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PUBLIC POWER AGENCY MEETING MINUTES
July 10, 2007 at 4:00 p.m.
Members Present: John Montone, Chairperson, Timothy C. Lattimore, Luke Rybarczyk, William Graney, Krste Biljanoski, and Dennis Zach
Members Absent: Vijay Mital, Mike Luksa
Staff Present: Michael Long and Anthony DeCaro
One vacant position
Meeting of the Public Power Agency was called to order by Chairperson John Montone at 4:00 p.m. on July 10, 2007. Motion to approve the minutes from the May 17, 2007 and April 18, 2007 meetings made by Tim Lattimore and seconded by Dennis Zach and all in favor.
Tony DeCaro discussed the proposal received from The James Leffel & Co., of Springfield, Ohio, manufacturers of Hydraulic Turbines, for the Mill Street Hydro Plant, in the amount of $45,000.00. Proposal was for new parts, refurbishment of existing components and for filed technician to assist in reinstallation. Representative from Leffel came to the site and pond was drained for inspection. Gate mechanism has frozen because the unit has been sitting idle for a long time. There is corrosion in all junctures and several gates partially open due to broken links and rust build up has made the gate mechanism inoperable. Gates need to be removed, cleaned and evaluated for continued use. Connecting rods need be fitted with new bushings.
Also received proposal from Philadelphia Gear of New Castle, Delaware, which ranges from $78,600.00 to $97,020.00. The difference between the two is the proposal for $97,020.00 would remove existing gearbox and transport to Delaware regional service center, where they would remove gearbox lid, rig existing gear elements out of casing, inspect all internals for wear, check housing and housing bore conditions, clean and prep gearbox housing for reassembly, install gear elements, install new bearings as required and perform internal contact/backlash checks, reassemble gear housing lid, perform a no-load spin test and document results, paint gearbox and transport back to Auburn where it would be reinstalled and connected to the input and output couplings, check alignments and document, perform a no-load spin test to
unit to unit to verify operation and a “job walk” upon completion of the project. Basically the difference is Philadelphia Gear would send the gearbox to Delaware and the proposal for $78,600.00 would be to work on the gearbox on site.
John Montone stated he received a letter from the State turned down again for money for the system study for hiring the consultant, have to go to City Council request funding, do a Request for Proposal from different consultants and see what the cost is going to be, a distribution system study. Need to get this going it has been 3 years to get something done here. We need to get a proposal from consulting engineers to tell us what they feel the system is worth and so forth, so we will have this information when we go to City Council.
Mike Long stated that we received a grant in the amount of $34,750 for our Qualities Communities Management to try to do some energy management. Met with John Hamer from NYPA, talked about hydros, the digester project, we didn’t mention to him the combined heat and power units similar to the unit that is installed at the Springside. This is a unit that makes heat and also electricity, can be geared down small enough to put in residential homes. Set up some structure and offer it to the public and they could pay for it through their tax structure, like you put your sidewalks on your taxes. That would have to go before City Council. We may be able to get NYSERDA grants that we could offer to the public. It is a special built internal combustion engine, very quiet and very clean. Also talked about putting solar panels on the parking garage, direct connect to City Hall to provide power. Also talked about Power to Schools, he did a presentation on at the Holiday Inn, but the
Auburn School District didn’t attend, way to help lower their costs. Made suggestion through the agency to approach the School, City Council and who ever else would be involved and work it through the Auburn Public Power Agency, will also help with financing.
