UTILITY COMMITTEE
The Utility Committee meeting was held on January 8, 2007 at 5:10 p.m. with Chairman Carey presiding. Members present were Mr. Ruane, Mr. Slavin (departed at 6:00 p.m.), Mr. Cregar, and Mr. Snaman. Members of Council present were Mrs. Russell, Mr. McGlumphy, and Mr. Salters. Mayor Speed was also present.
AGENDA ADDITIONS/DELETIONS
Mr. Slavin moved for approval of the agenda, seconded by Mr. Snaman and unanimously carried.
Annexation Request - 1044 and 1050 South State Street, Owned by 1050 South State, LLC
Members were provided the Petitions to Annex and Zone Property and a Cost/Revenue Analysis Summary for properties located at 1044 and 1050 South State Street, owned by 1050 South State, LLC.
Mrs. Townshend, City Planner, advised members that it has been determined that electric and water service is available for these properties and is currently in place. Although the sanitary sewer service is available, the applicant will need to obtain an easement from the property owned by N/F Center for Neurology Properties, LLC, in order to extend a sewer lateral from the City’s main to these properties. The owner/developer will be responsible for all costs associated with extending sewer service to the properties. Mrs. Townshend stated that the Cost-Revenue analysis showed a positive cash flow to the City over ten years of approximately $6,398 for 1044 South State Street and $8,449 for 1050 South State Street.
Mr. Slavin moved to recommend adoption of the Resolution setting the date of the Annexation Referendum to be held on February 15, 2007 for properties located at 1044 and 1050 South State Street (Attachment #1). The motion was seconded by Mr. Snaman and unanimously carried.
Green Energy Grant Limits and Regulations (Deferred during 12/11/2006 Meeting)
Mrs. Tieman, Senior City Administrator, reminded members that in the summer of 2005, the State of Delaware issued a Renewable Energy Portfolio Standard (Delaware Code, Title 26, Chapter 1, Section 351-363). She stated that Section 363, Special Provisions for Municipal Electric Companies and Rural Electric Cooperative provides for exemptions from the standard. The City has followed the four (4) steps to be completed and has developed proposed green energy grant limits and regulations (subsection 4) to meet the requirements effective January 1, 2007. In order to fulfill Subsection 4, Mrs. Tieman indicated that the City must have green energy grant limits and regulations in place.
Staff recommended adoption of the Municipal Utilities’ Green Energy Fund Program developed by the Delaware Municipal Electric Corporation (DEMEC). The regulations and grant limits will allow the City to provide comparable grant limits and regulations to most other municipal and investor owned utilities within Delaware. The limits proposed are equivalent to Delaware Electric Cooperative.
Responding to Mr. Ruane, Mrs. Tieman explained that the program will be administered through the Delaware Energy Office, which is why the document is worded generically rather than specific to the City of Dover. She stated that the City’s funding is collected through the Green Energy Rate adopted in July and that the funds are sent to DEMEC to be held in trust until disbursements are approved by the Delaware Energy Office.
Noting that the document references municipal codes, Mr. Ruane questioned if the Dover Code has been reviewed to determine if it accounts for this type of technology and application. He suggested that the appropriate City official review the relevant sections of the Dover Code to ascertain whether in fact this technology has been taken into account or whether provisions or revisions are necessary to be included in the Dover Code.
Mayor Speed noted that the fourth paragraph of Section 4.5, Claim for and Distribution of Green Energy Program Grants, should be amended by changing the two instances of “twenty-five percent (25%)” to fifty percent (50%).
Mr. Slavin moved to recommend acceptance of staff’s recommendation for adoption of the Municipal Utilities’ Green Energy Fund Program caps and regulations as presented, with the revisions noted by Mr. Ruane and Mayor Speed, and that the effective date be January 1, 2007 (Attachment #2). The motion was seconded by Mr. Snaman and unanimously carried.
Brown Water Financial Update/Water Quality Expense Report
Mrs. Duca, Assistant City Engineer, distributed and reviewed the Brown Water Financial Update/Water Quality Expense Report, which represents a consolidation of expenses that have occurred during the past six (6) years, since water quality concerns and brown water problems began occurring (Attachment #3).
