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: Bob Pancich, Lee Ebeling and Olaf Stimac. Also present were the ECP Executive Director, City Manager, Acting City Attorney and the City Clerk.
Prior to beginning the meeting, Director Pancich announced that, with the concurrence of the Board members present, he would be serving as Chair for this meeting due to the absences of Chairman Golie and Director Ryan. Director Pancich expressed condolences to George Golie and his family for the loss of his wife, and explained that Director Ryan’s work commitments required him to attend the startup of a new phase of a coal mining operation.
Executive Director Coleen Balzarini updated the Board on the following:
Financials.
Acting Chairman Pancich asked if any of the Board members had questions regarding the financials for Ms. Balzarini.
Director Ebeling inquired about the accrual differences on pages 5 and 14. Ms. Balzarini responded that the Board requested, and she included, comparisons on what was budgeted versus the actual numbers for the current year, as well as actual comparisons for the previous year. Director Ebeling noted a positive change of about $200,000 more this year after the first quarter compared to the prior year first quarter.
HGS Asset Impairment. Southern’s Board voted to accept the audited financials for Southern Montana for the year ending December 31, 2008. The total amount of the asset impairment for Southern was in excess of $9 million dollars. Ms. Balzarini reported that Southern’s analysis to determine the asset impairment was done in compliance with generally accepted accounting principles (GAAP) as described in financial accounting standards (FAS) Statements 71 and 90. The analysis that Electric City Power conducted related to ECP’s portion of the asset impairment also complied with Governmental Accounting Standards Board (GASB) Statement 42. Southern Montana hired experts in asset valuations to make this determination. That determination was reviewed by Southern’s external accountant, as well as Southern’s independent auditor. All reported that the methodology used to determine how much should be written down, as well as the allocation of the costs to ECP and the other Southern members was reasonable. YVEC disputes how the allocation was determined.
With regard to the asset impairment, Ms. Balzarini continued that ECP’s balance sheet has a negative bottom line. It continues to be the case that, as long as ECP is in operation, the revenues collected from ECP customers would bring the deficit balance into a positive balance over time.
WREGIS Account Holder Registration Agreement. Ms. Balzarini explained that WREGIS stands for Western Renewable Energy Generation Information System. WREGIS is a neutral party that collects all the information regarding generating facilities that have been accepted as renewable energy generators. The purchase of energy renewable credits is a cost that is in addition to the cost of energy. In 2005, the legislature made renewable energy credits mandatory for public utilities. In 2007, the legislature modified that so that competitive electricity suppliers, such as ECP, also needed to be in compliance. Renewable energy credits are measured based on the consumption of small and medium sized customers. Large customers are not required to meet the renewable energy standard.
Ms. Balzarini reported that ECP will receive renewable energy credits from the co-gen facility at the Wastewater Treatment Plant, and it has purchased renewable energy credits through Southern that are now on file with WREGIS for 2009.
The waiver request filed on behalf of ECP with the PSC for non-compliance of the renewable energy credits in 2008 was denied. The PSC imposed a penalty against ECP in the approximate amount of $23,000, or $10 per megawatt. The renewable energy credits that were purchased for 2009 cost about $7.50 per megawatt, as well as the handling fees for registration and transferring. The penalty was not significantly higher than what the cost was to purchase renewable energy credits. Ms. Balzarini explained that ECP believed it did not need to comply because its contracts were in place prior to 2007. However, when ECP’s customer contracts were renewed and restated in October, 2007, that took ECP out of the exemption category. With regard to the penalty imposed, ECP has yet to receive the order from the PSC. Upon receipt, ECP has an option to appeal that decision. The difference between the penalty and purchasing renewable energy credits is less than $6,000. After a brief discussion, it was the consensus not to recommend pursuing an appeal. The penalty is an eligible expense to be recovered from customers.
With regard to page 10 of the WREGIS Agreement, Director Ebeling inquired about a schedule of fees. Ms. Balzarini responded that she would obtain the current fees and noted that the fees will change over time and the posted fees are the official fees going forward.
Accept Board Meeting Minutes of November 2, 2009. Lee Ebeling moved, seconded by Olaf Stimac, to approve the November 2, 2009, Board meeting minutes.
Acting Chairman Pancich asked if there were any inquiries from the public. Hearing none, Acting Chairman Pancich called for the vote.
Motion carried 3-0.
NWE Proposed Rates and Adjustments – December. Ms. Balzarini reported that these documents were included for informational purposes.
Burns & McDonnell Report/Recommendations. City Manager Doyon reported that he is attempting to schedule a video conference after the new Commission is seated in January for this Board and the Commissioners to question the consultants regarding their findings.
Lee Ebeling moved, seconded by Olaf Stimac, to postpone action on the Burns & McDonnell report and its recommendations until after the video conference meeting with the consultants and City Commission.
Acting Chairman Pancich asked if there were any inquiries from the public.
Aart Dolman, 3016 Central Avenue, commented that, since this was an action by the City Commission to hire the consultants and the City Commission hasn’t approved or rejected the report, he opined that this Board’s action is premature.
