UTILITY COMMITTEE
The Utility Committee Meeting was held on February 12, 2007 at 5:00 p.m. with Chairman Carey presiding. Members present were Mr. Ruane, Mr. Slavin, and Mr. Cregar. Mr. Snaman was absent. Members of Council present were Mr. Hogan, Mrs. Russell (arrived at 5:23 p.m.), and Mr. Salters (arrived at 5:43 p.m.). Mayor Speed was also present (arrived at 5:25 p.m.).
AGENDA ADDITIONS/DELETIONS
Mr. Slavin moved for approval of the agenda, seconded by Mr. Ruane and unanimously carried.
Public Utilities Director’s Report on Capital Projects Impact on Power Plant and Capital Project Reliability Review
During the January 8, 2007 committee meeting, members requested that staff review the FY07 CIP budget and provide an update on the projects as related to expenses for the operation of the power plant in support of any planned transmission line work. In addition, the City Manager tasked the Public Utilities Director, Mr. Lunt, with reviewing the electric system facilities for major reliability issues.
After reviewing all the projects, Mr. Lunt submitted a summary of each CIP project, inclusive of the financial report of current budget expenses. He advised members that the Governors Avenue Project has been delayed by the State until next year. The Dover Downs 69 Kv Line Relocation was completed during the first week of January, which required the plant to operate for two(2) days in January. The materials for both the Lebanon Transformer and Mayfair 69 Kv conversion have been ordered and will be delivered in the next fiscal year. Mr. Lunt assured members that there are no other projects in the CIP that will impact plant operation. He also noted that any unplanned outages or maintenance on the transmission line may require support from the power plant.
At the request of the City Manager, Mr. Lunt also reviewed the reliability of the electric system and submitted a report on major deficiencies that exist that would severely impact system reliability. He provided members with an overview of three (3) major deficiencies that have been discovered at this time, as follows: 1) College Road Substation; 2) McKee Run Transformer; and 3) Transmission Relay Upgrade.
Responding to Mr. Ruane, Mr. Lunt confirmed that the funding source for the new reliability projects for FY07 will be from reallocation of funds and that no additional funding is being requested. Mr. DePrima indicated that most of the reallocated funds will be obtained from the Governors Avenue project. He explained that the model that has been used by staff, in conjunction with the rate study, allows for $3M to be programmed each year for CIP expenses. There is also a bond issue being proposed; therefore, in the future, it will be a combination of debt service and the $3M programmed that will be utilized to cover CIP expenses.
If members were to approve the revised CIP recommendations as presented, Mr. Ruane questioned whether or not it would require the costs to be factored into the rate structure, thus creating additional costs for the rate payers. Responding, Mrs. Mitchell explained that when the model was created, there was $3M allocated for CIP projects, regardless of the CIP budget requirements. These reserves are being used to help supplement if needed; however, the reserves are being reduced since the City is not budgeting for the reserves. She stated that there may not be a need to replenish the reserves through rates unless there is concern that the reserves have been compromised.
Mrs. Mitchell advised members that no consideration has been given to the affect on the rate model or financial policies that the revised CIP requests being presented will have this year or next year. Mr. DePrima stated that there should not be an assumption that the CIP projects programmed for next year will remain, explaining that there is an unknown variable involved.
Responding to Council President Williams, Mrs. Mitchell explained that it is necessary for the City to assure that there is enough cash flow to replenish the reserves if used and assure that the revenues meet or exceed the operating expenses to meet debt covenants and current year expenses, without using reserves for capital. If the reserves are ticketed for capital uses, that will not affect the rate covenants; therefore, the rates must be set to cover the expenses and meet the covenant. She urged members to keep in mind that the capital projects and capital funds are separate from the operating fund and that, for the operating fund, the revenues must meet or exceed those expenses and at the same time maintain a covenant ratio of 1.25. There should be enough cash flow in the operating funds to replenish reserves if necessary. At this time, Mrs. Mitchell indicated that, in her opinion, the City has enough funding to meet both of the requirements.
Mr. DePrima explained that there are three (3) new priorities to be considered for the CIP which, in his opinion, will not cause an increase in next year’s CIP due to the ability to re-prioritize projects. He also reminded members that a large bond issue and its associated debt service was included in the rate model. He reiterated that the three (3) additional projects will not go beyond any of the parameters that have been established.
In response to Mr. Slavin, Mrs. Mitchell stated that there is no policy or procedure that prohibits a sitting Council from taking action that obligates future Councils. Mr. Slavin felt that this may be an issue that members would want to consider further, noting that a Council could approve several CIP projects with minimum expenses for the current year but that could have astronomical expenses in the next year, which the new Council would have to budget for accordingly.
