1 2 3 4 5 6  MEETING OF THE May 22, 2018 -8 8:00 a.m. Those in Attendance  BOUNTIFUL CITY POWER COMMISSION  7 Power Commission 8 John Cushing, Chairman 9 Susan Becker 10 Dan Bell 11 David Irvine 12 Jed Pitcher 13 Paul Summers 14 15 City Officials 16 Gary Hill, City Manager 17 Clint Drake, City Attorney  Power Department Allen Johnson, Director Jay Christensen Jess Pearce Luke Veigel Recording Secretary Nancy Lawrence  18 19 Excused 21 22 WELCOME 23 25 27  20 John Marc Knight, City Council Rep  Chairman Cushing called the meeting to order at 8:00 a.m. and welcomed those in  24 attendance. Commissioner Summers offered the invocation.  26 MINUTES-, April 10, 2018  Minutes oft the Joint meeting of the Bountiful City Council and Bountiful City Power  28 Commission held April 10, 2018 were presented and unanimously approved on ai motion made 29 by Commissioner Summers and seconded by Commissioner Pitcher. Commissioners Cushing, 32 BUDGET REPORT-) YEAR-TO-DATE 10- MONTH PERIOD ENDING APRIL30,2018 34 Period Ended 30 April, 2018. He reported that the year-to-date figures are final through March 35 2018; April 2018 is preliminary because it is missing data fori interest income on investments, 36 interest income on rate: stabilization, bank and investment account fee expense, credit card 37 merchant fee expense, and transfer to rate: stabilization fund expense. These figures are not  30 Becker, Bell, Irvine, Pitcher and Summers voted "aye".  31 33  Mr. Christensen presented the Budget Report for the Fiscal Year-to-Date 10-month  38 expected to materially: affect the YTD net margin.  39 40  Total revenues YTD were $26,604,904, above its HAB by $170,082. Major items above  41 or (below) HAB were: Electric Metered Sales was $(371,534) below its HAB due to mild winter 42 weather; Air Products income was $232,106 or 12.6% above its HAB; and preliminary interest 43 income on investments was above its HAB by $124,475. Commissioners Irvine and Pitcher 44 asked if the Contributions in Aid to Construction (above its HAB by $44,971) were based on 45 actual costs and Mr. Christensen verified that that City receives full recovery on projects  46 performed by the City for other entities.  47 48  Total Operating Expenses YTD were $20,960,300, below its HAB by $1,964,444. Major  Page 10 of5    (PC minutes May 22, 2018)  1 items included: Power Costs at $881,403 below its HAB due to careful purchasing and 2 scheduling ofj power resources, and mild winter weather; transmission at $329,841 below its 3 HABI because work has been postponed on budgeted projects; distribution at $165,877 belowi its 4 HAB due to budgeted work yet tol be done; substation was temporarily above its HAB by 5 $(53,505) with the budgeted purchase of four 46KV breakers for the Southeast and Central 6 substations; and total labor and benefits expense at $143,871 below its HAB with lower overtime  7 and newer employees.  8 9 12 13 16 17  Total Capital Expenditures YTD were $3,619,959, with major items being the  10 unbudgeted (but approved) purchase oft the Fisher property of$519,065; and work inj progress at  11 the 138 KV substation of $2,246,561.  The net margin year-to-date was $2,024,645, above its HAB by $1,460,304. This was  14 due largely to lower power costs, higher. Air Products income, lower distribution expense, and 15 lower labor and benefits expense. The preliminary net margin for the month was $145,678. 18 YTD period, following which Commissioner Becker made a motion to approve the Year to Date 19 Budget Report for the 10-month Period Ending April 30, 2018. Commissioner Irvine seconded 20 the motion which carried unanimously. Commissioners Cushing, Becker, Bell, Irvine, Pitcher  Mr. Christensen reviewed changes in the Balance Sheet and Cash Flow statements for the  21 and Summers voted "aye".  22 24  23 IPP ALTERNATIVE REPOWERING APPROVAL  Mr. Johnson reviewed that the Intermountain Power Agency (IPA) is losing its California  25 power purchasers in 2027 for all coal-generated electricity. However, the California entities are 26 willing to continue as customers for natural gas-fired power. As ai result oft this circumstance, the 27 Intermountain Power Project (IPP) will be converted from a coal facility to ai natural gas facility. 28 This led to a change of agreements and the City Council approved two oft the necessary 29 agreements, known as the Second Amendatory Power Sales Contract and the Fourth Amendment 30 to the IPA Organization Agreement. Due to a change in the project size and design oft the 31 project, iti is necessary to approve a revised alternative repowering agreement.  