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PUBLIC POWER AGENCY MEETING MINUTES
December 13, 2007 at 4:00 p.m.
Members Present: John Montone, Chairperson, Timothy C. Lattimore, Luke Rybarczyk, William Graney, Vijay Mital, Mike Luksa, Krste Biljanoski
Member Absent: Dennis Zack (called had a conflict)
Staff Present: Michael Long, and Anthony DeCaro, newly elected Mayor Michael Quill
One vacant position
Meeting of the Public Power Agency was called to order by Chairperson John Montone at 4:00 p.m. on December 13, 2007. Motion to approve the minutes from the August 30, 2007 meeting made by Mike Luksa and seconded by Luke Rybarczyk, all in favor.
Meeting started right off with the digester project, there was an award of $500,000 made at the Wastewater Treatment Plant, Senator Schumer came in for that, something that had been in the works for a while. John asked Mike to tell the group about other grants.
Mike Long stated that Kamyar was going to come but due to the weather he couldn’t make it. We started off with New York Power Authority taking a look at developing combined heat and power project for our Wastewater Treatment Plant. At the same time we had a study going on with NYSERDA grant funding to look at the community digester project and that was a two for one special where we got them to look at one for the County and one for the City. As the Department of Energy was approached basically the New York Power Authority did a feasibility study, as you may recall, we are losing a lot of money on natural gas, and what we are trying to do is really stem the cost of running that facility. When the Power Authority did the initial evaluation and came up with an estimate we took that material
and submitted it to the NYSERDA and we were able to get a $1 million dollar grant for that CHP project. We were also able to give that project to Senator Schumer and Clinton and we have a $241,000 Department of Energy grant to get that project moving. What we did was use that for the energy analysis, the engineering feasibility portion of it. As we went from the initial feasibility study to the RFP process we used the Department of Energy for that. We also submitted additional requests to Congressman Boehlert and we got $891,000 from him and so just recently Senator Clinton and Schumer had announced another $500,000 that was approved by the Senate Sub-Committee on Energy and that now has to go before the Congressional Sub-Appropriations Committee for the Congress and when that gets approved then there is a consolidation bill and that is signed by the President. Hopefully that will be effective 10/01/08, so we have about 2 ½ million dollars in
grants, it is $11.6 million the overall project budget right now.
John read parts of a letter from Bill Cetti and it basically said immediately following the signing of all agreements which took place last week, the project was launched by Central Hudson. EOTS working with Central Hudson prepared an RFP, which was sent out to 3 digester companies. These are the companies that are actually bidding on building the digester and we had them here and interviewed them with Central Hudson, they are BioThane, Pure Process System and Schmack. RFP was very comprehensive and included a lot of information about the project site. Responses are due to Central Hudson on December 17th and a meeting with ECOTS and Central Hudson has been scheduled for December 18th to screen the proposals and from that point, this company called Pure Process System doesn’t sound familiar but Bill has been telling us they have a little different technology than the others, German engineering technology. Bill goes on to state that ECOTS believes there is a possibility that
Central Hudson will have completed the contract and proposals by January 15 toward the end of the month. Once contract is executed, a meeting with the agencies and NYSEG will need to be scheduled and we need to attend that meeting too because we are the Public Power entity, we may have a problem with them registering through the ISO because we have got two utility agencies or private utility companies and NYSEG might try to play a game here with franchise agreements, to claim they are the sole provider in this community. Central Hudson is now under CH-Auburn and they are basically going to be providing the power to us and we are going to distribute the power, that is how the contract and agreement reads. Some things we need to get clarified with NYSEG and this is only if we tie this to the grid for extra power and credits, etc. Hopes to have it up and running by the end of next year. ECOTS is now rolled over with Central Hudson acting as quality
control.
Mike stated he believes the way it is set up now we took our $241,000 grant that paid for the engineering stage, now that they are in the construction phase, CH-Auburn is actually going to pay ECOTS for their time spent on the project on our behalf. We will also be able to use them for our legal fees and everything else as part of the negotiation process so that all is being covered through the grants.