In order to address the major reliability issues, staff submitted the following requests for consideration:
College Road Distribution Substation Transfers and Switchgear
Members were advised that standard utility practice dictates that any first contingency failure should be recoverable without any major long term (over 4 hours) impact to the customers. Mr. Lunt explained that if there was a failure in a substation transformer during peak loads, the City should be able to divert the load to other stations and continue to operate. He advised members that there are three (3) scenarios where this is not achievable: 1) Division Street Substation; 2) Dover Downs Substation; and 3) Frazier Substation. If any of these substations were to fail during the summer peak periods, the Electric Division would be required to resort to rolling blackouts until such time as the load had decreased enough to be carried by the adjacent stations or until the substation could be repaired.
Staff recommended that the College Road Distribution Substation Transfers and Switchgear project be approved for bidding FY07; that the necessary budget amendment be included in the mid-year review, and that funds be transferred from the I&E Fund as replenished from the existing CIP projects, as outlined in the Public Utilities Director's report dated 02/01/2007; and approval of the revised CIP sheet. An expenditure in the amount of $525,000 would be required for this project with the funds returned to the I&E Fund from current FY07 projects. The CIP for FY08 will include $2,435,000 for a total project cost of $2,960,000. Mr. Lunt explained that the proposed distribution transformer and switchgear in the College Road Substation would provide direct electrical support for Division Street, Dover Downs, Frazier, McKee Run Generator Station, and General Scott Substations. Additionally, by directly supporting these four (4) stations, indirect support can also be provided to Mid-City and St. Jones Substation.
Responding to Mr. Ruane, Mrs. Mitchell stated that the bond issue includes $15M for Units 3 and 4 off of the 230 Kv and the other $5M for the Frazier Substation relocation to the civic center, which the City Manager indicates will not be occurring. Mrs. Mitchell assured members that if the Public Utilities Director has other projects that have priority, since the Frazier Substation relocation is not necessary, those funds can be transferred to cover the new priority project costs.
Mr. Slavin moved to recommend approval of staff’s recommendation that the College Road Distribution Substation Transfers and Switchgear project be approved for bidding FY07; that the necessary budget amendment be included in the mid-year review, and that funds be transferred from the I&E Fund as replenished from the existing CIP projects as outlined in the Public Utilities Director's report dated 02/01/2007; and approval of the attached revised CIP sheet (Attachment #1). The motion was seconded by Mr. Cregar and unanimously carried.
McKee Run Substation Transformer
Mr. Lunt advised members that transformer 6312-20-3 failed on June 16, 2006 during a generation startup error. This was one of two transformers that ultimately tie the McKee Run bus and the 22 Kv system to the 69 Kv system. Currently, the St. Jones Substation, Mayfair Substation, and generation units 1 and 2 are tied through the 22 Kv transmission system. If the City were to experience a failure on the remaining tie transformer, 6922-2000-2, there would not be any electrical path to serve the 22 Kv transmission system. He stated that at St. Jones, the 12 Kv load could be served from other locations; however, the 4 Kv load could not be served from any alternate location since it is the last 4 Kv station in the City. The 4 Kv load at St. Jones is basically the State Office Complex, Wesley College, and residents/businesses in between; these customers would be out of service for an indefinite period of time. Lastly, Units 1 and 2 could not generate since there would not be a connection to the PJM grid.
Mr. Lunt stated that quotations were requested from used transformer suppliers and a few transformers that would comply with the City’s requirements were located. He advised members that staff has developed specifications and started the RFP process in an attempt to minimize the delay in completing the project if Council decides to approve this request. As the Public Utilities Director, Mr. Lunt expressed his opinion that time is of the essence since there is a great exposure to a large, long-term outage if this project were delayed. He advised members that the cost of this project may be offset by an insurance payment from North American Energy Services (NAES); however, this issue has not been settled at this time.
Staff recommended the following: A) that a used transformer be bid and awarded to the yet unknown low, substantially compliant bidder as determined by staff, and that the City Manager and Finance Director be given the authority to approve the contract(s) for the purchase, transportation, and placement services of this transformer, and that this project be approved for FY07; B) that the necessary budget amendment be included in the Mid-Year Review, and that funds be transferred from the I&E Fund as replenished from the existing CIP projects as outlined by the Public Utilities Director's report dated 02/01/2007 - this work will also entail the removal of the existing transformer from the current location to a storage pad; and C) approval of the attached revised CIP sheet.