32 33  Bountiful City is currently aj part-owner of the IPP project and our share oft the electrical  34 power output has been used by the City as well as being laid off or reserved for possible future 35 use. The existing plant was rated at 1,800 MWs with the City's share at 30 MW. The new gas 36 fired plant is proposed to be built at 840. MW, sO Bountiful will only see approximately 14 MW. 37 The Excess Power contract provides that BCL&P can lay off the entire output to California with 38 aone-year call back provision. The contracts have been-reviewed by staff, the City Attorney and 39 the City Manager, and it is staff recommendation that Resolution No. 2018-04 be approved and 40 the Mayor authorized to sign for the Approval of Alternative Repowering for the IPP project. 41 Mr. Johnson said that the 141 MW are needed toj power the DC transmission line to get power to 42 California. The reduction from 301 MW to 141 MW will leave the City short and other resources 43 will need to bei identified. Following a briefd discussion, Commissioner Pitcher made ai motion 44 that the Power Commission recommend approval ofl Resolution No. 2018-04. Commissioner 45 Bell seconded the motion and voting was unanimous in the affirmative. Commissioners  46 Cushing, Becker, Bell, Irvine, Pitcher and Summers voted "aye".  Page 2 of5    (PC, minutes May 22, 2018)  2 IPP FIFTH AMENDMENT APPROVAL  3  Mr. Johnson explained that the Intermountain Power Agency (IPA) is the entity that  4 manages the Intermountain Power Project (IPP). Ini relationship to this fact, there are several 5 items that the IPA staff and board would like to get updated to match the current needs or 6 concerns for the project. Mr. Johnson reviewed a summary oft those items (particularly related to 7 authority and membership oft the Board), as contained in Resolution No. 2018-05, noted that 8 these housekeeping items have been approved by the IPA Board ofDirectors and have been 9 reviewed by the City Attorney, Power Department Staff, and City Manager. These items are 10 needed tol keep the Organization Agreement up to date and to meet the legal needs for the  11 project. 12 13  Iti is recommended that the Power Commission approve Resolution No. 2008-05.  14 Following a short discussion, Commissioner Summers made ai motion that the Power 15 Commission recommend approval of Resolution No. 2018-05 for the Approval ofthe Fifth 16 Amendment to the IPA Organization Agreement. Commissioner Pitcher seconded the motion 17 and voting was unanimous. Commissioners Cushing, Becker, Bell, Irvine, Pitcher and Summers  18 voted "aye". 19 21  20 CFPP POWER SALES CONTRACT APPROVAL  Mr. Johnson reviewed that BCL&P has been involved with UAMPS and NuScale for  22 several years to develop a Carbon Free Power Project (CFPP). The CFPPis as small scale 600 23 MW nuclear reactor that would be located in Idaho. The Department of Energy (DOE) has been 24 a key partner in the development of the project and is currently paying 50j percent of the cost to 25 develop the National Regulatory Commission license application. The UAMPS board has 26 approved a Budget and Plan of] Finance to limit the first year oft the contract to $6,000,000, or 27 approximately $100,000 to the City ofl Bountiful. This number could bei increased if additional 28 subscribers are found. The City would then have the option to stay with the project, change  29 entitlement shares, or drop out oft the project at that time.  30 31  Resolution No. 2018-06 authorizes approval ofthe contracts for the carbon free project,  32 which will cost the City approximately $100,000 to continue with the project through April 33 2019. Mr. Johnson reviewed the amount of the project that other cities (municipal power 34 organizations) have signed for and noted that there could be ai risk of not having enough partners 35 for the project. He recommended that Bountiful commit to 51 MW and explained how this would  36 fit into our overall resource plan.  37 38  A lengthy discussion followed regarding the resource plan, including existing contracts  39 and the possibility of adding solar, wind, and thermal. One element of concern is the uncertainty 40 ofnatural gas costs and the impact that would have on existing resources, including the plant. 41 Commissioner Pitcher made ai motion to: recommend that BCL&P commit to 5MWi in the CFPP 42 and authorize the City to approve Resolution No. 2018-06 and the Power Sales Contract for the 43 UAMPS Carbon Free Power Project. Commissioner Summers seconded the motion, noting that 44 this is a good project and although it is difficult to predict future costs, past experience has 45 demonstrated that everything we projected regarding resources years ago has doubled in cost. 46 The motion carried unanimously with Commissioners Cushing, Becker, Bell, Irvine, Pitcher and  Page 3of5    (PC minutes May 22, 2018)  1 Summers voting "aye".  