Mr. Slavin relayed frustration in receiving information at the last minute that members are expected to analyze, understand, question, and convey knowledge of, particularly matters that involve the expenditure of public monies.
Mr. Slavin moved to table the issue and recommended that the matter be brought back at the next committee meeting to allow members the opportunity to analyze the material and present questions; and that in the future, items that appear on the agenda include backup material with the packet otherwise the matter will be tabled. The motion was seconded by Mr. Ruane and unanimously carried.
Schoolview Pump Station
Mr. DePrima advised members that many residents of the Schoolview Development have expressed concern regarding how adjacent development will impact both storm water and sanitary sewers in their area. As a result, on December 8, 2006, he sent a letter to all homeowners in the development which answered all of the questions that had been asked by the residents. Mr. DePrima noted that he has not heard any further complaints regarding the situation.
Mr. Carey explained that the intent of having this matter presented to the committee is to make this issue a part of the record.
For record purposes, Mr. Ruane requested that the letter dated December 8, 2006 sent to individuals involved in this particular situation, as referenced by Mr. DePrima, be included as an attachment to the committee minutes.
Mr. Ruane moved to recommend acceptance of the report provided on the Schoolview Pump Station and the inclusion of the letter dated December 8, 2006 sent to nearby residents (Attachment #4). The motion was seconded by Mr. Snaman and unanimously carried.
PACE/NAES Monthly Report (November)
Mr. DePrima provided the PACE/NAES Monthly Report for November 2006 (Attachment #5).
Mr. Carey explained that by reviewing this report each month, it will provide members the opportunity to monitor what is being sold in electric and the revenues received, allow members to have a better understanding of any fluctuations, and make improvements to the situation.
Mr. Ruane noted that on page 4, there is a reference to $350,000 gross margin loss and requested an explanation. Responding, Mr. DePrima stated that this is a new situation for the City and that the 69kV project has been planned for years, which is a City-wide system improvement. For further clarification, Mr. Lunt, Public Utilities Director, explained that this was previously included in the Duke Contract. Once the contract changed over in July, that is no longer the case. Since the City took over the operations of the plant, it is now the City’s expense. He advised members that in the future, it will be included in the City’s budget.
Mr. McGlumphy indicated that although he understands the $350,000 is project related, he noted that there is a highlighted note indicating that soft market conditions due to mild weather preclude, and questioned that since the City has experienced mild weather conditions, and the City operates on a series of assumptions, it seems that the mild weather is working against us. He requested that the committee consider recommending that staff develop a monthly report to allow the City to prepare our citizens for what is coming in the future by keeping on top of such issues and by keeping the public informed.
Responding, Mr. DePrima explained that although the weather can negatively affect the City’s revenues, at the same time, it has a positive affect on the City’s expenses. He assured members that the $350,000 loss is a direct result of the CIP project as previously explained.
Evaluation of Bids - Lebanon Transformer
Members were advised that the existing Lebanon Substation transformer is 35 years old and has exceeded its 30 year life expectancy. In addition, since the City is now responsible for supplying Dover Air Base Housing (DABH) at distribution voltage, the existing transformer is not capable of carrying the additional load, which will require a shift load to adjacent substations in order to avoid overloading the existing transformer. The current transformer’s capacity is 12 MVA and will be replaced with a 33 MVA transformer to carry future projected load growth. Members were also advised that the current Lebanon Substation transformer cannot be used as a backup for the Danner Farm, Horsepond, Mid-City, or Mayfair substations because of the size constraints, which ultimately affect system security/reliability.
Staff recommended awarding the bid to the lowest responsible transformer bidder, Hughes Utilities, Ltd./NPX, in the amount of $761,850. Mr. Lunt, Public Utilities Director, explained that a payment of 10% is required when placing the transformer order and that an additional 20% is required upon approval drawing submission for a total expenditure of $213,900, which is reflected in the 2006-2007 budget. These payments are required from the manufacturers before they will begin manufacturing the transformer. Since the project costs were underestimated in the 2006-2007 Capital Investments Plan, staff recommended that the remaining cost of the transformer, in the amount of $547,950, and an additional $90,000, which includes an engineering estimate for material, construction, installation, and removal of equipment, be reflected in the 2007-2008 CIP ($637,590) for a total two (2) year project cost of $851,850.
