CALL TO ORDER: 5:49 P.M.
ROLL CALL: City Commissioners present: Randy Gray, Bill Beecher, Diane Jovick-Kuntz and John Rosenbaum. Commissioner Sandy Hinz was excused. Also present were the City Manager, Assistant City Manager, City Attorney, Directors of Community Development, Fiscal Services, Library, Planning, Public Works, Fire Chief, Acting Director of Park and Recreation, Acting Chief of Police, and the Deputy City Clerk.
Administrative Officer Jordan Love presented to the Commission an update on the City's involvement in the history of how Electric City Power was established. In June of 2003, Northwestern Energy unilaterally canceled supply contracts with Montana cities and schools. In August of 2003, Electric City Power was established by ordinance, and in October, the City joined Southern Montana Electric Generation and Transmission Cooperative (SME). The City applied for its license and, in October 2004, received its license from the Montana Public Service Commission (PSC) to supply electricity to large commercial customers. Then in the spring of 2005, House Bill 642 that would allow the city to become an electric utility and serve its own residents was defeated in the Montana House of Representatives.
Mr. Love stated that the purpose of the electrical energy utility was to secure a stable, affordable source of locally controlled electricity for the community. He added the key to reaching their goal was to focus on energy supply and this was where pricing volatility would occur.
Currently, the City's operation was supplying over five megawatts to customers which included the Great Falls Public School District, the Airport Authority, FedEx, and Montana Air National Guard, through 2008. Mr. Love added that the City would begin to add another 10 megawatts (MW) for additional customers in September 2005 and over the following year.
The City submitted a petition to Public Service Commission to operate a small customer supply program. This would include 10-15 small commercial and residential customers representing about 15,000kw for an annual average usage. Mr. Love added that this could be expanded through additional petitions. The City was currently developing a customer base and had a goal to ensure stable and low electric rates for customers by maintaining a reliable electricity supply.
Fiscal Services Director Coleen Balzarini reported the Highwood Station facility total construction cost was estimated at $500,000,000. The City needed to move forward with the option and buy 600 acres for the project. The City agreed to sell raw water to the Highwood Station that was necessary to operate a 250 MW circulating fluidized bed coal fired electric generating plant. This would allow 3,200 gallons per minute from the City's available water rights to be used to provide industrial water to be used in connection with the operation of the Highwood Station.
City Manager John Lawton stated that the City has thirteen separate water rights of reservation and the City had not touched majority of the water rights. Currently the City was using twenty percent or less of the total of all reservations.
Southern Montana Electric (SME) and the City are working along with rights specialist Dave Schmidt of Helena and Harley Harris, water rights attorney with Luxan and Murfitt on an application for the City. They were looking at the inventory of the water rights and monitoring the effects it would have to the City. He added that SME is a customer using City water.
Mr. Lawton reported on the air quality permit that requires twelve months of monitoring. The City anticipated approval to submit preliminary data within two months. He added that an Environmental Impact Study (EIS) provided a scoping meeting which allowed a thirty day comment period. A short list of contractors were reviewed and approved by Rural Utilities Service (RUS) and SME. Mr. Lawton explained the Co-op financing for Highwood Station. He added that the interim financing of $12,000,000, required approval from RUS. This would allow the starting of preliminary design and permitting, which was approved. CoBank would provide interim financing through various stages of development. The financing would be fixed rate. RUS would provide take-out financing for the co-ops' portion of the plant for long term financing.
Electric City Power's first step in financing the Highwood station was hiring a financial advisor. Dashen and Associates was recommended by DA Davidson. The second step was a multiple financial structure. The City had interviewed five bond councils. The two that were chosen were Chapman and Culter, LLP and Dorsey and Whitney LLP. Other electricity related projects included: RW Beck analysis and WiFi on light system poles. The City is looking into ownership of the street lights and financing of future lighting. A property owner would pay for fifteen years for the street lights and after the fifteen years the street light would be paid for, thus ending the ongoing payment. The Commission would be asked to pass the policy.
Mr. Lawton provided information on financing issues the City faces and a solution on how to solve them. He added that this was a doable project and that 75 percent of the project was already financed through partners throughout the state. He stated that a large customer base was already in place and the City planned to expand its base to include a medium and small customers.
Mr. Lawton stated that the immediate needs included a roadmap plan to continue building customer base, retail and wholesale. The City needed to develop a detailed format agreement with SME, needed a final decision on 40 or 60 MW, and to enable an ordinance revision for Electric City Power. The purpose was to secure a stable, affordable source of locally controlled electrical energy for the community. He added that the City needed to focus on energy supply and that this was where the price volatility would occur.
Commissioner Beecher stated that there needed to be a review of the water rights to receive right opinions and an update on the development process. He added that the information provided was good and the City needed to be taking advantage of the project. Mayor Gray suggested an analysis on the down side development in the next fifteen years. City Manager John Lawton suggested having the water right experts, Dave Schmidt and Harley Harris discuss technology issues. Mayor Gray suggested having a format where the Commission would be able to ask questions.
Michael Winters updated the Commission on the Veteran's Memorial. He stated they were looking at a completion date towards the end of September 2005. On September 11, 2005, they would be having a ceremony and at that time would like to turn the project over to the City with no financial liability obligations. He included that everything had been paid for as they had proceeded throughout the project. Mr. Winters stated that the Veterans had sold over 2000 tiles. They were adding a secondary wall on the north side with 900 tiles with room for expansion to the wall. The Veterans had a statute of an angel created that was the focal point of the memorial and profited from sales of the miniature angels that were sold.
The Veterans were hoping to put a trust in place for ongoing accumulation of money. Mr. Winters stated that they had not received any financial aid from the government and that the project was a community effort. All their proceeds had come from the community.
Mayor Gray asked Mr. Winters to meet with him on the trust issue, and he would give him some direction and also, if he would be willing to present the update at a Commission meeting where it would be presented live on channel 7 for the public viewing.
There being no further business to come before the Commission, the regular work session of July 19, 2005, adjourned at 6:52 p.m.
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