2 4 6 7 8 9 10 11 12 13  3 10YEAR) BUDGET AND CASH FLOW PROJECTION UPDATE 5 Projection with four difference scenarios, using the following assumptions:  Mr. Christensen reported that he had prepared a 10 Year Budget and Cash Flow  Electric Metered Sales and Power Costs increase at 0.5% per year for the 10-year  period;  We are able toj purchase power at the same rate starting in 2022;  5MW ofnuclear power in 2027; Personnel costs at a 6%i increase per year; Maintenance costs at a 4% increase a year' Vehicles at a constant $250,000 per year  14 The first scenario shows the value to keep above the $161 million threshold (required to maintain 15 our current AA- bond rating). This scenario would require three rate increases, back tol back, 16 with a 4 percent in 2023, 11 percent in 2024, and 10 percent in 2025. The second scenario 17 reflects no. rate increases and would require eventual borrowing from the City to maintain 18 department operations. The third scenario reflects what is needed to maintain an average 19 positive net earnings. This would require a 4 percent rate increase in 2022, 5j percent rate 20 increase in 2025, and 7 percent rate increase in 2027 and would leave a cash balance below $16 21 million. The fourth scenario reflects paying off the bond in 2021 and no rate increases, but witha  22 reduced ending cash balance that would be unfavorable for bond ratings.  23 24  Al lengthy discussion followed, and it was the consensus ofthe group that it would be best  25 toi implement annual rate increases of2 percent (defined as "steady as you go" by Commissioner 26 Becker) in an effort to: maintain the cash balance necessary for the AA- bond rating, as well as to 27 continue with capital projects necessary to maintain the integrity oft the system and to meet 28 growth demands. Mr. Johnson noted that we will need to be aware oft the rates charged by  29 Rocky Mountain and tol balance our needs with our capacity.  30 31  Commissioner Irvine mentioned that it will be necessary to maintain good  32 communication practices with residents of] Bountiful to help them understand the benefits, goals 33 and objectives of their power provider (BCL&P). Commissioner Summers suggested that a 31 quarterly report be provided to residents and Commissioner Bell re-emphasized the necessity fur 35 positive public relations and communication. Mr. Hill noted that the administrative staff and 36 City Council can assist with this function. Chairman Cushing congratulated the staff for the 37 budget study/report and thanked Mr. Christensen, particularly, for the format that assists in  38 identifying variables and their impact on ending cash.  39 41  40 138 KV PROJECTUPDATE  Mr. Veigel reported that the 138 KV project will have a slight delay due to a' "permitting  42 snag" in driving the transformer through Tennessee. It should arrive here next week. Cache 43 Valley has completed necessary work to install the transformer. In the meantime, the other 44 transformer is functioning correctly and carrying the loads. Commissioner Bell asked what the 45 estimated date of completion will be. Mr. Johnson said that once the transformer is on the pad, it 46 will take 8 days to assemble, Cache Valley will hook it up, and it should be fully on line by the  Page 4 of5    (PC minutes May 22, 2018)  1 3td week ofJune. The Power Plant will be used until then to cover any excess: requirements.  2 4 6 8 10 12 13 14 15 16 17 18 19 20 21 23 25 26 29 30 31  3 OSMOSE POLE REPAIR UPDATE 5 retested the poles for strength. 7 SOLAR INSTALLATIONS UPDATE  Mr. Veigel reported that Osmose completed the pole repair project in five days and have  Mr. Christensen said that there has not been much change/activity in new solar customers  9 in the past 30 days. He estimated that there are 200+ solar customers at this time.  11 POWER SYSTEMS OPERATONS REPORTS  The following items were included ini the packet, but not discussed in the meeting:  a. February and March 2018 Resource Reports  b. March and April 2018 Lost Time Related Injuries/Safety Report  March and April 2018 Public Relations Report d. March and April 2018 Outage Reports  22 OTHER BUSINESS  Chairman Cushing thanked the staff and Commissioners for their input and service. The The meeting adjourned at 9:40 a.m. on a motion made by Commissioner Pitcher and  24 next Power Commission meeting will be held. June. 26, 2018 at 8:00 a.m.  27 seconded by Commissioner Becker. Voting was unanimous with Commissioners Becker, Bell,  28 Cushing, Irvine, Pitcher and Summers voting "aye".  QEm  Cshgh  John Cushing, CHAIRMAN  Page 5of5