Minutes
These minutes are the official minutes of the MSC's July 2010 meeting held July 27, 2010 as approved at the Commission's August 24, 2010 meeting.
JULY 27, 2010
Minutes of the monthly meeting of the Municipal Services Commission held July 27, 2010 at the office of the Commission, 216 Chestnut Street. The meeting was called to order at 4:00 P.M. with Robert S. Appleby, President, Commissioner, presiding.
Attendance Report:
Present:
Robert S. Appleby, President, Commissioner
H. Hickman Rowland, Commissioner
Daniel F. Knox, Commissioner
Francis L. Patterson, Secretary
FINANCIAL AUDIT PRESENTATION
Mr. Michael Malchione of Horty and Horty presented the 2009/2010 financial audit of the Municipal Services Commission. He reviewed the salient portions of the report along with any changes made since the last audit. Both Comptroller Patone and Mr. Malchione answered any questions the Commissioners had. Mr. Malchione presented several accounting required disclosure letters and explained the nature and purpose behind each letter. The Commissioners thanked him for his presentation and Mr. Malchione left the meeting
MINUTES
With the concurrence of all the Commissioners the minutes of the June 15, 2010 regular monthly meeting and the July 6, 2010 special meeting were approved without alteration. Commissioner Knox asked the Secretary about TA Instruments and the undercharge for consumption. The Secretary said Staff met with a representative from TA Instruments to show him documentation of when the fault occurred. He added he has a meeting on August 2nd to discuss the irrigation well and he felt sure this undercharge would be discussed. Commissioner Knox also asked if there was a resolution for the customer who complained about the transmission pole feeding the new substation. The Secretary said Delmarva planted trees and the MSC moved the customer’s gate. The Secretary said the customer called to say thank you.
SUPERVISOR GUYER
Supervisor Guyer spoke to the Commissioners about two items which have come up in regards to painting the Gray Street water tank and the rehabilitation of School Lane treatment facility. He told the Commissioners the electric conduits that provide electric to the light atop the Gray Street tank needs replacing. He discussed with the Commissioners his options for addressing the replacement. The Commissioners left it to Supervisor Guyer’s discretion whether he should hire Quantum Controls to replace the conduits, conductors and light or whether he should perform the work in-house.
Supervisor Guyer told the Commissioners that Eric Retzlaff of Davis, Bowen & Friedeal, consulting engineer for the water system improvements, spent the money allocated for Construction Administration. Supervisor Guyer made the case that Mr. Retzlaff has been a great help in reviewing submissions beyond the scope of his original engagement and in his opinion has saved the Commission from having to make changes in the field. The Commissioners debated allocation of additional funding in light of previous engineering cost overruns. After a thorough discussion they agreed to allocate an additional sum which the Supervisor was not to exceed. Supervisor Guyer left the meeting at this point
COMPTROLLER’S REPORT
Comptroller Patone made her monthly financial reports to the Commissioners reviewing with them changes since the last month’s reports. She gave an Executive Summary and briefly spoke about the changes of note answering the Commissioners questions as they arose. She said of particular note is the fact that cash is down but fixed assests are up from the previous month and year which shows the MSC is spending the money on infrastructure. She added that in Revenue and Expenses the deficit is significantly less than was budgeted.
The Comptroller reviewed the reconciliation with DEMEC for payments for the new substation and noted the difference between what the MSC pays DEMEC which goes to principal and interest for the bonds and what is retained for a required reserve.
The Comptroller concluded by telling the Commissioners she would like them to consider raising the security deposit for commercial customers. The Commissioners discussed fixed amounts versus two to three months worth of estimated use. The Commissioners asked the Secretary and Comptroller to make a recommendation. The Comptroller said she would get with the Secretary to formulate a recommendation.
Upon motion made and unanimous approval, the Commissioners accepted the financial report for the month of June and approved the payment of the June bills attached hereto.
