Electric City Power, Incorporated

JOURNAL OF BOARD PROCEEDINGS

October 13, 2008

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

CALL TO ORDER: 5:30 PM

ROLL CALL: Directors present: Chairman George Golie, Lee Ebeling, Bob Pancich and John Gilbert. Also present were the ECP Executive Director, Assistant City Manager, City Attorney and the City Clerk.

EXECUTIVE DIRECTOR REPORTS

Executive Director Coleen Balzarini updated the Board on the following:

Ms. Balzarini explained that she and John Gilbert met and reviewed the financials of ECP and she changed the format of the financial reports. Ms. Balzarini reviewed the comparative charges for the combined customer accounts of ECP, City of Great Falls accounts, and the Wastewater Treatment Plant accounts. She explained the challenges of presenting up to date information due to the two to three month delay of receiving the imbalance billing.

Ms. Balzarini reported that the water credits will be recovered when HGS is in operation or, in the event HGS is not built, the payment terms will be negotiated.

At the last ECP Board meeting Mr. Gregori discussed current anticipated costs of power based on current estimates. She explained that the Board will likely hear complaint/ comments tonight that the exact number he used was not reflected in the draft minutes. The minutes are a summary of what was done, and not verbatim what was said. Further, the estimates Mr. Gregori discussed will continue to be adjusted until HGS is built.

Ms. Balzarini discussed the transmission and energy rates, as well as the trends and historical increases compared to average rates. The parties discussed the power contract rates and the fact that the trend is improving.

Ms. Balzarini provided background information when ECP first started receiving energy, wholesale rate plus imbalance charges, versus the other coop members’ blended rates. She explained the blended rate as a flat rate based on historical information and is more consistent. However, the potential of making more money exists if ECP keeps its own contracts. She believed the plusses of a blended rate outweighed the minuses of potential higher returns on imbalance sales. ECP now has the option of going to the blended rate, or continuing the status quo through 2011. Mr. Pancich inquired if the Board needed to make a decision now. Ms. Balzarini responded that the Board can wait until the contracts expire, but then customers will see a significant increase in 2011. The Board directed Ms. Balzarini to obtain a copy of the blended contract for review. An addendum would need to be added to the existing contract and a recommendation made to the City Commission to approve the amendment.

Blended Rate. In order to explore the feasibility of going to a blended rate versus the status quo, John Gilbert moved, seconded by Bob Pancich, and approved by roll vote, that this Board review the blended rate contract and perform a review of additional numbers.

Mr. Ebeling requested a graph of two different scenarios. Ms. Balzarini responded that she would provide six months for comparison with the existing customer base.

Motion carried 4-0.

I.  UNFINISHED BUSINESS

II.  NEW BUSINESS

Accept Board Meeting Minutes of September 8, 2008. Bob Pancich moved, seconded by Lee Ebeling, and approved by roll vote, to postpone action on the September 8, 2008, Board meeting minutes until the next meeting.

Mr. Gilbert pointed out corrections that needed to be made, i.e. Tim Gregori’s name was misspelled a few times. Due to not attending said Board meeting, Mr. Gilbert abstained from voting.

Motion carried 3-0 (Director Gilbert abstained).

Term Expirations. After discussion, it was determined that there were no term expirations to discuss this year.

Vice-Chair Position. Due to Vice-Chair Dawn Willey’s resignation and citing Mr. Ryan’s background, Bob Pancich moved, seconded by John Gilbert, and approved by roll vote, that the position of Vice-Chair be appointed to Bill Ryan.

Motion carried 4-0.

III. COMMUNICATIONS

Public Comment.

Ed McKnight, 906 3rd Avenue North, discussed the cost of power versus the wholesale price of the contracts. He referred to quotes contained in the minutes in 2004 and 2005. Mr. McKnight argued about transmission charges, water credits and imbalance charges and demanded that his questions be answered. Ms. Balzarini responded that she has attempted to answer Mr. McKnight to the best of her ability and has nothing more to offer. Mr. McKnight asked what was the total spent or lost in the pursuit of public power. Ms. Balzarini explained the ECP fund and capital contributions made to HGS and commented that it was hard to interpret what kind of costs Mr. McKnight was looking for. Chairman Golie agreed that Mr. McKnight’s questions were very confusing.