Mr. Slavin moved to recommend approval of staff’s recommendations, as follows: A) that a used transformer be bid and awarded to the yet unknown low, substantially compliant bidder as determined by staff, and that the City Manager and Finance Director be given the authority to approve the contract(s) for the purchase, transportation, and placement services of this transformer, and that this project be approved for FY07; B) that the necessary budget amendment be included in the Mid-Year Review, and that funds be transferred from the I&E Fund as replenished from the existing CIP projects as outlined by the Public Utilities Director's report dated 02/01/2007 - this work will also entail the removal of the existing transformer from the current location to a storage pad; and C) approval of the attached revised CIP sheet (Attachment #2). The motion was seconded by Mr. Cregar and unanimously carried.
Transmission Relaying, Replacement, Calibration Study and Equipment
Members were advised that in a one-month period, there were two (2) outages on the 69 Kv transmission service. Mr. Lunt explained that the first outage occurred when a lightning arrestor failed on the Danner Farm (DF) transformer. What should have happened is that the DF substation's 69 Kv breaker should have opened and de-energized the station. Instead, the line relays at Dover Air Force Base and North Street operated, de-energizing the transmission line between the switching stations. This caused the customers of the Lebanon and Mid City Substations to lose service. In the second incident, a transmission line insulator failed on one of the two lines between North Street and McKee Run. What should have occurred is that the relays protecting the 69 Kv line should have picked up the fault and opened the line at both ends. Instead, the relays on both lines (the two lines going between North Street and McKee) at North Street opened and the relays at Dover Downs operated, de-energizing the 69 Kv lines and substations between North Street and Dover Downs. Mr. Lunt stated that there were several substations affected by this outage including Scott Paper, one line into Kraft Foods, General Scott, Division, Frazier, Mayfair, and 3 transformers at St. Jones Substation. There were almost 12,000 customers out of service at the peak of the outage. He explained that if the relays had worked correctly on the transmission system, there should have been one distribution circuit at General Scott Substation open when the transmission line dropped into the under-built distribution line, which would have affected about 300-400 customers. After discussing this matter with staff, Mr. Lunt stated that this type of miss-operation is a common occurrence. He advised members that in order to correct the problem, the City needs to have the transmission system modeled to determine the correct relay settings, replacement of the current 35 plus year-old relays with new electronic relays, and installation of the new relays on the existing equipment.
Staff recommended that: A) this project be approved for bidding and expenditure in FY07; B) the necessary budget amendment be included in the Mid-Year Review with funds being transferred from the I & E Fund as replenished from the existing CIP projects as outlined by the Public Utilities Director's report dated 02/01/2007; and C) approval of the attached revised CIP page.
Mr. Slavin moved to recommend approval of staff’s recommendation, as follows: A) that this project be approved for bidding and expenditure in FY07; B) the necessary budget amendment be included in the Mid-Year Review with funds being transferred from the I & E Fund as replenished from the existing CIP projects as outlined by the Public Utilities Director's report dated 02/01/2007; and C) approval of the attached revised CIP page (Attachment #3). The motion was seconded by Mr. Cregar and unanimously carried.
Engineering Consultant’s Report - June 20, 2006
The City of Dover Electric Bond Resolution requires that the City retain an independent engineering consultant to inspect the City's electric system and to review the electric budgets and insurance program. The City contracted with Burns & McDonnell to perform this year's analysis. The report provides the information related to their annual review for the Fiscal Year ended June 30, 2006.
Mrs. Mitchell, Finance Director/Treasurer, reviewed the highlights of the report which compares FY2004 to FY2006.
Staff recommended acceptance of the Engineering Consultant’s Report on the Operation and Maintenance of the Electric System for Fiscal Year 2006, as reviewed by the Finance Director.
Mr. Slavin moved to recommend acceptance of the Engineering Consultant's Report on the Operation and Maintenance of the Electric System for Fiscal Year 2006 as recommended by staff. The motion was seconded by Mr. Ruane and unanimously carried.
Annexation Request - Properties Located on the South Side of North Little Creek Road, Containing 2.2689+/- Acres, Owned by Christopher J. and Rebecca R. Raubacher
Members were provided the Petition to Annex and Zone Property, the Development Advisory Committee (DAC) Commentary, and a Cost/Revenue Analysis Summary for property located on the south side of North Little Creek Road, containing 2.2689+/- acres, owned by Christopher J. and Rebecca R. Raubacher.
Mr. Koenig, Public Services Director, noted that the properties are currently receiving electricity from the City and that City water service is available. City sanitary sewer service is planned to be extended to the property with the construction of the Rojan Meadows Subdivision. Mr. Koenig advised members that the cost-revenue analysis indicates a positive cash flow to the City in the amount of approximately $3,134 over ten years.