John said there should be substantial completion by November deadline that is what the agreement states and up and running by December. Having said all of that we should be in the process, we are still being kept in the loop as far as any meetings with those people. Central Hudson is going to come back here and keep us up to speed, they are going to assign a team to oversee the project and we will be working parallel on some infrastructure, how we are going to distribute this power and we will still be working with ECOTS on that. With the 3 megawatts some of that will be used at the Wastewater Treatment Plant, some at the existing businesses down there, at some point we will need to call those companies that are interested to invite them to talk to see if they are interested in this public power as
opposed to NYSEG power, even if it was on a demand situation. Also to keep a block of that 3 megawatts to advertise for low cost power to whatever industry that moves into Tech Park.
Mike Quill asked if that was new industries in Tech Park? John said a promise was made to the existing ones that are there, but the others yes, would be new. One company is an alternative manufacturer, solar panels. Mike Long has put a package together for them not only for energy but some other things too. But that doesn’t stop us from going out and getting somebody interested in that. The City Manager stated that there are areas in Tech Park that we can expand too on the wetlands issue. John said if we sell this back into the grid and look for the credits of the agency then we can have a right to go to NYSEG and say to them we want that credit to be contributed towards the community. We have to be careful and make the right decisions because right now we have it set up
as distributed generation on site generation as far as that project.
John asked if anyone had any questions on the digester. Kamyar has offered to come in and sit with Mike and Bill and go through the whole process to bring them up to speed. Once we know who the company is and the type of technology that is going to be used, then we will have them in here too. Other thought probably a recommendation from us how that funding when that revenue is established how that will be distributed and establish a budget for this agency, at some point that is going to have to happen. Manager stated that is going to be a way the public can say look I am getting something back here, lowering taxes, lowering this kind of thing, so it will be self-funded but there should be some that we can put towards services and lower the general fund.
Next on the agenda is future projects with Central Hudson – Central Hudson, specifically Sephir Hamilton has made a commitment to us that they are willing to work on the hydro projects and any thing else for that matter, maybe setting up an establishment structuring it just like the digester for the hydros. Tony DeCaro stated he gave Sephir a breakdown sheet, the economics of the project for the last several years for N. Division and for a period of time from 1992 to the time when N. Division went out of service and if you look in the center of this sheet you see that we are actually at a loss of total revenue of about 2.2 million dollars net with the hydro electrics, but if you take out the cost of stabilizing the dams the Mill Street Dam stabilization we earned quite a bit of money, but the dam
stabilization at Mill Street was a federally mandated program because they reclassified that dam as a high hazard and we were mandated to stabilize that dam in a fairly short time frame and decision was made to use the revenue contingency fund from that account to do that work. If you recall there was also some controversy over how the contractor was selected for that, the project had to be re-bid it drove up the cost substantially. It was the excess amounts from that project that caused the total balance of these revenues to be in the negative. We are 2 million behind with net costs for the dam stabilizations but when you remove that you had made quite a bit of money. Manager stated you can’t remove one from the other you are dealing with the old technology, as soon as another government agency says we need to look at this dam and change it this way, we are not making money, you may as well just take the dam down and forget the hydro power. What
I am looking at if we get into hydropower it better be new technology that is not going to be affected by dams or any other agencies that is going to come in here. The one dam a few years ago they made the decision instead of taking it down said keep it and it probably was the wrong decision. Tony stated that part of the problem with that decision was that they wouldn’t let us take it down, first they gave it to us as an option and then DEC stepped in and said you created a habitat behind it. The Manager stated you are always at the mercy of another agency where other types of power haven’t so far. Tony said the situation with that comes down to the fact if you don’t generate power there we still have the fixed cost of the dam maintenance because now we are in a program we have to have the dam examined ever 3 years for ever so we are always at a point where we have to expend revenue at that site and one of the ways to offset that is to try
