Electric City Power, Incorporated

JOURNAL OF BOARD PROCEEDINGS

July 7, 2008

Electric City Power, Incorporated (ECP):
Regular meeting of the Board of Directors Great Falls Civic Center,
Gibson Room

CALL TO ORDER: 5:30 PM

ROLL CALL: Directors present: Chairman George Golie, Bill Ryan, Randy Gray and Bob Pancich. Also present were the ECP Executive Director, City Manager, Assistant City Manager, and Fiscal Services Operations Supervisor.

EXECUTIVE DIRECTOR REPORT

Executive Director Coleen Balzarini updated the Board on the following:

Newspaper Articles:
Northwestern Energy Announces Agreement to sell its Interest in Colstrip Unit 4. Ms. Balzarini pointed out that Northwestern also has the option to keep its interest, and incorporate the generation into the existing rate base.

City Puts Coal Plant on Back Burner for 30 Days. Ms. Balzarini stated the City Commission conducted a work session regarding its participation in the capital development of the Highwood Generation Station. SME General Manager Tim Gregori made a presentation to the Commission and stated that as they work thru the financing possibilities, there is no urgency for the Commission to take action at this time.

Highwood Generation Station Project Update:
Ms. Balzarini updated the Board on the lawsuits filed against the project: MEIC and CCE have filed a lawsuit against the DEQ, and only one portion of the air quality permit, not against SME. The lawsuit regarding the emissions of PM 2.5 is moving forward. Mary Jaraseski, the local legal representative for SME was in attendance and available for questions.

City Commissioner Bill Bronson and City Manager Greg Doyon attended the last SME Board meeting as representatives of ECP.

I.   UNFINISHED BUSINESS

II.  NEW BUSINESS

Accept Amended Board Meeting Minutes of April 7, 2008. Randy Gray moved, seconded by Bob Pancich, to accept the amended Board minutes from the April 7 meeting. The individual votes were all in favor.

Accept Board Meeting Minutes from June 9, 2008. Bob Pancich moved, seconded by Bill Ryan, to accept the Board minutes from the June 9 meeting. The individual votes were all in favor.

Accept/Reject the Unaudited Financial Statements for ECP. Ms Balzarini reviewed the balance sheet and income statement, in detail, of accrual basis transactions thru June 26, 2008. She stated that at this time they are not complete, as they do not include June revenue or expenses. Mr. Ryan asked Ms. Balzarini to provide a “snap shot” of previous financial information, on a quarterly basis to get a clearer picture of the financial statements. She stated that is possible and she will get a format that is clear and concise, and provide it to the board on a monthly basis. Mr. Pancich added he would like to see an additional column for year to date information. Mr. Ryan moved, seconded by Mr. Gray to accept the Unaudited Financials, with the amendment to provide the Board the information in a quarterly format, along with year to date totals. The individual votes were all in favor.

III. BOARD MEMBER REPORTS

Ms. Balzarini requested that the Communications portion of the Agenda be moved before the Board Member reports, to coincide with the City Commission agenda format change. Chairman Golie stated it would be beneficial, in this instance to discuss the resignation of Mr. Gray from the Board before proceeding with Public Communications. Mr. Gray stated that due to his travel commitments, he is resigning his position on the ECP Board. Ms. Balzarini stated that the City Commission would post notice of the Board opening, and will take applications, then appoint someone to fill the remainder of Mr. Grays’ term. Ms. Balzarini did not know immediately how many years of his term were left, but would clarify for the Board.

IV. COMMUNICATIONS

Charles Bocock, 51 Prospect Drive, commented that at the April Board Meeting, Neil Taylor had requested cost estimates of construction and cost of power in regards to HGS. At the June meeting, Richard Liebert had requested the same information. To date, neither has received the requested information. Mr. Bocock asked, in regards to the Pilot Program, with the resignation of the board member receiving power under the program, or if a person is no longer affiliated with the City, are they still included in the program. Ms. Balzarini stated the services are provided to particular meters at particular locations, and are not necessarily all affiliated with the City. Service under the program would cease if the particular customer moved from that location.

Larry Rezentes, 2208 1st Avenue N, asked if a copy of the report on ECP’s financials would be available. He stated ECP was in violation of Ordinance 29.25, which stated ECP would be self-sufficient. In 2006, a $600,000 loss was reported in 2008, a $300,000 loss and a $200,000 loss was projected for 2009, and at the sacrifice of programs such as DARE. He asked about the travel funds for ECP board meeting and where they were being paid. Ms. Balzarini responded that all expenses related to the board meetings are paid out of the electric fund, and some of those are reimbursed by SME. Chairman Golie asked Mr. Rezentes to set up an appointment with Ms. Balzarini to discuss financial statements in detail.

Ed McKnight, 906 3rd Avenue N, discussed a map he had downloaded from the internet regarding capacity of generation in the WECC & NERC regions. He stated these are verifiable numbers as apposed to Mr. Gregori’s interpretation of the numbers.

Stuart Lewin, 615 3rd Avenue N, stated since certain board members and members of the community are buying power at a loss to the City, are their plans to reimburse the City for these losses.

Carol Fischer, 500 53rd Street S, expressed her anger towards the financials and the effect the ECP deficit has on other City programs.

Ron Gessaman. 1006 36th Avenue NE, questioned a statement from the June 9 meeting in which a statement was made regarding RUS financing and one reason ECP was created no longer exists. Mr. Pancich clarified that since RUS is not financing the co-operative portion, ECP does not need to finance a separate portion of HGS. He also asked who would be attending the SME Board meetings in the event Chairman Golie is unable to attend. Chairman Golie stated another board member would be appointed to attend in his absence. Mr. Gessaman referred to Mr. Gregori’s comment at the last board meeting regarding SME hiring Big Sky Sequestration Partnership, stating that the BSSP website does not list SME as one of its partners.

Aart Dolman, 3016 Central Avenue, stated he had sent a letter to the Mayor regarding the placement of windmills on the Lewis & Clark historic site. He questioned whether the windmills, which are anticipated to be funded by $12 million in grant money from the Department of Energy, could still be placed on the site. He also asked the status of the EIS given the fact that the RUS is no longer involved in the project.

Kathleen Gessaman, 1006 36th Avenue NE, asked the status of the Grant County PUD proposals to replace Yellowstone Valley Electric in the HGS project. Mr. Ryan responded that they are currently reviewing the MT standards qualify under the WA standards in regards to energy supply sources.

Michael Witsoe, 510 11th Street S, asked for a clarification of cash based accounting. Mr. Witsoe made a specific request for a microphone and sound system to be used in board meetings to comply with ADA requirement for the hard of hearing.

ADJOURN: Mr. Pancich moved, seconded by Mr. Gray to adjourn the meeting. Chairman Golie adjourned the meeting at 6:55 PM. The next meeting is set for August 4, 2008, at 5:30 PM in the Gibson Room of the Great Falls Civic Center.