Electric City Power, Incorporated (ECPI): Regular meeting of the Board of Directors Great Falls Civic Center, Gibson Room
CALL TO ORDER: 5:30 PM
ROLL CALL: Directors present: Chairman Bob Pancich, George Golie, Randy Gray Bill Ryan, and Dawn Willey. Also present were the ECPI Executive Director, City Manager, Assistant City Manager, Administrative Officer and the Operations Supervisor.
EXECUTIVE DIRECTOR REPORT
Executive Director Coleen Balzarini updated the board on two bills relating to ECPI’s electricity supply operations. She first spoke about House Bill 25, NorthWestern Energy’s “reregulation” bill. The bill, if passed, would terminate Montana’s current customer choice regime and allow NorthWestern energy to build generation facilities with a guaranteed return from ratepayers, after a preapproval process by the Montana Public Service Commission (PSC).
She then spoke about House Bill 739, sponsored by Alan Olson (R-Roundup), which would place onerous regulatory conditions on local public power entities that wish to construct generation, transmission, or related facilities including demonstrating that rates would be better than the default supplier’s, an approval by 40% of registered voters (as opposed to 40% of votes cast), and lengthy proceedings before the PSC.
Consider recommendation of proceeding to Phase II of independent engineer’s analysis to the Great Falls City Commission. Ms. Balzarini reported to the Board that Phase I of the analysis was used to consider the economics of the City’s participation in the proposed Highwood Station, and the report by R.W. Beck determined that Highwood Station will be a competitive resource in the Northwest market. Balzaraini outlined the scope of work for the Phase II analysis. Phase II will consist of a group of individual tasks related the City’s financing and marketing efforts including a load analysis of the City’s current customers, a pro forma model, contract development and documents to support ECPI’s issuance of debt.
George Golie asked if Phase II would mark the end of R.W. Beck consulting expenses relating to the City’s due diligence for participation in Highwood Station.
Balzarini said that it would, and that these expenses would be reimbursed by issuance of revenue debt for Highwood Station. City Manager John Lawton then noted that by structuring Phase II with individual tasks, the engagement can be stopped and controlled closely.
Randy Gray asked if Southern Montana Electric Generation and Transmission Cooperative (SME), and if there was any overlap of the work. Balzarini responded that RUS would review all of Stanley Consultants’ work.
George Golie then made a motion that the Board recommend that the City Commission proceed to Phase II of the independent engineer’s analysis. Bill Ryan seconded the motion, and the motion was approved unanimously by the Board.
Approval of Board Minutes from March 5, 2007. George Golie moved to adopt the minutes and Randy Gray seconded the motion. The March 5, 2007 minutes were approved unanimously.
Draft Development Agreement Between the City and SME. Executive Director Balzarini reported to the Board that the purpose of the draft Development Agreement is to provide the general structure of the relationship moving forward, acting as an “agreement to agree” on general financing, ownership, power supply, and other issues.
Dawn Willey asked who had prepared the draft agreement. Balzarini responded that most of the work was completed by a member of the City’s bond counsel team, David Swanson of Dorsey and Whitney, LLP, and SME’s counsel, Mike McCarter of Luxan and Murfitt, PLLP.
George Golie asked how the $8.1 million figure referenced in the document was arrived upon. Balzarini explained that this figure reflects SME’s estimated preconstruction and development costs
Stuart Lewin presented Al Revis, from the Blackfeet Indian Reservation. Mr. Revis spoke about the expanding role of wind energy in the United States, particularly on Indian reservations. He also told the board about an emerging technology that uses a new style of wind turbines and also produced hydrogen.
Mary Jolley asked about a 17.5% equity investment in SME made by the City and a projected 25% investment in Highwood Station. Executive Director Balzarini explained that the 17.5% investment was an initial investment by the City in the SME organization because the City represents one of six members. The projected 25% relates to the City’s ownership share of the Highwood Station facility.
Richard Liebert spoke about the evolution of wind power technology and that this should be considered. He also noted that a 900 MW coal fired power plant in Kansas was stopped.
Cheryl Reichert said she was concerned that SME was not committed to using activated carbon injection technology to control mercury from Highwood Station. City Manager John Lawton noted that SME has repeatedly stated its commitment to use activated carbon injection.
Ron Gessman stated that the ECPI board does not ask questions. He said they should be asking about the “thermal efficiency” of the project, “escalator costs,” personnel training, and the breakdown of costs for debt issuance.
Ken Thornton told the board he was thankful that SME is considering installing carbon capture technology, but wanted to know the cost of using chilled ammonia technology. City Manager John Lawton responded that the cost is not known at this point, as carbon capture on power plants is an experimental technology and that carbon dioxide is not currently a regulated pollutant. He added that best efforts are being made by SME to develop and deploy carbon capture equipment at HGS.
Rodger Norgard said that the plans for Highwood Station appear not to be comprehensive and said he had concerns about losses.
Kathy Gessman noted that she likes the idea of public power, but is concerned with the pollution from Highwood Station
ADJOURN: Executive Director Bob Pancich adjourned the meeting at 7:10 PM. The next meeting is set for May 7, 2007 at 5:30 in the Gibson Room of the Great Falls Civic Center.
Agenda Packet ( 1.4M scanned PDF)
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