to generate power there. John said you are talking about Mill Street. Tony said yes and North Division is up and running and has been running since the end of November. We were in a drought situation all summer and around Thanksgiving weekend we reached the point where we could generate power. Power generation was very spotty the first week because of the amount of debris the channel was carrying because of the drought and low water. After we got through that it has been running around the clock. We have been making money and with the weather forecast right now we anticipate being able to make money through the rest of the month and beyond that as long as the water holds out. We are making good revenue at North Division right now. The direct read at the interface of NYSEG they changed the meter so we can’t directly read it, they have to come in with a computer and interface with it to get a reading. Tony stated he wants
John to come and take a look at it. It was changed before we had the transformer accident. John stated we could put a meter on our side, we can’t quantify the figures we are getting from them, and we are at their mercy. John stated we are generating power and getting paid for it until the end of December, where are we with that agreement, we should at least put them on notice. Mike Long stated that there is a power purchase agreement for the North Division Street dam negotiated many years ago. Over the last 4 months we have had 4 or 5 meetings with NYSEG and they keep cancelling meetings. John at one time recommended that we have Jeff Ginzer put them on notice that we need to negotiate that. What happened with the Mill Street dam was there was a power purchase agreement and we were getting about 8 ½ cents a kilowatt hour after the agreement ran out they gave us what they called the avoided cost 2.4 cents, it was a lot less
revenue. Mike stated he has sent emails to a couple different people asking that we meet. John stated we need to get a handle on credits, we don’t know where they have been going. Tony stated from his understanding NYSEG was taking the credits; now that we are an agency we have the ability to take them. John stated any place we can distribute that energy and electric where it is right now into the grid or take it and use the power at the firehouse. In the meantime John will talk with Jeff if the agency wants to do that. Central Hudson is more than willing to enter into a cost of service with them. If we are in default of the agreement, that is why I am wondering what is happening with NYSEG we don’t want to lose something that is rightfully ours. Mike Long stated that we partly wanted the agreement to expire so that we could get the credits ourselves. We do but we don’t want to end up losing revenue because you are
not getting paid for it and $1,900 a day – Tony said it was between $1,500 and $2,000 depending on the load. John stated we need to get some kind of agreement between NYSEG and us just an addendum to the original contract and just extend it for 3 months or so. We don’t want a binding contract for a long period of time. Tony said what is at stake is also the credits. John said we should call Sephir let him assign somebody to this project. Mike said to make a motion to start negotiations with Central Hudson. Vijay made the motion to start negotiations with Central Hudson and seconded by Krste Biljanoski. All in favor.
Tony said the same things apply for Mill Street Dam, should you make a decision to generate power there you would be eligible to earn credits when generating power. Several options to do that have the City do it, have Central Hudson do it as a turnkey, and if you do you want to upgrade the set that you have rather than repair the generation that is there. There are generators out there that are more efficient. The current set was installed in the 1980’s and was out of date when we purchased it that would be one way to go. Auburn Armature estimates repair of the generation set, generation itself and the gear to that including brake would be in the vicinity of $17,000. Next piece is from James Leiffle Company, for them to come to our site and work on the turbine, below water level,
refurbishment of the turbine and this would be cost for materials as listed and reworking at a cost of $42,300. Philadelphia Gear two quotes, last quote for $97,000 that was to remove the gear and sending to Philadelphia, our recommendation that they come and do the work on site. There are extra bearings for this equipment stored at the site which we have examined, Denny Zach has been instrumental in examining the bearing and we discovered about 50% of the bearings are usable. We should look at complete refurbishment with a turnkey operation with someone like Central Hudson. John said what needs to be done is to have an engineering person take a good look at it. I am sure Central Hudson would fund that if we requested that.
Mike Long stated that we have a $3 million dollar grant to start the State Dam, and he also asked that be included in US Army of Engineers scope of work. Concept is once engineering is done and there has been some initial work done by Konski Engineers and some others that have worked on it, have those numbers updated and hopefully bring back to the Army Corp let them put it in their capital budget. Just to refurbish the dam itself.
