JOURNAL OF JOINT WORK SESSION MEETING OF THE GREAT FALLS CITY COMMISSION AND ELECTRIC CITY POWER BOARD OF DIRECTORS
February 1, 2010

CALL TO ORDER: 6:30 p.m.

ROLL CALL: City Commissioners present: Michael J. Winters, Robert Jones, Bill Bronson, Mary Jolley and Fred Burow. Electric City Power Board of Directors present: George Golie, Bob Pancich, Bill Ryan, Lee Ebeling and Olaf Stimac.

Also present were the City Manager, Acting City Attorney, Director of Fiscal Services/Executive Director of ECP, Police Chief and the City Clerk.

Prior to beginning the meeting, Mayor Winters announced that Commissioner Bill Bronson would chair this joint meeting.

Commissioner Bronson commented that the principal focus of discussion at this meeting will be to discuss questions to submit regarding the Burns & McDonnell report.

Commissioner Bronson reported that Commissioner Jolley submitted questions, he had similar questions that he hadn’t yet shared, and that Mayor Winters had one question to add. Commissioner Burow’s primary concern was not keeping everything open to the public

Director Ryan suggested that the Board’s questions be combined with the Commission’s.

Commissioner Burow discussed the Burns & McDonnell recommendation of hiring a staff accountant, or someone similar to a general manager, that knows the power industry and the costs associated therewith. In response, Director Ryan discussed the different aspects of the power business and different areas of expertise.

Mayor Winters commented that he wants Burns & McDonnell to address violation of Ordinance 2925 and alternatives, and what is to be gained by reducing the ECP Board to three members.

Commissioner Jolley added that she would like the consultants to comment about the 40 year contract.

Director Stimac inquired why the Commission hasn’t amended Ordinance 2925 so that it could have been complied with. In response, Commissioner Jolley commented that the Commission relied on information it was given at the time and thought ECP would support itself. After further discussion about decisions of the prior Commission and the recommendations of Burns & McDonnell, Commissioner Bronson noted that it is a policy decision that will ultimately have to be made by the Commission.

Since the goal of this session was to gather questions, Commissioner Bronson volunteered to merge the questions or comments in a form to make available for everyone to review. He would like the questions submitted to Burns and McDonnell prior to the February 18, 2010, meeting.

Commissioner Jones discussed the timing of the Burns & McDonnell meeting and the next ECP Board meeting and what direction the ECP Board needs from the Commission now regarding the contracts. Executive Director Coleen Balzarini noted her concern of discussing a 10% increase with the customers and not knowing the Commission’s position on the future of Electric City Power.

Director Pancich discussed the recommendation not to liquidate ECP until 2019. The ECP Board needs direction from the Commission before discussing contracts, fee increases and green energy with customers.

Chairman Golie added that everyone needs to understand that there is a contract for a predictable supply of power at a predictable price until 2019. That is an enticement to customers.

Commissioner Jolley’s recommendation was to think about un-winding ECP.

In response, Commissioner Bronson commented that will ultimately be a policy decision the City Commission will have to make. The subject right now is the City Commission providing direction to the ECP Board to carry out the day-to-day operations of ECP.

Commissioner Burow commented that if contracts are not going to be renewed in 2011, the one year notice deadline to customers is June, 2010.

In response to Commissioner Burow’s comments about ECP operating in the red, Director Ryan explained legislative sessions and subsequent vast changes that affected ECP and its ability to negotiate contracts. The methodology of billing subsequently changed and the ECP Board recommended the blended rate.

Director Ebeling noted that ECP does have strong negotiating points to make to its customers. It will be a marketing effort and can be done with a plan, but it all needs to start with the Commission’s long range plan for the City of Great Falls.

Commissioner Bronson inquired what the last possible date was for ECP to start discussions with its customers. Director Ryan suggested first completing the list of questions to increase everyone’s understanding and comfort level on what recommendations should or shouldn’t be made. After that, the parties need to discuss the structure of how ECP will operate, and authority of the Board or a manager.

Ms. Balzarini added that the sooner negotiations get started with customers the better. At a minimum, she requested direction regarding discussions on the renewable energy component of the rates.

Commissioner Jones noted that every month makes a difference on the financial report.

Mayor Winters suggested joint meetings for the next couple of months. June should be a starting date for some solid direction.

Commissioner Bronson noted, and Acting City Attorney Chad Parker concurred, that there wasn’t a problem with Ms. Balzarini, as the Executive Director of ECP, having preliminary, informational discussions with customers on the issue of renewable energy credits, and broad discussions about everything else. As a result, no final decisions will be made until it comes back before this Board and Commission, is properly noticed and the public has a chance to comment, and the Board and Commission have a chance to deliberate on it.

Ms. Balzarini summarized that she would make initial contact with customers, talk about renewable energy credits and potential rate increases prior to the expiration of the fixed-rate contracts in 2011. She reminded everyone that the pricing goes to a cost plus scenario after 2011.

Director Stimac requested that the question be submitted to Burns & McDonnell regarding why the Commission didn’t change the ordinance so that it was in compliance.

On another matter, Director Ryan commented that he was approached by a group requesting to do a presentation about green energy. Everyone, except Commissioner Jolley, agreed that Director Ryan should provide the information to the Board and Commission for a future presentation.

Commissioner Bronson welcomed comments from the public.

Aart Dolman, 3016 Central Avenue, requested that Burns and McDonnell include footnotes where they obtained their sources of information in reaching their decisions. Commissioner Bronson responded that he would add that to the questions and comments to submit to Burns and McDonnell.

Larry Rezentes, 2208 1st Avenue North, commented that he was a CPA. He suggested the parties re-establish the premise under which ECP was operating. He reported that he looks at liquidation analysis very regularly and suggested what needs to happen is the assets and liabilities of ECP need to be looked at, as well as what exposure could exist to the City. Mr. Rezentes opined that the voters changed the composition of the City Commission with the goal in mind that the Ordinance establishing ECP would be amended. His view is it would be a violation of public trust if this Commission continues to violate Ordinance 2925.

Mayor Winters inquired if Mr. Rezentes had an alternative to be in compliance with Ordinance 2925.

Mr. Rezentes continued that, as long as the City is in violation of the Ordinance, the solution is to shut down ECP.

Mayor Winters responded that over the past several months, ECP has been working in the black.

Mr. Rezentes requested Burns & McDonnell fulfill the elements of the work they were called upon to do. He thinks the liquidation analysis that Burns & McDonnell prepared was inadequate, and separate from a shut down plan, it should reflect on an asset and liability basis and on a specific question basis of the exposure to the City.

Ron Gessaman, 1006 36th Avenue NE, recommended that the new members of the Commission be provided with a copy of all the ECP customer rates through December, 2010. He believes there will be a customer relations problem when the Executive Director negotiates contracts if no contingencies are provided. Some of the contracts he looked at were stamped superseded. He doesn’t remember see anything about renewable energy credits and ECP being allowed to recover the costs in said contracts.

Jim McCollum, 2828 Central Avenue West, suggested that the City not do to its customers what NorthWestern Energy did to Great Falls when it is time to re-negotiate and make decisions about ECP.

ADJOURN

There being no further discussion, Commissioner Bronson adjourned the joint work session meeting of February 1, 2010 at 7:37 p.m.