SECRETARY’S REPORT
Secretary Patterson reported on the July 21, 2010 DEMEC meeting. He told the Commissioners in June the Beasley generator ran 115 hours and generated $359,499 in sales which lowered the cost of June’s energy below DEMEC’s billable rate. The Secretary said there is a recommendation by ACES Power Marketing to change DEMEC’s hedging purchases so that DEMEC does not hedge against higher prices all 12 months of a year. The Secretary said a discussion about reallocation of Beasley I & II was held and Dover and Lewes still have not committed to whether they want to be a part of DEMEC’s generation. The Secretary said Lewes said they would have an answer by the August meeting and would most likely want to change their status to a full requirements status and participate in the generation. He added that Dover did not indicate when they would decide. He went on to say that President McCullar cautioned the 7 full requirements members about giving away their capacity interests. Newark indicated they would welcome Lewes and Dover as participants and the corresponding reduction in their interest in the generation units. The Secretary asked the Commissioners what their position is if Dover and Lewes want to participate in Beasley II and or both Beasley I & II. The Commissioners discussed their participation and seemed to favor reallocating whether Dover or Lewes participate. The Secretary ended by saying the State is trying to clean up a backlog of renewable energy projects by infusing money into the municipal green energy program. The Secretary said there was discussion about pooling the money and taking care of the municipalities with the longest waiting lists which would be Lewes and Newark.
The Secretary spoke about Riverbend in Old New Castle and said Supervisor Guyer and he attended the Planning Commission meeting where Riverbend’s attorney Adam Balick was presenting the case for lifting the 55 and older age restriction. The Secretary said Mr. Balick showed the Planning Commission a plan which addressed sidewalks and school bus stops but the plan included putting a sidewalk over the MSC’s water main along Aster Blvd. The Secretary said he is concerned that without overlaying the plan over existing or planned utilities there will be additional conflicts created. The Secretary said there was discussion about a second access road and Mr. Balick seemed to offer the Trustees’ property as a solution. He added the Planning Commission resurrected the Route 9 By-Pass through Centerpoint as a solution. Secretary Patterson said with the Commissioner’s permission he would like to write to the Planning Commission and propose that if they are inclined to recommend the lifting of the age restriction to Council that it be contingent on Riverbend putting up a bond or some other form of surety which would be forfeited if Riverbend did not build the interconnections as illustrated on the water and electric plan within five months of the removal of the age restriction. The Secretary said it should make Mr. Capano agree to abide by the MSC’s rules and regulations and tariff as it applies to warranty of the water system. The Commissioners agreed to the Secretary writing such a letter. The Secretary said at the Planning Commission meeting Mr. Balick introduced a second builder who plans to build sixty of the eighty townhouses which are approved. The Secretary concluded his report that the MSC withdrew its offer to sell a piece of switch gear to Riverbend since the offer had not been acted on and the MSC now had a use at the Penn Farm.
The Secretary said in Riveredge Business Park a meeting with TA Instruments, the State (DNREC), Local Officials and the MSC to discuss the irrigation well is set. The Secretary said the meeting is scheduled for August 2, 2010 and he is sure the under billing for electric will come up. In Twins Spans Business Park he said Staff has been working with John Harvey to resolve water issues but it seems to have hit a wall. The Secretary said Mr. Harvey requested copies of all the applications for water and electric which the MSC had for the subject properties. The Secretary said Comptroller Patone made an extensive search and turned over what she could find but the record is incomplete. The Secretary added the absence of applications is not satisfactory to Mr. Harvey and he seems incapable of moving forward without them. The Secretary suggested to Mr. Harvey that his records may be more complete and he can fill in the missing documents. The Commissioners questioned how this impacts whether or not he wants to own the water meters or have the MSC own them or how it relates to a water meter that is not working. The Secretary said he can’t answer that just that Mr. Harvey has not made a decision so the MSC is going enforce its tariff.
The Commissioners agreed to read the Electric and Water Supervisors written reports.
Secretary Patterson said there are several additional items he would like to report. He said City Administrator Cathie Thomas forwarded a letter from Green Stone Engineering which he included in their papers. The letter proposes how to deal with the destabilization of the switch gear at Johnson’s Way in Centerpoint. He said he asked Ms. Thomas if the City will pay and she said she needs to get Council’s approval first. The Commissioners agreed to the proposal if Council foots the bill.
The Secretary said MSC Staff met with Trustee member Chris Castagno about plans for the Penn Farm. Mr. Castagno said he is working to create a walking path around the property and he wanted to understand the MSC’s needs for water and electric pathways as well as Delmarva Power’s needs for gas and electric. The Secretary said he has a number to buy out the Penn Farm from Delmarva Power so the Trustees can remove the pole line that crosses the farm but he is suspicious of the number he got for the School Lane treatment facility and has gone back to make sure the number quoted is for the right account.
