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Home My WebLink AboutDRAFT AEA Business and Management Sustainability Plan Community/Utility Name - [Tech type] Business and Operations Management Sustainability Plan Date Name and Contact Information [Coming into a new position, what would you want to know? Reference to make sure taking care of things. For smaller projects please keep plan concise, practical and to the point. This plan must be developed by the project’s Owner & Operator. AEA requires this plan to be completed before construction funds are released. As this template is meant to cover many different types of projects, there will be parts that are not needed for your project. Delete sections that do not apply.] All  are in place to help describe the type of information being requested and can be deleted from the final document. [Insert Photo of Project] Community/Utility Name - [tech type]  Business and Operations Plan Date  2 | P a g e Contents Project Overview ........................................................................................................................................................3 Project and Operational Finances ..............................................................................................................................3 Expected savings to customers ..............................................................................................................................3 Expenses and Revenue ...........................................................................................................................................4 Project Information ....................................................................................................................................................5 Pre-project readiness .............................................................................................................................................5 Project activities .....................................................................................................................................................6 Facility Management and Operation Plan ..................................................................................................................7 Staff & organization ................................................................................................................................................7 Training ...................................................................................................................................................................7 Operations planning ...............................................................................................................................................7 Inspections & Maintenance ....................................................................................................................................9 Financial Management ...........................................................................................................................................9 Potential Problems .................................................................................................................................................. 12 Monitoring & reporting ........................................................................................................................................... 12 Reporting ............................................................................................................................................................. 12 Operational performance monitoring ................................................................................................................. 12 Appendices .............................................................................................................................................................. 13 Community/Utility Name - [tech type]  Business and Operations Plan Date  3 | P a g e Project Overview 1. Describe the project, including A. the history of the project in a few paragraphs. B. In one paragraph, describe how the project is going to be/has been integrated into the community C. Describe the objectives of the project in a paragraph 2. Expected benefits A. Economic B. If done for operational reasons, explain why it was needed: I. For electric projects, operational reason might include:  Historical and expected change in load [peak loads, total kWh generation needs by month/year]  How generation has changed  Reliability issues—outages, voltage issues, etc.  