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PUBLIC POWER AGENCY MEETING MINUTES
January 18, 2006
Members Present: Stephen Rich, Chairperson, Frank DeOrio, Timothy C. Lattimore, Robert M. Buschman, Robert Bergan, James Dacey and William Graney
Staff Present: Nancy Hussey and Michael Long
Members Absent: Vijay Mital (called out west), Mike Luksa (on vacation)
Public Power Agency Meeting of January 18,2006 called to order by Stephen Rich at 7:30 a.m. Steve welcomed Bill Graney as a new member of the agency. Review of the minutes of November 23, 2005. Any corrections, changes or additions to the minutes. Motion to approve minutes made by Frank DeOrio, seconded by Rob Buschman – all in favor.
Steve Rich called for presentation of old business. Nancy Hussey reported on the status of the Meridian pipeline. Reason we haven’t heard from them is they went through a merger and contact person Leisa Monk is still there and contact has been re-established. Meridian has sent a representative to the landfill to make sure there are no buildings on the pipeline and we should have a response by next week.
Frank DeOrio handed out copies of the Request for Statement for Qualifications that have responded to the invitation. First page shows who were asked and out of 14, 2 were recused, Acres International and Black & Veatch as they have dealings with NYSEG. Seven out of (12) responded and the sub-committee has not met as yet as Mike Luksa is out of town but should this coming week and the committee will select 3 and schedule the interviews. Bill Graney asked why only three 3 would be interviewed and Steve stated that the agency agreed to that and that by establishing a sub-committee to go over the qualifications and report back to them would be a better use of everyone’s time. This is a good cross section of the committee to review the qualifications and to make a recommendation. Frank
briefly explained the rating system that will be used to select the three firms. The top three firms will then be interviewed by all the members of the agency.
Nancy Hussey stated that there was an item that needed to be discussed in Executive Session. Rob Buschman made a motion to adjourn for Executive Session, seconded by Jim Dacey.
Meeting resumed – Steve asked that the agency go through the goals and go through the things we need to do and thought this could go hand in hand with next item on the agenda and asked Mike Long to give up an up date. We have had past presentations on low flow and power generation and other things that we have been exploring. I think we are all fairly versed on what is happening with the sludge and with that I would like to open up for discussion, get people’s thoughts and move along from there.
Bob Bergan stated that he was very impressed with the summary that Mike Long presented to the City Council and to this group. It put together a wide variety of sound projects that the we are working. My concern is that we don’t spend an undue amount of our resources or time on the project that has dominated our discussion and that is the municipalization of the NYSEG system to the extent it takes away resources from the other practical projects that will help the citizens in this City. As we know the City has a fine line of resources in time, expertise, money and my concern as a board member is how we allocate or advise the City to allocate those resources. Steve asked Mike Long to respond as we are combining these two agenda items. Mike stated that the list that he
and Frank started was a list to give to Senator Clinton on different issues that we were working on. It became kind of a way to present information to different organizations as to what we were involved in. Dave Laney was at last week’s Council meeting and he gave an update on couple of the projects they are working on right now. The pay back for the combined heat/power project really with the old numbers that were developed in 2005 gives about a 4 year pay back and after we were able to get a couple more grants and we gotten down to a 2 – 2 ½ year pay back which is going to save us over $900,000 a year after the debt is retired. Bob Bergan asked status and Mike stated that Frank just finished the air testing and it went to the engineers so they can develop the turbines. Frank stated they hope to have a 90% design review set of plans with the next 3 months. That combined with the construction schedule shows that we could be
making energy as early as spring 2008. Mike stated that part of the problem with the timing of this project is that they have to build a specific system for this location, not something you can take off the shelf. We have received a $1 million dollar grant from NYSERDA and on this Thursday’s agenda is a grant from Senator Clinton and Senator Schumer from the Department of Energy and Congressman Boehlert has announced a $900,000 grant for this project. Frank stated it reduced the project to just under $2.6 million.