Neil Taylor, 3417 4th Avenue South, requested that the last meeting’s minutes reflect Mr. Gregori’s statement that the projected rate right now for electricity would be $0.07 per kilowatt hour. Mr. Taylor welcomed the two new members. He provided his spreadsheet analysis of the cost of coal if it were built today, and does not include carbon penalties or sequestration. Chairman Golie commented that Mr. Taylor’s spreadsheet does not take the cost of delays into consideration. Mr. Taylor commented that if Mr. Gregori would have presented his project properly there wouldn’t be delays.

Kathy Gessaman, 1006 36th Avenue N.E., inquired about the status of the draft Development Agreement. Ms. Balzarini explained that there was no need for the Development Agreement now. It was only necessary when there were multiple partners seeking financing. Now, SME is securing financing. The City has an All Requirements Contract with SME and SME is responsible for acquiring the power. Ms. Gessaman inquired what was ECP’s and the City’s standing with SME. Ms. Balzarini responded that ECP and the City have a participation share with SME, but are not part of the new corporation formed to build HGS. SME enters into contracts to receive electricity that it passes on to the distribution coops and ECP.

Stuart Lewin, 615 3rd Avenue North, commented that this was the first he heard that the City was no longer participating in the ownership of HGS. Mr. Lewin commented that the City already paid $2 million dollars and this was unacceptable to him. He doesn’t believe the public was getting all the information, and does not believe the tax payers are getting the benefit of cheap power. Mr. Lewin commented that SME is costing the City millions of dollars and urged the Board to unwind itself from SME to stop losing money.

Chairman Golie interrupted Mr. Lewin stating that he consistently attacks the integrity of the Board members.

Mary Jolley, 1910 2nd Avenue North, thanked the new Board members for serving. Commissioner Jolley suggested that the Board read the SME meeting minutes regarding the blended rates to help with their recommendations to the City Commission.

Mr. Pancich commented that misinformation like Mr. Lewin’s comments gets printed in the newspaper. An audit is currently being performed and he puts his faith in the auditors.

Ron Gessaman, 1006 36th Avenue N.E., welcomed the two new Board members and asked when the Mayor swore them in. Mr. Gessaman was informed that only elected officials are sworn in. Mr. Gessaman inquired which positions do the new members occupy and was informed that the City Commission made the appointments at the September 16, 2008, City Commission meeting. Mr. Gessaman read a portion of an article regarding Alberta’s oil boom. He also commented that the price of $41.70 was first mentioned in a September 17, 2004, Memorandum contained in the SME Board meeting minutes. He read a portion of the MOU citing that SME and the City would address the rate disparity issue. The wholesale power cost SME $41.70 - $36.00, leaving a difference of $5.70. Mr. Gessaman stated that is why the City of Great Falls came up with the water credits. He also discussed the requirements of the Assignment and Assumption Agreement, and read portions of City Codes and Ordinance 2925 commenting that the City and ECP were in violation and subject to penalties. Mr. Gessaman commented that ECP does not provide for customer incentives. Ms. Balzarini responded that NWE is the transmission service provider. Part of the money collected by NWE goes toward education and conservation. A discussion followed regarding conservation and renewable energy. Mr. Gessaman handed out light bulbs that he got at the October 4 NWE event at the fairgrounds. Mr. Gessaman commented that the coops do not allow for net metering. He is hoping that the upcoming legislature will make it illegal to not allow for net metering.

Mr. Ebeling stated that he would look into why the coops do not allow net metering. He also discussed carbon capture and sequestration and Europe technology.

Mike Witsoe, 2612 1st Avenue South, congratulated Mr. Ebeling and Mr. Gilbert and commented that they entered into a chicken coop of wolves. Mr. Witsoe commented that he has video tapes of all the meetings. He does not believe Chairman Golie understands accounting. He encouraged the new members to look and listen.

IV. BOARD MEMBER REPORTS-None

ADJOURN: Chairman Golie adjourned the meeting at 8:46 p.m. The next meeting is set for November 3, 2008, at 5:30 p.m. in the Commission Chambers of the Great Falls Civic Center.