Fuel insecurity II. For thermal projects, operational reasons might include:  Sources of heat in community (heating oil, natural gas, propane, electricity, biomass, etc.) by percentages  For individual buildings connected to thermal generation describe energy consumed for heat  Describe any changes in consumption over past five years for the buildings  If biomass: Describe the current use of biomass in the area including the current firewood market, number of people gathering wood, and the equipment used. Also, include the current price for a cord of wood delivered. Project and Operational Finances Describe the project & operations finance. Is this a new line of business or is this an addition to a current line of business (such as a new project at an existing utility)? If it is a change to a current business, explain how the project will change the finances of the existing business. Expected savings to customers To attract customers, it is likely that customers will need to save money. Explain how the project will save customers money. Project will likely increase some expenses, decrease other expenses. Total expenses should go down…If total expenses go up, explain why this is beneficial and why it will be good for customers and why they will choose more expensive option. If electric project at utility eligible for PCE, use table below to calculate savings by customer class. Table 1: Expected customer savings (PCE-eligible utility) CURRENT PRE-PCE RATE EXPECTED PRE-PCE RATE CURRENT POST- PCE RATE EXPECTED POST-PCE RATE EXPECTED SALES EXPECTED CUSTOMER SAVINGS RESIDENTIAL Community/Utility Name - [tech type]  Business and Operations Plan Date  4 | P a g e COMMUNITY FACILITIES COMMERCIAL STATE/FEDERAL TOTAL N/A N/A For heat projects…. Table 2: Heating costs for buildings CUSTOMERS CURRENT COST EXPECTED RENEWABLE ENERGY COST EXPECTED DIESEL COST SAVINGS BUILDING 1 BUILDING 2 BUILDING 3 BUILDING 4 TOTAL Expenses and Revenue Capital costs Describe the sources of funds that paid for project. Explain any reporting requirements for grants (what info needed, schedule). Tax implications of grants. Table 3: Capital expenses and sources Source of funds (Utility, state, federal, other) Amount ($) Type of fund (grant, loan, equity) Annual principal payment (Year 1) Annual interest payment (Year 1) $ - $ - $ - $ - $ - $ - $ - $ - $ - Total $ - $ - $ - Operating Revenue and Expenses Describe the sources of revenue, how it will cover the expenses and make a profit. Fill in table below Table 4: Operating Revenue Source of Revenue Volume (Btu, kWh, etc.) Expected rate ($/kWh, $/Btu, $/customer, etc.) Total Annual Revenue Community/Utility Name - [tech type]  Business and Operations Plan Date  5 | P a g e Sales (electricity) $ - Sales (heat) $ - Customer charges $ - Other (grants, etc.) $ - Total $ - Describe the change in expenses due to the project. Fill in table below Table 5: Annual expenses Expense category Current Annual Expense ($) Expected Annual Expense ($) Change in Annual Expense ($) Fuel expenses $ - $ - $ - Non-fuel Operating expenses $ - $ - $ - Interest expense $ - $ - $ - Principal payments $ - $ - $ - Other expenses $ - $ - $ - Profit $ - $ - $ - Total $ - $ - $ - Net Revenue Describe the change in net revenue due to the project—it is hopefully positive. If it is not positive, then look again at the expenses and revenues to determine how the project can at least break even. Fill in table below Table 6: Net revenue Current Expected Change Total revenue $ - $ - $ - Total expenses $ - $ - $ - Net Revenue $ - $ - $ - Project Information Pre-project readiness Describe what had been to prepare for the project. Including: 1. Electric infrastructure installed and/or improved before project: A. Generation efficiency, controls, distribution upgrades, demand-side management, storage 2. Thermal: Building energy efficiency measures A. List measures taken, dates of any measures completed and/or path forward for increased EE. Community/Utility Name - [tech type]  Business and Operations Plan Date  6 | P a g e Project activities Pre-construction documents [Where someone can find documents. Also provide a short summary of what was determined. This is not necessarily a complete list, and your project may not require all of the documents listed below] 1. Feasibility A. Documents 2. Conceptual design 3. Permitting & Site Control—anything continuing? A. Site control – lease and easement agreements B. Fire Marshall approval C. 40CFR63 NESHAP Rule (large projects) D. State Historic Preservation Office E. Forest Practices and Resources Act F. Insurance for wood harvesters G. Local ordinances if applicable H. Grant agreements 4. Final design documents 5. As-built drawings Physical infrastructure For electric generation projects give a general description of what will be built for generation, controls, transmission, and distribution. Fill out the table below Table 7: Electric generation units Generation unit Resource type Design capacity (kW) Make Model Serial # Expected life For thermal generation projects give a general description of what was or will be built for thermal generation, back-up heating, district heating, and harvest equipment (for biomass). If there are too many to track on this form, use another way to track units. Table 8: Thermal generation units Generation unit Resource type Design capacity (kW or MMBtu/hr) Make Model Serial # Expected life Community/Utility Name - [tech type]  Business and Operations Plan Date  7 | P a g e Facility Management and Operation Plan Staff & organization 1. Organizational chart- with contact information 2. Staff (New/existing) A. Primary and secondary Operators: I. Job description/announcement - tasks, experience/skills needed, training II. backup personnel plan B. Business Management: I. Job description/announcement - tasks, experience/skills needed, training