It is estimated that delivery of the transformer will occur 56 weeks after placing the order and that the City would take possession of the transformer during the 2007-2008 budget. Once received, staff will install the new transformer prior to the summer load of 2008.
Responding to Mr. Ruane, Mr. Lunt explained that delivery time was estimated at 5-7 months, which used to be the case; however, due to the demands from the industry, delivery time has been extended to 56 weeks. If this information was known, he felt that staff would have brought this purchase forward prior to this time.
Mr. Ruane alluded to the bids being presented to members at this meeting and requested that staff be requested to present an update on the CIP at the next committee meeting. He noted that both this and the next item are changing the time-line on certain projects and relayed concern with there being changes to other items in the CIP.
Mr. Ruane moved to recommend that at the next meeting, the Public Utilities Director provide members with an updated CIP, which should take into account these two (2) projects and others that may be affected by the financial challenge that the department is facing. The motion was seconded by Mr. Snaman and unanimously carried (Mr. Slavin absent).
Mr. Ruane moved for approval of staff’s recommendation for awarding the bid to Hughes Utilities, Ltd./NPX, in the amount of $761,850 for the purchase of a 33 MVA transformer for the Lebanon Substation. The motion was seconded by Mr. Snaman and unanimously carried (Mr. Slavin absent).
Evaluation of Bids - Mayfair Substation Structural Steel, Equipment, and Material
Members were advised that the final material phase for the 22kV to 69kV conversion of the Mayfair Substation is the purchase of the equipment package. This project is scheduled to be completed in the summer of 2008. The equipment package, which is made up of mostly steel and copper products, is priced $28,360 higher than the budgeted amount ($167,465) due to the escalation of metal prices.
Staff recommended that the bid be awarded to the substantially compliant low bidder, Dis-Tran Packaged Sub-Stations, LLC, in the amount of $196,095. Mr. Lunt, Public Utilities Director, explained that the shortfall, in the amount of $38,000, will be transferred from the 2006-2007 CIP (Page 234 System Operations Automation - 487-8300563-40-25). Although Dover intended to fund this project, the equipment was purchased by Duke through the Dover/Duke Engineering services clause of the agreement. This transfer will bring the overall budget amount of 2006-2007 to $205,465 for this project and will cover the cost of structural steel, equipment, and foundation work. Although it is the intent of the City to take delivery of the package in the 2006-2007 budget year, there is a high possibility that all of the equipment will not be delivered in time since there is a 24-26 week final delivery schedule. If this occurs, the remaining funds for the 2006-2007 year will be transferred into the 2007-2008 budget year.
Responding to Mr. Ruane, Mr. Lunt indicated that the completion date is anticipated to occur during the first quarter of 2008 for this project. Mr. Lunt clarified that this bid provides for the final materials necessary for this project’s completion; however, there will be additional labor fees, estimated at $60,000, for the installation of the equipment.
Mr. Ruane moved for approval of staff’s recommendation for awarding the bid to Dis-Tran Packaged Sub-Stations, LLC, in the amount of $196,095 for the purchase of the equipment package for the 22kV to 69kV conversion of the Mayfair Substation. The motion was seconded by Mr. Snaman and unanimously carried.
Mr. Snaman moved for adjournment, seconded by Mr. Slavin and unanimously carried.
Meeting Adjourned at 6:10 P.M.
Respectfully submitted,
Carleton E. Carey, Sr.
Chairman
CEC/jg
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Attachments
Attachment #1 - Annexation Resolution - Properties Located at 1044 and 1050 South State Street
Attachment #2 - Municipal Utilities’ Green Energy Fund Program
Attachments to Original Minutes and File Copy
Attachment #3 - Brown Water Financial Update/Water Quality Expense Report
Attachment #4 - Letter Dated December 8, 2006 Regarding Schoolview Pump Station
Attachment #5 - PACE/NAES Monthly Report (November)