltage lines and equipment needed to distribute energy to each individual customer. He advised that customer - owned generation could not offset this cost. Mr. Lucore advised that the basis for Monroe's "Buy -All, Sell -All" position was that it created a level playing field for all City electric customers to receive the same benefit from Renewable Energy Generation (solar or other), allowed Monroe to continue to recover fixed system costs from all electric rate payers regardless of Renewable Energy Generation; eliminated shifting of fixed energy costs from Renewable Energy Generation customers to electric customers without Renewable Energy Generation installed; Monroe's electricity comes from 90% Nuclear Generation with zero carbon emissions and Monroe purchased 40,690 MWh's (40,690,000 kWh's) of renewable energy from NCMPAI at a cost of approximately $200,000 annually to make up the LCity's share of the 10% requirement. Mr. Lucore reviewed a diagram displaying the NCMPAI's generation sources which showed hydro at 1%, natural gas and oil at 4%, renewable at 5% and nuclear at 90%. Regarding net metering methodology, Mr. Lucore advised that the customer's solar production offsets load from their usage on a monthly basis and net usage was purchased from utility at the Retail Rate. He advised that solar customers received compensation for their solar energy at the Retail Rate. Mr. Lucore advised that the customer was overcompensated since retail rates were designed to recover all fixed system costs. He advised that the utility under -recovers system costs from all solar customers which shifted the recovery of those fixed system costs to all remaining customers. Mr. Lucore advised that the basis for the Net Metering Policy was that Duke Energy's electricity was generated using a higher percentage of carbon -emitting sources than the NCMPAI. He advised that Duke was faced with large capital expenditures in order to meet the percentage of renewable energy production required by Senate Bill 3. Mr. Lucore advised that incentivizing customers of Duke Energy to install rooftop solar was a cheaper option than installing their own renewable energy facilities. He advised that Session Law 2017-192, House Bill 589 Enacted in 2017 required "Public Utilities" to utilize a Net Metering methodology. Mr. Lucore advised that City municipals that owned their own electric system were not considered public utilities and were exempt from this law (N.C.G.S 62-3(23)(d.)) Mr. Lucore reviewed a chart depicting North Carolina's sources of electricity generation. Mr. Lucore advised that Waynesville was the only municipal utility in the western part of North Carolina that used Net Metering. With regard to recent industry trends, Mr. Lucore advised that by 2015, 43 states and the District of Columbia had some utilities using Net Metering programs. He advised that according to North Carolina State University's Clean Energy Technology Center's "SO States of Solar" series "4`h Quarter Report and Annual Summary for 2017(2018a) " and "QI and Q2 Update Reports (2018b and 2018c)" Net Metering was "arguably the most widespread state distributed solar policy in the country." City Council Strategic Planning Meeting December 3, 2019 Page 243 Mr. Lucore advised that the article also shared that recently, there had been considerable interest in finding alternatives to NET Metering by legislatures and public utility commissions (PUCs), with some related deliberations underway or recently concluded in at least 48 states and the District of Columbia. He advised that the basis for the trend to move away from the Net Metering policy to some form of Avoided Cost policy was to ensure fair and equitable distribution of fixed costs among all rate payers. Mr. Lucore advised that in Fiscal Year 2019, the City had an average of 8,875 residential electric customers. He advised that those customers purchased 109 MWh's (x 1,000 for kWh's) of electricity at a cost of $14,210,802. Mr. Lucore advised that the average annual electric consumption and cost per residential customer was 12,328 kWh's at a cost of $1,601.22. He advised that based on the online information, if a person installed a 3.5 kW rooftop solar panel, it would produce 4,655 kWh's annually (1,330 kWh's x 3.5). Mr. Lucore advised that 4,655 kWh's was 37% of the average annual residential consumption of 12,328 kWh's. Mr. Lucore advised that 37% of the average annual residential customer's electric cost was $592.45 ($1,601.22 x 0.37). He advised that if 1.5% of residential customers installed a 3.5 kW rooftop solar panel on their homes and the City allowed Net Metering, $78,795.85 in costs would be shifted to other electric customers without rooftop solar panels installed (8875 x 1.5% =133 x $592.45 = $78,795.85). Mr. Lucore advised that in contrast, by using the "Buy-All/Sell-All" methodology, the City would purchase the 619,115 kWh's generated (4655 kWh's x 133) by all of the rooftop solar panels at an Avoided Cost of $18,821.10 (619,115 kWh's x $0.0304). He advised that in the "Buy-All/Sell- All" methodology, there was no cost shifting since the customer was receiving credit only on the Avoided Cost of energy production. Mr. Lucore advised that if the additional $78,795.85 were passed on to the remaining 8,742 Residential customers, (8875 —133 = 8742) each customer would pay an additional $9.01 annually to subsidize 133 rooftop solar customers. Based on the cost to install rooftop solar panels indicated online of $3.50 per watt, Mr. Lucore advised that a 3.5 kW panel would cost $12,250.00. (3.5 kW x 1000 = 3500 Watts x $3.50). Mr. Lucore advised that using the $592.45 per year savings in the Net Metering scenario, the customer would recover their investment of $12,250 in 20.7 years. He advised that using the "Buy- All/Sell-All" methodology, each rooftop solar customer would be paid $0.0304/kWh for the 4,655 kWh's generated annually for a savings of $141.51. Mr. Lucore advised that using the $141.51 per year savings in the Buy-All/Sell-All scenario, the customer would recover their investment of $12,250 in 86.6 years. The Buy-All/Sell-All methodology was the most equitable way to allow renewable energy generation for ALL electric customers and for the City to recover everyone's fair share of fixed costs. City Council Strategic Planning Meeting December 3, 2019 Page 244 L X-J Mr. Lucore advised that customers requesting to change the Policy to a Net Metering Policy were doing so in order to receive a higher pay back on their investment at the expense of other electric customers. Mr. Lucore explained that it was not equitable to make all other electric customers help pay the cost of renewable generation for customers that choose to install it. He advised that it was not equitable to the single mothers just trying to survive or the elderly on a fixed income and all lower income customers to subsidize those customers that have the means to install renewable energy generation. Mr. Lucore stated that if the electric customers that could afford and chose to install rooftop solar panels to help the environment, they should do so at their own expense. Mr. Lucore stated that this item was for informational purposes and there was no action required of Council. Council Member Gordon asked how many people in the City were currently using solar panels. Mr. Lucore advised that currently there were three solar customers in the City and was primarily due to the City's Buy-All/Sell-All Policy. He noted that Staff had been approached by a lot more than that and once they figured out that the City did not do Net Metering, then those customers did not want to put solar panels up anymore. Council Member Gordon asked about how many other customers had approached Staff with regard to solar panels. Mr. Lucore stated that it was probably ten to 15 other customers that had inquired about the solar panels. There being no further business, Council Member Keziah moved to adjourn the City Council Strategic Planning Meeting of December 3, 2019 at 4:40 p.m. Council Member Holloway seconded the motion, which passed unanimously with the following votes: AYES: Council Members Anthony, Holloway, Keziah, McGee, and Mayor Kilgore NAYS: None Attest: Jewa1 V�CC�r P . L BAQette H. Robinson, Minutes transcribed by Deputy City Clerk Sherry K. �,?tA A;.F¢, Bo y G. Kilgorevlayor �O City Council &P w— December 3, 2019 Page 245