II. backup personnel plan C. Other Positions: I. Job description/announcement - tasks, experience/skills needed, training II. backup personnel plan Training 1. Facility training plan a. Inspections & maintenance b. Operations i. Biomass only—Wood harvester training plan (not required if purchasing fuel from another entity) 2. Business management training plan, if needed 3. Schedule for refresher training Operations planning Safety considerations Safety Plan? Do you have a safety plan, or attach your safety plan to this document? Generation management strategy Describe your generation (thermal and/or electric) management strategy. When will it be used, when it not be used, why? When will generation be curtailed? Will there be energy storage? How will it be used? Describe how the Controls (engines, generators, programmable logic controller (PLC)) will be used to maximize the value of the project? How are your controls going to be set up? What will be the priority unit. Include controls manual and settings as appendix Expected output Where generation will go—electric and/or heat. Total expected to produce over year. Expected capacity factor (if electric generation) Table 9: Expected generation Month Electric Generation (kWh) Thermal Generation (Btu or kWh) Community/Utility Name - [tech type]  Business and Operations Plan Date  8 | P a g e January February March April May June July August September October November December Annual Total Resource & fuels planning 1. Reservoir management (hydro) a. Min/max water levels in reservoir (based on syphons, intakes, etc.) b. Flow restrictions by week, month, season per permits c. Bypass 2. Non-hydro storage [batteries, capacitors, etc.] a. Charge/discharge planning b. Control settings 3. Wood Fuel Sourcing Management and Operation plan I. Harvest Plans a. Attach forest inventory and detailed harvest plans. II. Harvest and processing capacity a. Detail the supplier(s) and quantities of wood expected for delivery, including harvest permits required by landowners. b. If self-harvesting, provide a narrative describing how the wood will be harvested and transported. c. What is the back-up supply for the wood? III. Wood Processing and Storage a. Describe how wood will be processed (split or chipped) and seasoned. How will moisture be measured and controlled? b. Detail where the wood will stored, the size of the storage area, and its proximity to the boiler. c. Describe the theft prevention considerations? (Cordwood) d. Describe how the wood inventory will be managed and who will be accountable? Community/Utility Name - [tech type]  Business and Operations Plan Date  9 | P a g e Inspections & Maintenance Infrastructure Inspections Who is responsible? How will manager make sure inspections are done? What needs to get done: Daily, weekly, monthly, quarterly, yearly. This should be included as a checklist that the responsible party can use to record inspection. See Appendix for examples… Maintenance Routine Maintenance Planning [Quarterly or more frequently] [see appendix for example maintenance checklists] 1. Who is responsible [job position and/or person]: what they do with info. If split ownership (such as a heat exchanger or electric boiler in building owned by someone else), be clear about who is responsible for what (this should go in heat sales agreement) 2. Provide a copy the annual maintenance schedule in the form of a chart and checklist, include maintenance needed on a 2, 3, or 4 year interval as well. (This information should be in the equipment manual) Non-routine Maintenance Planning 1. Include planned major maintenance, repair, and replacement of high value parts over the expected life of the infrastructure. (This information should be in the equipment manual.) 2. List of critical spare parts 3. Explain your policy and procedures for unplanned major maintenance (i.e. things break unexpectedly). How are requests and/or work orders made, who processes the requests and decides if a fix will be made, gets quotes, and procures services and/or materials to make the required fixes. [reference also the process for making a budget amendment] Inventory management 1. Inventory requirements [supplies & materials] a. List the information needed to order supplies and maintenance parts, including manufacturer part numbers and contact phone numbers. b. Make/model, description, Part #s, Phone #s, emails, website, min # to keep on hand c. Tools required to perform O&M 2. When levels of supplies and materials will be checked—who is responsible, how frequently it will be done, how 3. Who is responsible for purchasing new supplies and materials Financial Management Sales agreements 1. Power sales agreements, if selling to a utility. 