Travis Kavulla, 725 49th Street South, commented that delaying action on the consultants’ report would allow more time to accumulate more facts.
Ron Gessaman, 1006 36th Avenue NE, complimented the Board for delaying action on the report.
Motion carried 3-0.
Great Falls Tribune On-Line Vote Results and Articles of November 25 and 28, 2009, regarding Burns & McDonnell’s Report. Included for review and informational purposes.
Board Terms Expire December 31, 2009; Ebeling and Golie. Director Ebeling reported that he filled the remainder of Dawn Willey’s term after she resigned. Director Ebeling commented that he is interested in being reappointed, but will be out of state on December 15. After a brief discussion regarding the consultants’ recommendations to reduce the number of members on the ECP Board, Ms. Balzarini commented that the Commission would take action at the next meeting on December 15. Director Stimac hoped that both Director Ebeling and Chairman Golie would reapply. If the City Commission chose to reduce the number of Board members, it would have a bigger pool to choose from. Acting Chairman Pancich concurred and added that he would like to see the Board stay together until the City Commission replaced or reappointed members.S&P’s Bond Rating, Follow-Up Memo and General Summary Chart. In response to comments made at the last meeting, Director Ebeling provided information about the BBB bond rating. He clarified that it is an investment grade bond.
Judith Gap Wind Farm. Director Ebeling provided a PowerPoint presentation. He explained the three arms of electric systems are generation, transmission and distribution. The Judith Gap Wind Farm currently has 90 wind turbines on site that produce 135 megawatts. After two years of operation, the net capacity factor is 38%. That equates to an average of 51 megawatts of power on a 24/7 basis sold to NorthWestern Energy at $32 dollars per megawatt hour. The construction costs totaled $180 million, divided by the net deliverable, equates to about $3.5 million per megawatt. He reported that the owner of the wind farm, Invenergy, is a Chicago company started in 2001 and now owns 18 wind farms. Director Ebeling showed and explained slides of the tower, blades and foundation and discussed wind velocity and generator rotor speed. He further showed and explained slides depicting the GE power collector, how it is converted through transformers and collected at a substation for placement on the NWE transmission line.
Montana and Wyoming have the highest wind electricity potential. Montana will always be a net energy exporter. Director Ebeling explained that transmission is, and will continue to be, a problem for a long time.
Due to wind being a dynamic system and very chaotic, Director Ebeling commented that we have to appreciate the difficulty that NWE has in trying to manage wind energy on the system. NWE was required to purchase 31 megawatts of new regulating capacity at a cost of $13 million per year. Due to the spikes in wind production, NWE had to purchase an additional 50 megawatts of regulating capacity to meet the requirements of the FERC and NERC balancing standards.
Director Ebeling concluded that state law requires that 5% of power through 2009 must be renewable energy, 10% between 2010 and 2014, and 15% starting in 2015. He added that the governor’s office currently doesn’t recognize hydro as being renewable.
Acting Chairman Pancich asked if there were any inquiries from the public.
Neil Taylor, 3417 4th Avenue South, congratulated Director Ebeling for an excellent presentation.
Ron Gessaman, 1006 36th Avenue NE, commented that was a great presentation, but believed Director Ebeling overstated the difficulties NWE was having. He asked if the Board could research how Spain was using 28% renewable energy.
Aart Dolman, 3016 Central Avenue, thanked Director Ebeling for his excellent presentation and discussion on realistic issues. He believes this State has a great future in renewable energy. He made reference to education and conservation programs in Europe and Germany.
Handouts from November 2, 2009, meeting. Acting Chairman Pancich noted the handout from Mr. Liebert from the last meeting included in the Board member packets for review and informational purposes.
Public Comment.
Larry Rezentes, commented that he is a CPA, residing at 2208 1st Avenue South. Mr. Rezentes provided a written summary of his comments (scanned PDF).
In conclusion, Mr. Rezentes commented that the citizens should have an opportunity to meet with the consultants face-to-face and objected to the proposed video conference meeting.
Ron Gessaman, 1006 36th Avenue NE, commented that the Tribune poll provided in the Board packet was self selecting and considered junk science. Mr. Gessaman disagreed with Director Ebeling’s comments regarding the BBB rating.
In response to Mr. Gessaman, Ms. Balzarini clarified to the Board that SMEG&T and SME each have a $20 million investment in the coal fired facility.
Kathy Gessaman, 1006 36th Avenue NE, discussed today’s Tribune article regarding two dams proposed in the Beartooth area that would generate about nine megawatts of power. She hoped Great Falls could duplicate that when hydro could be used as a renewable energy source.
ADJOURN: Acting Chairman Pancich adjourned the meeting at 6:45 p.m. Scheduling the date and time for the next meeting will be determined subsequent to the video conference meeting with Burns & McDonnell.
Attest:
Coleen Balzarini, Executive Director/Secretary
Date: ____________________________
Agenda Packet (1.7M scanned PDF)
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