Mr. Ruane moved to recommend adoption of the Resolution setting the date of the Annexation Referendum to be held on March 15, 2007 for property located on the south side of North Little Creek Road, containing 2.2689+/- acres, owned by Christopher J. and Rebecca R. Raubacher (Attachment #4). The motion was seconded by Mr. Cregar and unanimously carried.
Dedication of Rights-of-Way and Public Infrastructure - Acorn Farms - Phases II and III
On behalf of the developer of the Acorn Farms Subdivision (Phases II & III), Acorn Farms, Ltd., staff submitted a request for all rights-of-way and public infrastructure improvements related to phases II and III of this subdivision to be dedicated to the City of Dover for permanent ownership and maintenance. Acorn Farms Ltd. has constructed all of the improvements in accordance with City standards and specifications. After construction was completed, City staff inspected the public improvements and provided the developer with a list of repairs to be made to meet the City of Dover Standards and Specifications for Public Works Construction. All work has been completed and as-built drawings have been submitted to the Department of Public Services for its permanent records.
Staff recommended acceptance of the dedication of rights-of-way and public infrastructure for Phases II and III of the Acorn Farms Subdivision. Dedication is to include all of the referenced public improvements as follows:
Sewer Utility Infrastructure (estimated construction value = $ 126,465.00):
8" PVC Sanitary Sewer Main - 1,522 l.f.
4” PVC Sanitary Sewer Laterals - 2,035 l.f. (56 laterals)
4' Diameter Sanitary Sewer Manholes - 7 ea. (49.89 v.f.)
Water Utility Infrastructure (estimated construction value = $ 95,995.00):
6” Ductile Iron Water Main - 2,010 l.f.
8” Ductile Iron Water Main - 1,263 l.f.
1” Type “K” Copper Water Service Line - 1,870 l.f. (56 services)
8” Gate Valves - 5 ea.
6” Gate Valves - 4 ea.
6” Hydrant Valves - 3 ea.
Fire Hydrants - 3 ea.
Storm Water Infrastructure (estimated construction value = $ 41,915.00):
Yard Basins - 2 ea.
Single Catch Basins - 7 ea.
Double Catch Basins - 2 ea.
15” Type IV Reinforced Concrete Pipe - 721 l.f.
15” ADS Pipe - 300 l.f.
12” ADS Pipe - 40 l.f.
Street Infrastructure: (0.32 miles) (estimated construction value = $ 211,125.00)
Acadia Place Station 0+00 to Station 10+58
Teak Court Station 0+00 to Station 2+76
Shadybrook Drive Station 4+50 to Station 8+05
Responding to Mr. Slavin, Mr. Koenig stated that the stormwater management infrastructure is a part of the homeowners association and community property requirements for this area. The recommended action is clear that the only dedication that is related to stormwater is for the piping that transfers water from roadways to the swales. To his recollection, the responsibilities for the stormwater is noted on the plat.
Mr. Ruane moved to recommend approval of staff’s recommendation for the acceptance of the dedication of rights-of-way and public infrastructure for Phases II and III of the Acorn Farms Subdivision as outlined. The motion was seconded by Mr. Slavin and unanimously carried.
Franchise Agreement Comprehensive Strategy - Video Services
Mr. DePrima advised members that the City has been officially notified by Verizon that they would like to enter into franchise agreements. He stated that a team has been formed consisting of City staff members, with the Treasurer/Finance Director, Mrs. Mitchell, serving as the lead.
Mr. Ruane felt that members of Council should provide staff guidance by developing expectations of such an agreement and what provisions should be included, etc.
Responding, Mr. Carey suggested that staff be given the opportunity to develop a recommendation to be brought before members for further review and discussion, at which time, a recommendation could be made to be forwarded to Council.
Council President Williams advised members that a resident of the First District who has experience with theVerizon franchise has volunteered to assist the City with this matter.
Members requested that Mrs. Mitchell provide a recommendation on the parameters for the negotiations with Verizon for the franchise agreement and that any recommendations for appointments to the team be presented to the committee at their next meeting.
Mr. Ruane moved for adjournment, seconded by Mr. Cregar and unanimously carried.
Meeting Adjourned at 6:00 P.M.
Respectfully submitted,
Carleton E. Carey, Sr.
Chairman
CEC/jg
S:ClerksOfficeAgendas&MinutesCommittee-Minutes20072-12-2007 UTILITY.wpd
Attachments
Attachment #1 - College Road Distribution Substation Revised CIP
Attachment #2 - McKee Run Substation Transformer Revised CIP
Attachment #3 - Transmission Relaying, Replacement, and Calibrations Revised CIP
Attachment #4 - Annexation Resolution for Properties Located on the South Side of North Little Creek Road (Raubacher)