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Water & Power Board
Water and Energy Services Board Meeting
April 08, 2009
Water and Energy Board Room
811 E Red Hills Parkway
St. George, UT
3:00 PM
PRESENT:
Chairman Ross Hurst
Energy Services Director Phillip Solomon
Water Services Director Barry Barnum
Board Member Craig Hammer
Board Member Marge Shakespeare
Board Member Brad Rich-late
Board Member Max Rose
Council Member Jon Pike
Energy Resource Planner Laurie Mangum
Conservation Coordinator René Fleming
Administrative Professional Becky Rivera
Excused:
Finance Director Philip Peterson
Water Services Manager Scott Taylor
Opening:
Chairman Hurst called the meeting to order and welcomed everyone in attendance.
Approval of Minutes
The minutes of January 14, 2009 were reviewed.
Motion:
Board Member Craig Hammer made a motion to approve the minutes with corrections.
Second:
Board Member Max Rose seconded the motion.
Vote:
All voted aye, motion carried.
Review of Financial Statements
Power – February Financial Statement
Energy Services Director Solomon distributed an additional spread sheet to the Board regarding the cash flow for the department. There was some discussion regarding the reduction in revenues and impact fees compared to the previous year.
Energy Services Director Solomon said due to the softening of the energy market for the past three months, sales weren’t as expected. Revenue came in at half of what was anticipated. Operational costs were also cut significantly. Additional capital money was spent due to the Green Valley line being carried over from last year’s budget.
Chairman Hurst asked about the status of the 35 million dollar bond regarding the Millcreek Generation Facility (MFG).
Energy Services Director Solomon said, to date approximately twelve payments have been made to GE for the turbine/generator set amounting to about 17 million dollars.
Water – February Financial Statement
Water Services Director Barnum asked the Board to be excused early in order to meet with City Manager Gary Esplin. Chairman Hurst approved the request.
Water Services Director Barnum said the month of February was very comparable to February of last year. The increase in revenue was mainly due to intensive industrial use and not residential use. The City is providing construction water for the new Southern Parkway and the new Airport.
Water Services Director Barnum said expenses are down. Operating income loss is also down compared to last year. Non-operating expenses show a credit because of a payment from the City of Ivins for regional water usage. On a year-to-date basis there’s more than a million dollar increase in costs for distribution and transmission, which is due to the water line for the Airport and Fort Peirce Industrial Park pump station.
Board Member Marge Shakespeare arrived at 3:20 p.m.
Water – Staff Reports
New Airport Water Line and Tank – The water line is in and temporarily functioning with a diesel pump due to the easement transaction with the School and Institutional Trust Lands Association (SITLA). Payment has been made to Dixie Escalante Electric for the installation of the power line for the new pump station. A bid for $1,137,944 from Sunrock, which is the low bidder, will be submitted to the City Council regarding the three million gallon water tank.
West Side Improvement – Is currently under design and still progressing; bi-weekly meetings continue with the City of Ivins and the Washington County Water Conservancy District (WCWCD). There’s a good possibility the City of Santa Clara will benefit from the regional water since it has been determined their needs exceed their capacity. The WCWCD will handle all billing and tracking of water and how much is being used by each entity.
Chairman Hurst asked if the City was going to bond for the improvement.
Water Services Director Barnum said the Division of Drinking Water has promised a bond to the City at a good interest rate.
Questions were asked about the City of Santa Clara and their participation in the project.
Water Services Director Barnum said the City of Santa Clara has been using regional water for the past couple years, but only for blending purposes. Now, the City of Santa Clara is in need of water and will pay their fair share.
Efforts to Obtain Grant Money for Water and Reuse Water – René Fleming, conservation coordinator, has submitted a request for a grant to the Bureau of Reclamation which will help purchase the third filter for the reuse bay.
Other Grants – Staff is inquiring and hoping to get some grant funding to help with the Airport water tank.
Chairman Hurst asked about the summer ahead and the projected outcome regarding water.
Water Services Director Barnum replied saying drinking water supplies look good, but irrigation water is marginal due to the reconditioning of Gunlock Reservoir. Approximately 50% of irrigation water for the upcoming summer will come from reuse water.
Water Services Director Barnum was excused at 3:30 p.m.
Energy – Staff Reports:
Summer Resources: Laurie Mangum, energy resource planner, distributed a handout that described the transactions made for the summer 2009. Ms. Mangum anticipates running the diesel engines at Red Rock Power Plant for four hours a day in July; diesel is down in price and the market for natural gas has crashed; hopefully sales will increase for the upcoming months.
Energy Services Director Solomon said the budget forecasted 2 million dollars for wholesale sales, year-to-date the sales are at 3.7 million dollars which means the department has out performed regardless of the current market situation, but unsure about forward month.
SunSmart – Is continuing to move forward - 26 units sold to-date. René Fleming, conservation coordinator, said the state tax rebate, on a per unit basis, will be $1,500 and will apply to the 2009 tax return.
