Electric City Power, Incorporated

JOURNAL OF BOARD PROCEEDINGS
February 1, 2010

Revised Draft

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, Vice Chair Bill Ryan, Lee Ebeling, Robert Pancich, Olaf Stimac. Also present were the ECPI Executive Director, City Manager, Acting City Attorney, City Clerk, Fiscal Services Administrative Assistant, Mayor Winters, City Commissioners Bronson, Jolley, Jones and Burow.

Prior to the start of meeting ECP Executive Director informed the Board at this time Krista Artis, the Fiscal Services Administrative Assistant will begin taking over minutes from this meeting forward. Lisa will assist in the transition including assembling the Board packets.

A.  EXECUTIVE DIRECTOR REPORTS

Executive Director Coleen Balzarini updated the Board on the following:

Financials.

• Fiscal Yearend Audit with the Electric City Power financials extracted and Special Emphasis report from the auditors regarding ECP was provided in the current Board packet to get reports noted on the record. The Board was provided electronic copies earlier.

Chairman Golie asked if any Board members have any questions regarding these documents. There were no questions at that time.

Ms Balzarini provided handouts of the Financials for YTD November and December 2009 with detailed source materials. The detailed information is typically posted on the website only, but due to time constraints, they were handed out during the meeting and would be posted online at a later date. Balance Sheet, Income Statement and cash flow statement for November:

• Notes to the Financials are not included but Ms Balzarini will work to get those updated and to the Board for the March Meeting.
• November highlights include: Cost of Renewable Energy credits for the first half of calendar year 2009 in the amount of $20,336.76. Net loss for November 2009 was $34,954. YTD from July to November shows a net gain of $48,890.
• December highlights include: Cost of Renewable Energy credits for the second half of calendar year 2009 in the amount $20,336.76. Expense for the penalty for calendar year 2008 in the amount of $23,260 paid to the Department of Revenue as ordered by the Public Service Commission. The net loss for December 2009 is $57,697, with an YTD net loss from July to December in the amount of $8,807.

Ms. Balzarini will research to determine if prior period adjustments will need to be done to reflect these expenses in the correct accounting periods.

Chairman Golie asked if any Board members have questions regarding these documents.

Director Pancich inquired if we were able to recover the cost of the Renewable Energy from ECP customers. Ms Balzarini affirmed that we would but we would need to contact the customers and explain costs.

Renewable Energy Credits (REC’s).

• For 2008 REC’s were not purchased. Instead a penalty was paid of $10 per megawatt. 5% of ECP’s consumption had to be matched to renewable energy credits. In 2009 ECP acquired the needed energy credits for less than $8 per megawatt. In 2010 the current market price for REC’s are running between $20 and $30 per megawatt. ECP is required to have 10% of its portfolio from REC purchases. If REC’s cannot be purchased for around $10 per megawatt, then it would be cheaper to pay the penalty rather than purchase the REC’s. The penalty is remitted to the Department of Revenue and they in turn release the funds to The Low Income Energy Assistance programs (LIEAP).

Chairman Golie noted that it would make sense for the penalty to go to consumers here in Great Falls. Ms Balzarini noted that the LIEAP program is a statewide program and benefits all eligible energy consumers including Southern’s cooperative members. She is in the process of inquiring if the penalties we pay can be directed into the LIEAP district where our cooperative partners reside.

Chairman Golie asked if any Board members have questions. There were no questions at that time.

ECP Energy Contracts.

• Page 4, shows a list of contracts between ECP and current customers. Ms Balzarini explained that each contract may have slightly different terms: such as the Great Falls School District cannot sign a contract longer than five years and some have requested shorter terms than the 2042 date. There are fixed prices on the contracts with some allowing 1 percent increase each year or some have a flat price. Each contract needs to be watched to determine the duties and obligations of ECP and its customers.
• Page 5, shows the contracts between ECP and SME. Ms Balzarini noted the transition from the pass thru rates down to the transition and into the blended rate. Southern has purchased energy supply contracts sufficient for all of its members including ECP thru 2019.

Chairman Golie asked Ms Balzarini to provide the price of the power in the contracts. Ms. Balzarini responded that there is no one set price. It would depend on variables such as today’s dollar verses tomorrow’s dollars. Chairman Golie then asked if the prices will provide a predictable, competitive price for our customers in which Ms Balzarini affirmed. It was also noted that the contracts will not have a carbon tax added thru 2016.

Chairman Golie asked if any Board members have questions.

Director Pancich made an observation to the Burns and McDonnell report. With a 10% increase as suggested thru in the Burns and McDonnell’s report there may be some customers why who would receive a 10% increase while others would not have an increase at all. Ms Balzarini noted that it is a possibility. The customers would need to be approached individually regarding contract amendments.