Bob Bergan stated that one of the items on the summary was the Energy Master Plan and it makes a great deal of sense and working with NYPA to complete a comprehensive power study of all our facilities and buildings and applying for a grant from NYSERDA and asked the status of the study. Mike Long said that the Mayor, Councilor Graney and Mike visited NYSERDA two weeks ago and we went through the plan with Peter Smith, Executive Director and thanked him for the $1 million dollars for the combined heat/power project and they have also been very generous in some smaller grants. They seemed very excited about the types of things that we are doing. Bio-diesel, bio-fuel that is red hot right now and if we could put a project together with that right now, they are pushing in that direction. Bob
Bergan asked where the City was with the comprehensive energy audit. Mike Long stated he spent all day yesterday with a consultant who is doing the electrical analysis of the conservation projects. Part of the project is there are 10 different buildings that they are looking at trying to conserve energy. The way it is structured the energy savings from making these conservation measures will actually help pay for the capital costs. NYPA then bonds and finances the project, we pay them back with our increased savings so it doesn’t cost the City any outlay of cash and this is going to pay for the new geo-thermal system at the Police and Fire stations, which is a little over a $3 million dollar project. There are some conservation issues that they are also doing insulation and weather stripping, electrical generations and back up generators. Part of the plan is when this building was done it was an energy management system that was
installed and it sits in the Engineering Office and what we are trying to do it put together a comprehensive system that all be networked together and some body can take a look at what the flows are at the hydro sites via computer and to actually start to control things with the electrical media that is available today. Steve Rich asked when Dave talked about the various projects, surveys and the things that can be done like motion censors, switches, what wasn’t addressed is how is all this funded? Mike stated that NYPA comes up and does the plans and specs, probably in the next 3 weeks or so we will have their 90% drawings for all those projects. Then they will solicit bids from specific firms who do this type of work, put it out for bid, come back with what the actual costs will be and at that point we have a letter agreement between the City and NYPA to repay the costs associated with the projects. Doesn’t think the City has to
physically bond for the projects but have to do a letter agreement that says we will pay them back a certain schedule over a period of years. Typically they do a 10 year pay back, depends on the scale of projects and how much money is involved. NYPA bonds it, finances it and we pay them back the actual costs. They are a multi-billion dollar corporation so they can get a fairly good interest rate. Steve asked in regard to the Sewage Treatment Plant, how do we determine the period which we are going to pay back whether we do a rapid amortization get rid of the debt or whether we do a lengthy amortization based on the life of the improvements and take incremental statements in our budget, how do we figure that out? Mike stated that NYPA is going to come up with a formula. Frank stated what the authority does is they calculate the savings from the investment and then they utilize the savings over the course of pay back. So basically in
the case of the combined heat/energy plant they will pay that back in less than 2 years, will see rapid savings on the pay back and after that we see exclusive savings. Some of the ones that have a longer pay back period of 12 or 13 years that might be a much smaller savings but that is spread out over 13 years so the savings would allow the pay back.
Rob Buschman stated that we need to start looking at getting an Executive Director. That we go to Council and ask them to set some parameters and a salary and because of the complexities of some of these projects, and the time frames, and undue pressures on people that we need to look at establishing an Executive Director. I think at this point in time we need to approach City Council and get some funding for an Executive Director that would report to us and to expedite some of these projects. With what is going on in the City and the County we need a full time Executive Director. Frank stated it would be hard to support a full time Executive Director without any source of income. Steve suggested the agency put some criteria together by the next meeting and Rob agreed to approach City Council
during the budget process. Rob suggested members email him with suggestions for the next meeting. Mayor stated that if we had a Director he could go out and secure Federal and State moneys, I think it will pay for itself. Mike Long stated the agency may want to considers a model AIDA which is quasi-governmental, but uses City personnel as their staff. Motion from Rob Buschman to explore the merits of bringing on an Executive Director and seconded by Jim Dacey and all in favor.
Mike Long stated that we have had the NYPA looking at existing hydro facilities NYSERDA is interested in funding development for low flow and we were in contact with two engineering firms and Frank and I gave them tours of the facilities and they are interested in trying to fund some information. We should get a report from them in a month or so. Professor Greeley from Philadelphia area came up with a better economic forecast in terms of the numbers and NYSERDA would like us to put together some information. They work on these program opportunity notices or PONS and at the current time they don’t have one available for the hydro, but they anticipate one coming up in a month or two. At that time we will prepare a package that would have them take a look at the evaluation of the actual
study, come up with more conclusive information and present it in terms of the capital portion of it. We spoke with Joe Sayre and he was very interested, this is something they want to promote.
Bob Bergan asked if there was any movement on the proposal to have the State law changed on the net metering issue that was in the summary. It was said that there is pending legislation and net metering and that the City of Auburn would propose legislation to expand the energy to include hydro electric power, electric and gas transmission for municipalities because we are getting so little from NYSEG on what we generate. Are you aware of any movement on that? Tim stated that he and Bill Graney spoke with Senator Wright, head of the Energy Committee, and expressed our interest. Mike Long stated that it will have to be worked through the process.
Mike Long stated that the North Division Street contract is a long term contract, 20 years but we only have 7 years left. Frank stated half the contract is left but after that it drops down to a lower rate. NYSEG takes all the kilowatts up to 800, anything above that they won’t take. Part of the plan is looking at putting distribution lines to supply power to some industries and Frank stated one thing to keep in mind is once you go on power like that, NYSEG’s power supply becomes the backup supply and that comes at quite a premium, the rate per kilowatt is something we are going to have to evaluate, it would be almost 18 to 20¢ a kilowatt. We were looking at that as part of the Water Plant and State Dam Hydro Project.