Energy Services Director Solomon said because this is a new facility, there were some issues with the inverter and other equipment. The manufacturer of the inverter came from Germany to work out the problems and provided a check for lost revenue caused by the outage. Mr. Solomon said he is hopeful in getting more than $700,000 in stimulus money to put back into renewable and efficiency projects.
Rene Fleming explained how the anticipated stimulus money will be spent: complete another phase of the SunSmart project and still have money for the Energy Efficiency Program, along with the landfill gas project test wells.
UAMPS – Energy Services Director Solomon talked about the process of UAMPS completing their budget and the new way UAMPS wants to charge St. George in scheduling fees. Because the UAMPS budget was cut significantly regarding the projects the City is involved with, there shouldn’t be a considerable increase in costs.
Energy Services Director Solomon explained to the Board that Questar Gas has increased their fees to use their pipeline and provide administration. We are anticipating an increase of approximately $30,000 over last year’s fees.
Energy Services Director Solomon said next years budget has been forecasted very conservative and no increases are anticipated, even with the increases from UAMPS and Questar Gas.
Board Member Brad Rich arrived at 3:50 p.m.
UAPMS/PAC
Joint Operating Agreement (JOA) – Continuing to move forward in upgrading the line between Central and St. George. All percentages have been negotiated and meetings are set regarding raising capital.
PacifiCorp – Continuing to work on a transmission plan for the future. The routing for the future lines is still being determined.
Energy Services Director Solomon recognized Rick Hansen, energy services engineer and Colin Jack from Dixie Escalante Electric for their diligence on this project.
Millcreek Expansion Project – The turbine and generator have been tested and will be shipped to Houston Texas for assembly. Plant design is approximately 45-50% completed and construction has started; currently under budget with the target price.
May or June would be good time for a tour of the facility.
Conservation Coordinator Rene Fleming talked about the Energy Efficiency Program and updated the Board on the insulation rebate program. It took about six weeks to deplete $50,000. Customers who participated also receive a tax credit. This is a good year to participate due to the rebate and tax credit.
Chairman Hurst asked about being compliant with North American Electric Reliability Corporation (NERC) and Federal Energy Regulatory Commission (FERC).
Energy Services Director Solomon replied saying the City was selected and is scheduled to be audited in August by Western Electricity Coordinating Council (WECC). All documentation must be gathered and taken to Salt Lake for the audit. Rick Hansen and Jared Shakespeare will be attending this audit. The department is currently trying to be compliant and proactive by installing everything needed or required now and for the future.
Two Elks Project – The agreement for this project has required one year of negotiations for approximately – 10MW for winter and 30MW for summer. There was discussion regarding this project and the Millcreek turbines and the difference in prices. Energy Services Director Solomon encourages caution before signing the Agreement and does not feel comfortable with the project at this time. The biggest concern is the proposed cap and trade legislation.
Energy Services Director Solomon asked the Board for their direction in building another gas turbine or going with the Two Elks Project. The Two Elks Project is a 325MW plant.
Mr. Solomon said, in his opinion, it would be wise to wait for one more year to see what happens with the cap and trade issues.
Energy Services Director Solomon said the cost of a third turbine at Millcreek would be between 30-50 million dollars.
Energy Services Director Solomon stated the Bonanza II Project will probably not be constructed after all. After further discussion a question was raised on why the Two Elks Project will be built and the Bonanza II Project will not.
Energy Services Director Solomon responded saying the Two Elks Project already had their air permit before the Massachusetts ruling, which restricts permits for all coal plants in the country.
After a long discussion, the Board agreed it would not be prudent to enter into a contract with Two Elks at this time because of the potential risks. The Board agreed its better for the utility to hold off and not sign the Two Elks Project.
Energy Services Director Solomon agreed to look for alternative resources.
Chairman Hurst talked about no rate increases in the next fiscal year budget and how it contributes to the City’s revenue shortage.
Councilman Jon Pike agreed saying small increases should be implemented every year instead of one big jump in rates.
New business:
APPA Conference – June 13-17, 2009, Salt Lake City, UT
Chairman Hurst gave his opinions and comments regarding the conference and asked who would be interested in attending. If anyone on the Board would like to attend please advise Becky Rivera, administrative professional, who will take care of conference fees and lodging.
Water Week – René Fleming, conservation coordinator briefed the Board on Water Week, May 2-10, 2009. Since the State celebrates Water Week the City along with WCWCD is also celebrating. There are several happenings for the week including tours of some of the facilities. There will be a Water Walk hosted by the Mayor beginning at Cottonwood Cove Park and walking approximately two miles to The Gardens at Tonaquint Park. There will be a variety of vendors with ideas on how to conserve water.
Adjourn
Motion
Board Member Max Rose made a motion to adjourn the meeting.
Second
The motion was seconded by Board Member Shakespeare
Vote:
All voted aye, motion carried.
Calendar:
Next meeting: July 8, 2009 at 3:00 pm
Minutes recorded by:
Becky L. Rivera, Administrative Professional |
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