City of Banning utility appreciates value of integrated resource plan

The utility industry is going through a period of intense change—some would say upheaval—that makes planning more important than ever and well worth the time involved. Just ask Jim Steffens of the City of Banning, California, Electric Utility. You are leaving Western's site. “I like that the integrated resource plan (IRP) touches on so many areas of the utility,” said the Electric Utility Power Resources and Revenue Administrator. “The process made us think about how all the different parts, like the distribution system, play into delivering electricity.”

California’s Public Benefits Charge of 2.85 percent of retail sales make the municipal utility eligible to file a minimum investment report instead of an IRP. Yet the city opted to do the full IRP process for Banning’s 2015 report. “Historically, our five-year IRPs were very simple and didn’t change much because not much had changed since we last did a full IRP,” explained Steffens. “Then over the last few years, due to legislative and regulatory mandates, everything started changing fast and we really needed the comprehensive picture you get from an IRP.”

Times a-changin’
Banning Electric gets the majority of its electricity supply through contracts with the Southern California Public Power Authority You are leaving Western's site. for coal, nuclear and hydropower. Because California law does not permit electric utilities to invest in coal-fired power, SCPPA will be divesting its part ownership of the San Juan Unit 3 coal plant in New Mexico in 2017. “So there goes 20 megawatts (MW) of baseload power, which is a big deal for Banning,” said Steffen, adding, “Yes, we are a tiny utility.”

Some of that power will be replaced by 9.6 MW of landfill gas power from the Puente Hills facility You are leaving Western's site. built by the Sanitation Districts of Los Angeles County. A utility-scale solar farm on the border of Kern and Los Angeles counties will provide another 8 MW. In other words, Banning is looking down the road at a whole new resource mix by 2018.

Being located in a state on the cutting edge of transforming the power supply means that the city of 30,000 will have to look for ways to innovate, and that is where planning comes in. California’s carbon cap-and-trade program You are leaving Western's site. gives utilities allowances for compliance that can be auctioned. The IRP helped Steffens figure out how much of the auction proceeds Banning can bank to help cover the cost of prematurely getting rid of the San Juan plant.

Steffens also used the plan to track the city’s progress meeting the state’s aggressive renewable portfolio standard. “It showed that we may come up slightly short in one particular year, so we can start planning for that year now,” he said. “However, we are very proud of the fact that the utility power supply will be more than 70 percent renewable by 2018.”

Evolving load
Like the power supply, Banning’s load is also starting to change after decades of relative stability. Electricity demand dropped during the recession and has not yet fully recovered, but signs point in different directions.

In an economically challenged area, Banning residents have not adopted rooftop solar systems or electric vehicles (EVs) at the same rate as in other parts of the state. But both of these technologies are becoming more common and more affordable, so the city has to be ready. EVs could bring load growth, even as distributed generation reduces the utility’s load. Such uncertainties make the annual IRP progress report that much more important.

The rooftop solar array topping The Banning police department carports are topped with a solar array. Although solar power is still a relatively small piece of the city's power supply, Banning will be adding more in the near future.

The Banning police department carports are topped with a solar array. Although solar power is still a relatively small piece of the city’s power supply, Banning will be adding more in the near future. (Photo by City of Banning, California)

Population growth is putting more pressure on Banning too, with two large housing developments scheduled to start construction soon after 2020. “The past 10 years have been a real lesson in how quickly things we used to take for granted can change,” observed Steffens.

Plan points way
Efficiency is also included in Banning’s plan for the future. “A good portion of our Public Benefits funding covers the low-income Banning Electric Alternative Rate, or BEAR, but we also fund rebates,” noted Steffens. “Efficiency programs are an important part of customer service.”

Residential and commercial rebates are available for Energy Star appliances, air conditioner replacements, shade trees, weatherization, low-flush toilets, new construction, renewable systems and refrigerator and freezer recycling. The utility just launched a new commercial efficiency plan, the Business Energy Efficiency Fund, or “The BEEF, developed specifically for our small and mid-sized business community,” said Steffens.

Banning Electric created its new commercial efficiency plan, the Business Energy Efficiency Fund, the BEEF, specifically to help small and mid-sized businesses like Star Auto Parts.

Banning Electric created its new commercial efficiency plan, the Business Energy Efficiency Fund, the BEEF, specifically to help small and mid-sized businesses like Star Auto Parts. (Photo by City of Banning, California)

Most of the businesses in Banning are small mom-and-pop operations that often don’t have extra capital for upgrades but could benefit greatly from lower utility bills.

Participants receive a free walk-through energy assessment to identify potential energy-saving upgrades to lighting, heating and cooling, water heating, motors and refrigeration. The businesses can then select the retrofit that best meets their needs and the utility pays up to $2,750 for the project.

When asked what percentage of Banning customers were commercial, Steffens checked his IRP. “Twenty-seven percent,” he replied. “The great thing about the IRP is that I have the answer to questions like that right in front of me.”