2. Heat sales agreements with all customers Purchase agreements 1. Provide signed purchase and supply agreements (attached in appendices) a. Timber purchase agreement, if buying from other entity Community/Utility Name - [tech type]  Business and Operations Plan Date  10 | P a g e i. Permitting 1. Attach signed permits in appendices 2. Ensure they have the legal right to harvest timber ii. Sale and supply agreements b. Other fuels Other financial agreements – attached in the appendices 1. Leases—land, equipment, infrastructure 2. Employee sharing 3. Other Insurance/Risk Management attached in the appendices 1. General Liability 2. Work Comp 3. Unemployment – if required Accounting and budget Describe your accounting system. What program is used? How much experience does the bookkeeper(s) have? How long has it been used? Do you use cash or accrual system? If entity has multiple businesses or enterprises, how do you separate the businesses/enterprises in the accounting system? Accounting codes 1. Explain how new and existing accounting codes will be used for determining fair rates and for internal/external reporting I. If applicable, provide a listing of expense codes specific to the project Budgeting process 1. Explain the budgeting process a. When is the budget determined? What is the timeline from start to finish? b. Who is responsible for developing the budget? c. How is it finalized? d. Where is the budget kept? Is it in the accounting system, a separate spreadsheet, somewhere else? 2. Method used for estimating next year’s expenses a. Personnel (pay, hours, bonuses, raises) b. O&M (including equipment, cost per hour to operate, labor details, storage, construction, theft prevention) c. Administrative costs d. Fuel costs I. Non-RE II. Wood Supply Financials a. $/cord and $/MMBTU equivalent (matrix provided) b. Delivery cost c. Payment method Community/Utility Name - [tech type]  Business and Operations Plan Date  11 | P a g e d. How is the delivered fuel cost developed? Are the people delivering the fuel making money? – see AEA spreadsheet developed to understand delivered cordwood costs. e. Outstanding liabilities I. Tax II. Fuel loans f. Taxes g. How to pay for future repair and maintenance (save ahead, loan at time, combination) h. Other I. Interest II. Depreciation or principal? i. Profit & retained earnings 3. Check budget-to-actuals, how frequently. Describe the process for budget amendments, and especially emergencies (such as unplanned maintenance and failures). Incurring & Paying Expenses I. How do employees request purchases a. Small requests (parts, materials) b. Big requests (work order) II. Who is in charge of getting cost estimates and purchasing? III. Who decides if a purchase will be made? IV. Who pays invoices for purchases? V. Who records invoices and payments? Revenue 1. Sales revenue a. Rates i. Describe how rates will be set. ii. When will rates be evaluated? 1. Planned (Never? yearly? Every 6 months? When new fuel is purchased?) 2. Unplanned (when sales are higher/lower than expected, fuel costs are higher/lower than expected, unplanned maintenance or emergencies) b. How are sales metered (kWh, Btu)? Who is responsible for reading meters? c. Adjustment clauses – should be in heat sales agreements 2. Other revenue sources a. Grants b. Customer charges 3. Charging and collecting on revenue a. Billing terms and conditions b. Who is responsible for invoicing c. How are invoices delivered (mail, email, etc.) d. How is payment accepted e. If payment is late, what collection policies are in place to encourage payment? Community/Utility Name - [tech type]  Business and Operations Plan Date  12 | P a g e Balance Sheet Describe how you will use account codes track Assets, including depreciation (where appropriate) Describe how you will use account codes to track Liabilities, and ensure that short- and long-term liabilities are manageable. Potential Problems 1. What are the challenges to keeping this project functioning as a sustainable business? A. Common difficulties include: I. Fuel supply & costs II. Demand for energy (higher or lower than expected) III. Personnel IV. Disagreements with project partners V. Environmental change VI. Cost of alternative energy source 2. What strategies will you put in place to overcome those challenges? Monitoring & reporting Reporting What operational and financial reporting is required by grant agreements, reporting agencies, and/or the board of directors? Board of Directors Reports 1. What a. Financial, performance, maintenance 2. When, how 3. Who is responsible 4. Why… a. Actions to be taken External reporting 1. Indicate project reporting timelines, who is responsible for reporting, where the info will come from, etc. a. REF b. AEA/RCA PCE c. Resource agencies? Permit requirements? Operational performance monitoring 1. Describe how the system’s physical performance will be measured A. Meters to use I. Inputs—fuel, resource base (wind speed, solar insolation, water flow, etc.) II. Outputs—heat, electricity B. Reading of meters [who, when, how] C. Maintenance performance will be recorded. Community/Utility Name - [tech type]  Business and Operations Plan Date  13 | P a g e I. Availability II. Downtime, reasons, etc. III. Include diesel and biomass fuel use, boiler O&M, harvest equipment O&M, BTU metering. 2. Describe how the performance will be saved and analyzed 3. Describe how you will identify and act on performance difficulties Appendices 1. Inventory checklist 2. Inspection checklists 3. Maintenance checklists 4. Major repair checklists 5. Infrastructure manuals 6. As-built drawings 7. Job descriptions 8. Repair manuals 9. Controls manuals, with settings 10. Detailed performance specifications 11. Other