UTILITY COMMITTEE

The Utility Committee Meeting was held on January 10, 2005, at 5:35 p.m. with Chairman Carey presiding. Members present were Mr. Ruane, Mr. Sadusky, Mr. Cregar, and Mr. Snaman. Members of Council present were Mr. Slavin, Mr. Ritter, Mr. Hogan, Mr. Salters, and Council President Williams. Mayor Speed was also present.

AGENDA ADDITIONS/DELETIONS

Mr. Carey requested the deletion of item #1 - Revised Proposed Ordinance Amendments - Street Widths, and item #3 - Water Quality Evaluation Program and Consulting Services/CIP Amendment.

Mr. Sadusky moved for approval of the agenda, as amended, seconded by Mr. Snaman and unanimously carried.

Presentation - Electric Rate Study

In 2003, The City of Dover retained Burns & McDonnell Engineering Company to prepare a Comprehensive Electric Revenue Requirement Cost of Service and Rate Design Study. In September 2003, the Electric Rate Study Implementation Committee was established to further analyze and validate the findings of the Rate Study. The Committee's ultimate goal was to suggest ways of implementing the Study's recommendations in such a way as to ensure its objectives.

The final recommendations of the Committee were presented to the Utility Committee on February 24, 2004, at which time the City Manager was instructed to meet with the City’s customers to explain the rate study recommendations and discuss the impact of implementing the recommendations. Since August 17, 2004, presentations have been made to the following groups: Luther Towers, Playtex, Central Delaware Chamber of Commerce, Central Delaware Economic Development Council, Del Tech – Terry Campus, Dover Bowl, Delaware Economic Development Office, Dover Downs, Kent County Tourism, Main Street Dover, Delaware State University, Dover Post, Sara Lee, Bay Developers, Greater Dover Committee, Chesapeake Utilities, Sheraton, and the Capital School District. The Sunroc Corporation was e-mailed a copy of the presentation since they were unable to schedule or attend a presentation. Data comparing proposed billing to actual billing was made available upon request. Correspondence related to the Study’s recommendations was received from the Central Delaware Economic Development Council, the Central Delaware Chamber of Commerce, and Playtex.

Mrs. Terry Tieman, Administrative Services Director, provided a PowerPoint Presentation and reviewed the key points of the Study and the recommendations of the Electric Rate Study Implementation Committee.

Responding to Mr. Ruane, Mrs. Tieman stated that the gap between revenue and the cost of services could be closed if the entire study were implemented; however, after discussions with the community and large business groups, the Committee did not feel it was prudent to recommend implementation of the entire study at this time. Mr. DePrima, City Manager, noted that the Chamber of Commerce was aware that the majority of its membership would realize a savings on their electric bills; however, they chose not to support the recommendation to decrease rates for small and medium commercial members due to their concern with the impact on the large primary customers. It was their feeling that it would ultimately have a greater impact on their small and medium commercial members.

Responding to Mr. Snaman, Mr. DePrima noted that although the City’s residential rate is higher than Conectiv’s rate, at the time of the study, the rates for Conectiv and Delmarva Power were frozen. He advised members that the moratorium will probably be lifted this year and the City’s rates will be more competitive.

Mr. Ruane moved to recommend approval of Option #2, increase customer charges as proposed by the Study. The motion failed for the lack of a second.

Mr. Ruane moved to recommend approval of Option #3, changing the power factor to 95% from 90%, as recommended in the Study, seconded by Mr. Sadusky and unanimously carried.

Mr. Ruane moved to recommend approval of Option #6, moving the church, agricultural commercial, municipal, agricultural residential, primary time-of-use and primary 2 rate customers into their appropriate rate classes, phasing in one rate class at a time for a smooth transition. The motion was seconded by Mr. Snaman and unanimously carried.

Mr. Ruane moved to recommend approval of Implementation Option #7, over the next three (3) to five (5) years, transition Playtex Products, Inc. to a less complicated rate structure that fits within the City of Dover's rate model, as recommended by the Burns and McDonnell Rate Study. The motion was seconded by Mr. Snaman and unanimously carried.

Mr. Ruane moved to recommend approval of Option #2, increase customer charges, with the exception of the small commercial and medium commercial rate increases, increasing the large commercial customer charge from $5 to $10, the residential customer charge from $4 to $5, and the primary customer charge from $0 to $10. The motion was seconded by Mr. Sadusky and unanimously carried.

Mr. Ruane moved to recommend that staff be requested to provide a revised Cost of Services Analysis showing the percent variance based on the rates recommended by the committee, once they are adopted by Council, and make a recommendation to close the gap between revenue and cost of service. The motion was seconded by Mr. Cregar and unanimously carried. (City Clerk’s Office Note: Memo dated January 24, 2005 presented by Mrs. Tieman explains that the recommendations, if approved, close the gap between revenue and cost of service; therefore, no further recommendation will be submitted by staff).

Mr. Snaman moved for adjournment, seconded by Mr. Sadusky and unanimously carried.

Meeting Adjourned at 6:30 P.M.

                                                                                    Respectfully submitted,

                                                                                    Carleton E. Carey, Sr.

                                                                                    Chairman

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