Steffens pointed out that the benefits of the IRP go well beyond just getting information in one place. “When things are changing as much as they are for Banning, you need to see the big picture and dive deep into the details,” he said. “We didn’t have to do the full IRP, but it is a great exercise to show you where you are going.”

Diverse power portfolio keeps Silicon Valley Power’s electricity rates low

As many California utilities scramble to replace hydropower megawatts drying up in the ongoing drought—and raise their rates sharply to pay for that electricity—Silicon Valley Power’s You are leaving Western's site. (SVP) more moderate increases keep their rates among the lowest in the state, thanks to a diverse portfolio.

“For utilities with more than 5,000 customers, Silicon Valley Power’s average system rate is the lowest in California [EIA – form 861, 2013 data],” stated Larry Owens, SVP customer services manager.

Generation resources located across a broad geographical area help to create a stable platform for SVP rates. (Artwork by Silicon Valley Power)

Generation resources located across a broad geographical area help to create a stable platform for SVP rates. (Artwork by Silicon Valley Power)

SVP’s decades-long investment in a diverse mix of resources saved its customers more than $100 million last year, compared to the rates paid in neighboring communities. The city of Santa Clara municipal electric utility credits the “whole portfolio” approach with its ability to maintain a rate advantage over surrounding communities during historic drought.

For 2014, more than 36 percent of SVP’s electricity came from renewable resources including geothermal, solar, landfill gas, wind and eligible hydropower. Natural gas and large hydropower from Western make up the bulk of the conventional generation, rounded out with a small amount of coal and other resources.

Diversify three ways
Fuel sources are not the only thing about SVP’s portfolio that is diverse, but it is primary to their approach. Power comes from wind turbines in the state of Washington, geothermal and small hydro from all over northern California and a utility-scale solar plant in Kern County, California.  In-town resources include a 147-megawatt (MW) combined-cycle plant, a 7-MW co-generation plant, 750 kilowatts (kW) of landfill gas power and 500 kW of solar.

Wind power from Washington state helps to balance SVP's resource mix. (Photo by Silicon Valley Power)

Wind power from Washington state helps to balance SVP’s resource mix. (Photo by Silicon Valley Power)

Geographic diversity—when power resources are spread over a wide territory—helps reduce single-point-of-failure risk from extreme weather, transmission congestion and even earthquakes.

Ownership is the third aspect of the “triple diversity” strategy SVP uses to balance its portfolio. Most of the electricity is purchased through power purchase agreements and joint power agency contracts, but SVP owns or co-owns a natural gas power plant, some hydropower facilities and photovoltaic arrays. In addition to the SVP-owned local arrays at Jenny Strand Research Park You are leaving Western's site. and the Tasman Parking Structure at Levi’s Stadium, business and residential customers contributed 11.4 MW of installed capacity in 2014. “By not relying too much on one particular provider or one type of contract, SVP has created a very stable platform to keep rates affordable,” explained Owens.

Playing long game
That was the scenario that originally motivated SVP to pursue diversification in the 1980s when it was still a full-service taker from Pacific Gas & Electric (PG&E). “The first energy embargo was a wake-up call for our city leaders. They realized that moving away from a profit-motivated, sole source provider and seeking freedom from volatile fuel prices was key to providing affordable, reliable electricity to its customers,” Owens said.  “Renewable energy in particular could help SVP achieve its environmental goals.”

Silicon Valley Power began to acquire renewable resources in the 1980s with the purchase of hydropower from Western and wind power. (Artwork by Silicon Valley Power)

Silicon Valley Power began to acquire renewable resources in the 1980s with the purchase of hydropower from Western and wind power. (Artwork by Silicon Valley Power)

Hydropower from Western and wind from the Altamont Pass wind turbines were the first carbon-free resources into SVP’s (power) pool in 1985, followed by geothermal power from the North Bay Area in 1988. “Geothermal is a great fit for our needs,” said Owens said. “It is such a reliable base-load resource for our customers.”

The solar power portion of SVP’s portfolio has been growing rapidly in the last few years, thanks to dropping equipment prices, the utility’s generous support for customer systems and California’s renewable portfolio standard. The state must get 33 percent of its retail electricity sales from renewables by 2020.

SVP has already met the state’s 33-percent goal, but the utility will continue to evaluate new renewable resources to meet its continued growth in retail sales and to address the expectation of even higher renewable requirements. Currently, SVP has more capacity than load, “So we can shop around for the options that best meet our ‘triple diversity’ criteria,” observed Owens. “Even though we are in a severe drought now, equipping existing small hydro dams with high-efficiency turbines is an approach that still has some potential opportunities,” he added. “With a surplus of both capacity and renewable energy, SVP has many opportunities to sell into the renewable and non-renewable markets available in California.”

Recognizing opportunity and knowing when to seize it has given Silicon Valley Power a drought-resistant portfolio, brag-worthy rates and a solid foundation for meeting future challenges. Because keeping rates low, complying with regulation and protecting the community’s resources for the next generation is simply too big a job for one resource alone.

Source: The Outlet, June 2015