ECOTS has put proposal together, talking with Constellation Energy, Schmack Bio Gas and Central Hudson, three proposals ECOTS put together to them to answer back to us. We have interviewed Constellation today telling us what they are going to do for us, build, own and operate. Bill went over the basic contract and gave each member a copy of the contract to review on their own. A couple of catch clauses that you need to be aware of, in order for this to work, two things should happen, guaranteed power supply at 3 megawatts, if the plant is down, has to bring power to the City at the cost quoted for the project, so he has to buy the power on the market on the other side of that you have to bring the gas supply, if you don’t bring the gas supply you have to buy the natural gas. Told them when
preparing the proposal to assume that gas was there 100% of the time. Turns out no one followed our package the way we put it out, but everyone came pretty close. We cannot give you the actual proposals we have an agreement that we keep them confidential, but information inside those agreements will share with you the important parts. RFQ process was pretty complicated, had to get specifications for the project, had to fill out budgets, had to sign confidentiality agreements, needed draft agreements which basically what this is. Has not been reviewed by City attorney, you need to understand that this is ours, also need to know we worked on this and didn’t have time to do final proofing before it went out, had limited proofing. We responded to questions and clarifications from different bidders. We have reviewed the RFQ proposals completely. Done some preliminary analysis, staring interview process, put some final economics together
and we are done. Discussed the proposals that were submitted by Constellation Energy, Central Hudson and Schmack Bio Gas. Schmack Bio Gas is geared towards the digester and Constellation and Central Hudson are geared towards the electricity end of it. Schmack is not able to take advantage of some of the savings that the other guys can and I don’t think Schmack is getting credit for some of the savings that the others did. Production tax credit that is being made because the investments are owned by a private company is being shared by Central Hudson and Constellation and it doesn’t appear to be shared by Schmack. Bill stated that he believes that negotiations with each one of these parties and the difficulty of the final contract varies. Schmack is just bringing over the German technology, they have experience in Akron, but they are hungry, the numbers they are putting there they don’t have any risk, they are
ready to negotiate. Central Hudson defined their contract, spent a lot of time defining details in their contract, contract pretty close to ready to go. Constellation will take a little more work. Not a huge amount of time but a little more work in negotiation. Have some things weighing against each other. It appears that Constellation from their experience in these types of projects that they are pretty comfortable in their numbers. Bill’s recommendation to City, make a decision on who you want, remember they are long term partners you have 15 years of marriage here. Put your contract together, sign it, sign it based on budget numbers, make sure your contract adjusts to real numbers, don’t allow them to set a fixed fee on there, make sure you understand the items that go into each one of those when you are signing a contract. If you set up the cost controls, it gives you what you are looking for and now what will happen
is that budget that is in this preliminary will go to real numbers. Right now we don’t know if our numbers are real, they are pretty high to be honest, only way to get through this and make sure you are not cut short. As it winds down you don’t want to be renegotiating price. Locking in a single number may not be to the City’s advantage. Luke asked about the background information do we have on these 3 companies as far as what they have done and the types of relationships they have had with other people. We have information on Constellation, Central Hudson has met with staff already and will be meeting with Schmack and between the proposals and the previous information provided there is a pretty good feel for who is strong and who is not. Luke stated we want the best of the proposals. Want a blend of costs and ability to work with them as a partner. Central Hudson has been thorough in answering all the details.
Constellation is like a broad brush giving the general. Will handle that in negotiations. People running this plant are going to be important and we are recommending that hire City employees to do the daily check on the generators which would take about 2 hours. Digester is going to be an 8 hour day because you have deliveries coming in and you want to make sure that is properly handled and done right and maybe it is the digester employees that you hire that will do this other work.
Bill stated his personal opinion and said that is just it, an opinion, Constellation wants this project. Thinks they need this project to start their business in New York. Giving a pretty good deal on the numbers and you are sharing their benefits.
Mike stated that he has spoken to Mark, the City Manager to put this item on a work session and Mark stated if there was a presentation, doesn’t want to just generally talk about it, would like a power point presentation. Could go into Executive Session and discuss more in detail.
Motion to adjourn made by Luke Rybarczyk and seconded by Krste Biljanoski at 5:30 p.m. Next meeting is Thursday, August 2, 2007 at 4:00 p.m. in the third floor training room at City Hall.
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