Mr. Castagno is also working on the annexation of the Walnut Hill property for the Seeds of Greatness Church. The Secretary said in response to a request he sent an e-mail to Mr. Castagno outlining the benefits the MSC would get if the Walnut Hill property is annexed. He said he mentioned electric revenue, extension of water and electric services up Frenchtown Road and protection to the MSC’s Frenchtown Road well from pollution and dumping on the Walnut Hill property.
The Secretary said he answered an inquiry in relation to articles in the News Journal Papers regarding contamination to public drinking water sources throughout the state. He said he will publish a response in the local paper and put it on the MSC’s web site letting New Castle, residents know about MSC water testing.
The Secretary said the MSC has learned that Mario Medori is purchasing the Brosius Elliason site.
OLD BUSINESS
The Secretary told the Commissioners the new substation transformer was being loaded and would be shipped immediately. He added that it is expected to be off loaded Friday August 6, 2010. He told the Commissioners that a GPS system will track it as it crosses the country and the MSC will know where it is 24 hours a day. The Secretary said the only road permitting problem was Delaware who will not commit to a route until Wednesday August 4, 2010. The Secretary said Brandywine Construction is back finishing up the job getting the circuit out of the new substation across the railroad tracks and through Centerpoint. The Secretary said he became concerned about the quality of the work from Tri-M and their subcontractor Peirce Merrito. He added that he spoke with his Supervisors and then called and spoke to the MSC’s engineer Norm Baron about his concerns who also expressed his own concerns. The Secretary said this resulted in a meeting with Tri-M on Thursday July 22, 2010 to express the MSC and Utility Engineers concerns. Tri-M promised to make changes and to provide more stringent oversight of their subcontractors which they appear to be doing. The Secretary said Tri-M is determined to make the MSC happy with their work.
NEW BUSINESS
The Secretary said he has a resolution prepared by DEMEC which authorizes Commissioner Appleby to act on behalf of the MSC as a member of DEMEC’s Board which he has previously distributed for the Commissioner’s review.
Upon motion made and unanimous approval the Commissioners adopted the attached resolution titled:
“A RESOLUTION APPROVING A PROJECT TO BE UNDERTAKEN BY THE DELAWARE MUNICIPAL ELECTRIC CORPORATION; AUTHORIZING THE EXECUTION OF A POWER SALES CONTRACT BETWEEN THE MUNICIPAL SERVICES COMMISSION OF THE CITY OF NEW CASTLE AND THE DELAWARE MUNICIPAL ELECTRIC CORPORATION; AUTHORIZING THE REFUNDING BY THE DELAWARE MUNICIPAL ELECTRIC CORPORATION OF CERTAIN BONDS; AND AUTHORIZING OTHER MATTERS RELATED THERETO”
JULY MEETING
The Commissioners set the
date of the next monthly meeting to be August 24, 2010 at the office of the Commission, 216 Chestnut Street.
ADJOURNMENT
By
motion made and unanimous approval, the Commissioners voted to adjourn.
Approved________________
_____
_____________________________________
Date Francis L. Patterson, IV
MUNICIPAL SERVICES COMMISSION
OF THE CITY OF NEW CASTLE
("Project Participant")
CONTRACT RESOLUTION
A RESOLUTION APPROVING A PROJECT TO BE UNDERTAKEN BY THE DELAWARE MUNICIPAL ELECTRIC CORPORATION; AUTHORIZING THE EXECUTION OF A POWER SALES CONTRACT BETWEEN THE MUNICIPAL SERVICES COMMISSION OF THE CITY OF
NEW CASTLE AND THE DELAWARE MUNICIPAL ELECTRIC CORPORATION;
AUTHORIZING TIIE REFUNDING BY THE DELAWARE
MUNICIPAL ELECTRIC CORPORATION OF CERTAIN BONDS; AND AUTHORIZING OTHER MATTERS RELATED THERETO.