Tim Lattimore said that when Watertown was here they said after buying all the hardware and fixing up all the dams they return each year $2 million to the General Fund, they get 16 cents soon to go to 32 cents. John said the reason they are getting that because they originally were going to be a public power system and they sold out. Tim continued saying putting us in that position of bargaining is something we want to do. He said he disagreed with the Mill Street Dam being charged against the hydro, they should be charged against the General Fund. Mike stated it is an Enterprise Fund. John stated that the purpose of the agency, we have our established budget, we are making power off the digester and all of these dams comes into the agency funds and then we would probably regulated by the
Public Service Commission, but out of that revenue we would be allowed to put a percentage back into the General Fund.
Last item on the agenda is a recommendation to hire Larsen Engineering out of Rochester for the Sustainable Energy Master Plan. Mike said Larsen Engineers do a lot of sustainable energy and they helped us put together a grant application, which identified several tasks. Comparison of use quantities, distribution systems but not only within City but cooperative project with County, so we have a City and County Power Agency, so it is a cooperative project between the two. We received a $34,515 grant from the Department of State to do a study and basically what we are doing is hiring this engineering firm to be the people to put the package together. Time line in terms of tasks and it is about $15,830, fee that the engineering firm would get. The City and County together have to determine
our matching share, we have to come up with 10% match of the $34,515. Mike Luksa asked what was the NYPA study, was it similar? Mike Long said the New York Power Authority has done a couple different projects. NYPA has agreed to help us with things so we probably will use them as another consultant. Any questions? It is a good project they may come up with ideas that we have not as yet thought about. Going back to the study with the Power Authority, they have appointed a Guy Sliker and he met with the Mayor, Mark, Mike and myself and he talked about solar panels on the parking garage along the roof line, had a lot of innovative ideas and they are willing to fund those projects, but we have to show an initiative and they know the City of Auburn is ahead of the curve on all of these things, so basically what it comes down to is us writing a letter from this agency probably should entertain a motion to do this and get a letter out to them because
they are structured now back similar to the way the Power Authority use to be where they are willing to help communities. The money we got in the first program went just towards energy efficient projects, now we are talking more on a scale of alternative projects they would fund. Luke Rybarczyk made a motion to write a letter and seconded by Vijay Mital, all in favor.
John said on the County level Mayor Lattimore, Mike and John met with Shell Wind Energy is interested in putting a wind farm at a lower grade utility standard up in the Town of Scipio. They are going to put a med tower up to study it and make sure it is feasible do this. How we would be tied in because we are still an agency involved with the County, but the power needs to be put some place. Because it is outside the City area distribution lines it doesn’t stop us from having an area out there to bring back them back if it is feasible but again with the County end of it our distribution lines there are owned by NYSEG, they want to step in make it easier for them by using us or the County for right-of-way situations and so forth and we would end up with the power coming back to this community,
it would be a paper transaction. What happens it is producing the power put in the grid but we are getting credit for it we purchase it through the agency and distribute to the community. They have indicated that they are willing to put the money out for the total system study. Mike Long stated that we had applied for a joint application with the County to basically to do an analysis of all of the electrical distribution system within the entire County, figure out what the value would be and there is a double edged sword there all of sudden you want to purchase it you have a price but you also have a condition report, the other thing is if you don’t purchase it at least you can assess it. We also have the condemnation if you are involved in it and we are not willing to volunteer to do that, we are going to take it on a scale. We tried to hold a meeting with NYSEG month and a half ago on the City taking over the street lighting and it would save a
substantial amount of money for the City, they refused to meet with us. Now we probably need to have Jeff file a motion to intervene in a rate case by doing that it puts pressure on them to say we better starting talking to these people. They know now that Central Hudson is here and they have been ignoring us hoping that this agency would go away, in my opinion.
Motion to adjourn made by Vijay Mital and seconded by Mike Luksa. Meeting adjourned at 5:10 p.m. Next meeting scheduled for Thursday, January 24, 2008 at 4:00 p.m. in the third floor training room.
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