Director Pancich asked Ms Balzarini as to when would ECP be looking at renegotiation. Ms Balzarini noted she is looking for direction from the board and the City Commission before approaching customers.

Director Stimac inquired as to the process envisioned to request a 10% increase and requested discussion and a decision during the joint meeting following the regular ECP board meeting. Chairman Golie suggested such a discussion and consideration should occur during the joint meeting.

Southern Board Motions

• Ms Balzarini provided an overview of proposed motions received from the Southern Montana Board meeting of January 22, 2010. Motions were in regard to appraisal of Highwood Generating Plant assets and the possibility of transferring the assets from SME to Southern. The customers are with Southern so potential financing entities would like the assets to also reside with Southern. The other motion was to acknowledge SME would consider leasing the land to Southern.
• A special meeting will be held in February. The City Commission will need to consider the appointing of a designee to attend this special meeting.

Chairman Golie inquired about a cost associated with the transferring the assets. Ms Balzarini acknowledged Southern will be acquiring the assets and additional costs will be the responsibility of four existing co-ops that have continued on with the construction of the facility. Our investment will remain the same.

Director Pancich clarified that The City of Great Falls is not one of the four co-ops continuing with the project at this time.

YVEC vs. Southern Montana Electric Generation and Transmission

• Requests for information were sent out by Yellowstone Valley Electric Cooperative. The City and Electric City Power have responded to the requests. Some of the other member Cooperatives have responded and the documents will be distributed in next month’s board packets.

PSC Chair Greg Jergeson’s report and related communications

• Executive Director Balzarini noted Communications from PSC Chair Jergeson, Director Pancich and Travis Kavulla were included in the Board packets for the Board’s review.

B.  NEW BUSINESS

Accept Board Meeting Minutes of December 7, 2009.  Bill Ryan moved, seconded by Lee Ebeling, to approve the December 7, 2009 Board meeting minutes.

Chairman Golie asked if they were any inquiries from the public.

Ron Gessaman, 1006 36th Avenue NE, provided some literature on wind turbines in Spain.

Chairman Golie called for vote.

Motion carried 5-0.

Election of Chair and Vice-Chair.  Director Pancich moved to nominate Lee Ebeling as Chair; motion was seconded by Director Ryan. Bill Ryan moved to nominate Ole Stimac as Vice-Chair; motion was seconded by Director Ebeling.

Motion carried 5-0

Chairman Golie asked if they were any inquiries from the public.

Ron Gessaman, 1006 36th Avenue NE, stated motion was illegal. Bylaws state new Chair and Vice-Chair are to be appointed elected during January Board meeting. He provided handout of the bylaws. Chairman Golie responded to the fact of January’s meeting being cancelled and the election needed to be moved to the February meeting.

C.  BOARD MEMBER REPORTS

Meeting Minutes for January 11, 2010 Joint Meeting between Great Falls City Commission and Electric City Power Board of Directors.

Director Pancich inquired if any action is required by the ECP Board in regards to the joint minutes. Executive Director Balzarini clarified; the special meeting was called by the City Commission so The City Commission is responsible to any necessary action in regards to the minutes.

D.  GENERAL AND PUBLIC COMMUNICATIONS

Chairman Golie asked if there were any comments regarding the General and Public Communications Agenda items.

Executive Director spoke to the WREGIS fee Matrix. This was included at the request of Director Ebeling at the January meeting.

Public Comment.

Larry Rezentes, 2208 1st Avenue N, Provided an analysis of Electric City Power and a written summary of his comments.

In Conclusion, Mr. Rezentes commented on ECP continuing to violate City ordinance 2925. The law requires ECP to be self sustaining.

Neal Taylor, 3417 4th Avenue S, inquired into the motions before Southern Montana Board. Ms. Balzarini affirmed both motions were acted upon during the January 22, 2010 meeting. Ms. Balzarini voted in favor of both motions.

Travis Kavulla, 725 49th Street S, spoke to the rate increases to ECP customers and the feasibility of the customers accepting the increases.

Ron Gessaman, 1006 36th Avenue NE, inquired if a statement had been provided noting savings for the ECP Pilot Program customers. Ms. Balzarini noted the analysis was done and the Pilot Program showed no savings so no report was distributed.

Mr. Gessaman also commented on article from the Great Falls Tribune dated January 13, 2010 reporting on Electric Companies providing contributions to the Energy Share Montana Program. He noted that Southern and Electric City Power were not on this list. The Article was provided by Mr. Gessaman.

ADJOURN: Chairman Golie adjourned the meeting at 6:25 P.M. The next meeting under the new Chair is set for March 1, 2010 at 5:30 in the Gibson Room of the Great Falls Civic Center.