WHEREAS, the Municipal Services Commission of the City of
New Castle, a separate agency of the City of New Castle (the
"Project Participant"), is a duly organized and validly existing political subdivision under the laws of the State of Delaware
(the "State"), and particularly pursuant to its Charter,
72 Del. Laws Ch. 116, as amended (the "Charter"); and
WHEREAS, the Delaware Municipal Electric Corporation ("DEMEC")
is a municipal electric company incorporated in the State,
established by certain cities and towns, and formed pursuant to Chapter
13 of Title 22 of the Delaware Code (the "Act"); and
WHEREAS, the Project Participant is a member of DEMEC, and
by a resolution heretofore duly adopted by the Project
Participant, the Project Participant has duly authorized, executed and delivered the Agreement and Articles of Incorporation, dated
as of July 9, 1979 forming DEMEC, and all amendments
thereof and supplements thereto (the "DEMEC Joint Action Agreement"); and
WHEREAS, DEMEC is authorized and empowered under the Act and the DEMEC
Joint Action Agreement, among other things, (i) to
plan, develop, acquire, construct, reconstruct, operate, manage, dispose
of, participate in, maintain, repair, extend or improve one or more
electric projects (as defined in the Act); (ii) to issue its bonds,
notes or other evidences of indebtedness to pay all or part of the costs of
acquiring and developing such projects; and (iii) to exercise all other powers which may be necessary and convenient to
effectuate the purposes of DEMEC; and
WHEREAS, DEMEC has previously undertaken a project consisting of the
acquisition, development, construction and equipping of a
peak power generating station in Smyrna, Delaware (the
"Initial Project"); and
WHEREAS, DEMEC and the Project Participant have previously entered into a
Power Sales Contract dated May 1, 2001 (the
''Initial Power Sales Contract") whereby DEMEC agreed to sell and the Project Participant agreed to purchase the Project
Participant's share of the electric energy and electric
capacity of the Initial Project; and
WHEREAS, in order to finance the Initial Project, DEMEC
issued its Electric Revenue Bonds, Series 2001, dated September 1,
2001, in the initial principal amount of $34,790,000 (the "2001 Bonds") and pledged its right to receive payments from the
Project Participant under the Initial Power Sales
Contract to the trustee for the 2001 Bonds to secure payment on the 2001
Bonds;
and
WHEREAS, DEMEC has determined to undertake a new project (the "New
Project") consisting of the development, engineering,
design and installation of a second generator at DEMEC's existing power generation station in Smyrna, Delaware, and all
ancillary equipment necessary for the generation of up to
an additional 67MW of nameplate capacity and certain other related capital improvements to benefit the Project Participant and
certain other participating members of DEMEC (collectively, the
"Project Participants"), all as more fully described in the Independent Engineer's Report (the "Engineer's Report"); and
WHEREAS,
DEMEC will undertake and operate the New Project in order to supply Electric Capacity and Electric Energy (each as defined in the hereinafter
mentioned New Power Sales Contract) to
the Project Participant and to the other Project Participants
contracting with DEMEC therefor, and will sell the Electric Capacity and Electric Energy
of the New Project to the Project Participant pursuant to a New Power Sales
Contract between DEMEC and the Project Participant
(the "New Power Sales Contract") and pursuant to contracts
substantially similar to the
New Power Sales Contract with such other Project Participants (all such
contracts are hereinafter
referred to collectively as the "New Power Sales Contracts").
A draft of the New Power Sales
Contract is attached hereto as Exhibit
A; and
WHEREAS, in order to
enable DEMEC to issue its electric revenue bonds, or bond anticipation notes (such bonds and notes arc hereinafter referred to as
the "Bonds"), to pay the cost of acquiring
and constructing the New Project, it is necessary for DEMEC to have
entered into the New Power Sales Contracts with the Project Participant and the
other Project Participants, and to pledge such contracts and
the payments required to be made in accordance with such contracts as security for the payment of such Bonds; and
WHEREAS, pursuant to Section 3 of the Charter and Section 1307(a) of the
Act, the Project Participant has the authority to enter
into the New Power Sales Contract, and by the adoption of
this Resolution desires to authorize the execution of the New Power
Sales Contract.
NOW, THEREFORE, BE IT RESOLVED by the Commission of the Project
Participant as follows: Section 1.
Approval of New Project. The Project Participant hereby approves the Section 2.