Mike Long stated that we submitted an application for a grant on the gas well which was through NYSERDA, that project was not approved but we did have a debriefing when we were in Albany. They know there is gas underneath Auburn, but they asked us to come back with a little more detailed information on the drilling and costs and felt confident that they could come up with some assistance. We also have a NYSERDA grant applications in for the Fire/Police geothermal system. Rob Buschman asked if we could buy our own back up generator so we wouldn’t have to use NYSEG. Frank stated you have to remember hydro plants are seasonal, so if you are going to use that power to run the Fire Station down there it makes sense if you have extra power to use it. When you don’t have that power
and hop back on the grid, that power comes at a premium cost.
Mike Long said another project that we are starting to discuss with NYSERDA is taking a look at Casey and Falcon Parks to use some of the methane to replace the chiller at Casey Park. Chiller system is expensive and we talked about going to a heat pump system and we are trying to re-institute that study and we are negotiating with NYSERDA to see if we can generate a little bit of electricity to off set some of those costs there.
Mike Long stated that City Council approved a grant application request and then the County got involved and it is for a Shared Municipal Services Grant to do an evaluation of the electrical distribution system. This application is to the New York Department of State, which is looking for projects to be shared between municipalities and try to have cost savings involved. Application was submitted last Thursday, it is a $100,000 grant that would be applied for the City and the City would have a match of $10,000 for that. The County also included a $100,000 project with a match of $10,000. The overall project is $220,000. One stipulation the County requested is that they participate in the selection of the firms to do the study. The County with the recent tobacco money they received
they have been able to buy down their capital debt, so they have a lot of borrowing capacity. Good opportunity to negotiate a system, who would operate it, who would maintain it, if you would contract it out or do it in house and come up with several different scenarios and decide which way to go or not go at all. Steve Rich stated first off we don’t know if we are going to receive the grant and we are going down this road very rapidly with our RFQ process and all of our work was sent out to analyze the City and his questions are what is the anticipated response time from the State and should we be backing down on our review process, Mike can you bring us up to speed on that? Mike Long stated they already have money appropriated in process. Has not contacted the State as to how many applications they have received, they have a significant amount of money to distribute. Staff has indicated that by June they should have a list of projects
they are going to fund. We are asking for $100,000. Frank asked if it were possible that one political jurisdiction would get the grant and the other wouldn’t? Mike stated the State would fund both together. The City is the lead agency, County subsidiary. Mike stated he provided a list of all the energy projects the City is involved with and it shows that energy is something we have taken a hard look at and this is what we are after. Rob Buschman stated that he would like the City evaluated on its own, there may be some economic situations that the City alone may be able to carry. Mike stated that the anticipated study would look at the City owned system, County owned system, how you would break them apart, but it doesn’t make sense for the County to do it without the City. Mayor said that if we secure this grant, will that free up some money for the Executive Director salary? Frank stated he didn’t think
that grants pay for salaries. Mayor asked if anyone was against have some of the County members on the City board. Steve Rich stated we are not there yet, our RFQ is very specific to the City of Auburn. Jim Dacey asked what would be the benefit to have them on the board. Mike stated that was part of their process, I look at it two different ways; one you can do a City RFQ and start that process but if the grant comes through either you are going to have to go through the whole process again or slow it down a little bit and submit materials back to the firms that submitted and say we also would possibly like to consider including the County. You are going to have two parallel systems; do you slow one down so they match up or do you accelerate one and then do it all over again because you have to include the County? Rob Buschman stated we were told to move forward as fast as we can and I think we should move forward. Frank stated that once
the committee gets down to the three firms, and we could ask them if they want to participate in a County wide project and in the meantime the County should set their criteria. John Montone stated that the County is in agreement with the firms you have contacted. The preliminary study is going to tell you in detail where you are going to go from there, the County and City would look at the distribution lines, the substations and so forth. If you create an island it is going to be difficult for the people who are doing the study to come back with the proper answers. Frank stated that looking at the City of Auburn versus looking at Cayuga County as a separate municipalization it is two complete and different encompassing projects. They require different efforts, different amounts of time. John Montoned stated that the people that have submitted qualifications would agree that they have to look at the overall distribution structure. Frank
stated that they have only been asked to look at the City in the RFQ. John Montone stated you have to look at the distribution system. They will be looking at different areas. The County is in agreement to what you have done to this point, get the right people to do the RFQ and make sure that you have the right idea to move forward. County is 100% on board with this. Jim Dacey made a motion if the County is on board with the people that we sent the RFQ to that a joint letter from the County and the City go to the three firms and inform them that there is a possibility this could be a County-wide and City-wide evaluation. Rob Buschman seconded the motion – all in favor. Frank stated that once we select the consultant we will select the scope of services, which will change now that we are including the County.
Steve Rich asked if there was any other new business and Nancy Hussey stated that she was asked to obtain an opinion from our Bond Counsel and we received it last night and has not had an opportunity to review it. She will review it and make copies and put it on the agenda for next month.
The next meeting is scheduled for Wednesday, February 15, 2006 at 7:30 a.m. Motion to adjourn made by Rob Buschman and seconded by James Dacey.
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