Authorization of New Power Sales Contract. The Project Participant hereby authorizes the execution of the New Power Sales Contract, and
authorizes and directs the President and Secretary of the Project
Participant to execute and acknowledge the New Power Sales Contract on behalf of the Project Participant. The New Power Sales
Contract shall be substantially in the form presented to this
meeting, which is hereby approved, subject to such changes and modifications as counsel may recommend and the President of
the Project Participant may approve, such approval to be
conclusively evidenced by his/her execution thereof. The Project Participant acknowledges that under the terms
of the New Power Sales Contract, the Project Participant is
obligated to make payments (the "Payments") for its share of all of DEMEC's Monthly Power Costs (including debt service on the
Bonds, reserves for debt service, operating and maintenance expenses of
the New Project and reserves therefor, the requirements of any
rate covenant with respect to debt service coverage for the Bonds, and
other amounts as set forth in the New Power Sales Contract) and all Monthly
Transmission Costs of DEMEC properly allocable to the Project
Participant irrespective of whether energy is produced or delivered to the Project Participant or whether the New Project is
completed, operable or operating and notwithstanding suspension,
interruption interference, reduction or curtailment of the output of the New Project, and shall not be
subject to any reduction, whether by offset,
counterclaim, or otherwise, and shall not be
otherwise conditioned upon performance by DEMEC under
the New Power Sales Contract or any other agreement or
instrument or the validity or enforceability of any other
New Power Sales Contract, or any other agreement between DEMEC and any other Project Participant. The Project Participant acknowledges that DEMEC's ability to issue the Bonds and finance the New Project depends on
the inclusion of the above-described provisions in the New
Power Sales Contracts. The obligation of the Project Participant to make Payments
under the New Power Sales Contract shall not constitute a
debt of the Project Participant or a general obligation of or pledge of the full
faith and credit of the Project Participant, and the Project Participant
shall not be obligated or compelled to levy ad
valorem taxes to make the Payments provided for in the New Power Sales Contract. The obligation
to make Payments shall constitute an operating expense of the Project Participant's electric utility system payable
solely from the revenues and other available funds of the electric
utility system. The Project Participant also acknowledges that under the
terms of the Ncw Power Sales Contract, if one or more of the Project
Participants defaults in its payment of its obligations under its New Power Sales Contract, the Project Participant, together
with all the other non- defaulting Project Participants, shall be
required to accept and pay for the capacity and energy which was the
obligation of the defaulting Project Participant. Section 3.
Authorization of Refunding of 2001 Bonds. The Project Participant hereby authorizes DEMEC to refund the 2001 Bonds if it can be
demonstrated that debt service Section
4.
Certificate of Project Participant. Attached hereto as Exhibit B is a Certificate of the
Project Participant which must be executed and delivered to DEMEC upon
the execution of the New Power Sales Contract. The Commission hereby finds
that the information set forth in said Certificate is true
and correct and authorizes and directs the President and the Secretary to execute said Certificate and deliver it to DEMEC upon
execution of the New Power Sales Contract, and any
"bring-down" certificate required upon the issuance of the
Bonds. A similar certificate is authorized in the event Refunding Bonds are
issued. Section
5. Authorize
Other Action. The Project
Participant hereby authorizes the President and the
Secretary to take all other action and sign any other documents or
agreements necessary or appropriate to cause the New Project to be completed, the
Bonds to be issued, and the 2001 Bonds to redeemed and the Refunding
Bonds to be issued (if so determined), all as contemplated by this
Resolution. Section
6.
Confirm Appointment to DEMEC Board of Directors.
The Project Participant hereby confirms the appointment of
Robert Appleby as the Project Participant's member on the
Board of Directors of DEMEC.
Section 7.
Effective Date. This Resolution shall go into effect immediately upon its adoption by the
Commission.
I hereby certify that the foregoing is a true and correct copy of a
Resolution duly adopted by a majority vote of the entire Municipal
Services Commission of the City of New Castle at a regular meeting
of said Commission duly called and held on July
27 , 2010; that public notice
of said meeting was given as required by law; that said Resolution has
been duly recorded upon the minutes of said Commission; and that said
Resolution has not been amended, repealed or
superseded and is in full force and effect this 27
day of July , 2010.
savings can be achieved by refunding the 2001 Bonds, after
taking into account any necessary
Dated: July
27
, 2010
CERTIFICATE OF
SECRETARY
Site Design & Maintenance by Access WebWorks
Copyright 1999, Board of Water and Light Commissioners, City of New Castle
