Special Council Meeting Minutes April 20, 2009

 City of Heyburn Special Council Minutes

April 20, 2009

7:00 P.M.

Council Present:

Cleo Gallegos, Rocky Baker, Leann Smith and Dee Ray Bailey.

Employees Present:

Linda Dayley, Scott Spevak and Steve Tuft.

Visitors Present: Mayor Anderson asked for a roll call introduction. Cleo Gallegos, Heyburn City Council:  Rocky Baker, Heyburn City Council: Steve Tuft, City Attorney: George Anderson, Mayor: Linda Dayley, City Clerk: Leann Smith, City Council: Dee Ray Bailey, City Council: Scott Spevak, City Superintendent: Ralph Williams, United Electric Coop: John Saven, Northwest Requirement Utilities: Terry Greeman, citizen of Burley, Vaughn Egan, Burley Councilman: Don Dean, United Electric: Steve Ecklee, City of Rupert: Mike Brown, City of Rupert Council: Dennis Andrew, City of Rupert. Joann Justesen, Jay Lenkersdorfer and Gordan Hansen. 

Meeting conducted by Mayor Anderson.

Pledge of Allegiance led by Mayor Anderson.

Discuss Electrical Tier 2 with Load Forecast - John Saven.

Ralph Williams briefly explained the history of Bonneville Power starting with the early 1960’s up to date.

John Saven discussed the future electrical Tier 2 projection and load forecast with the Mayor and Council. John passed out a presentation on NRU LLC Organization framework for above high water mark load service.

Regional Dialogue Contract Background

*BPA Regional dialogue contracts allows for High Water Marks (HWM that will apportion the existing Federal Base System priced at the Tier 1 rate. To serve above HWM load, utilities will need to use non-federal resources; BPA Tier 2 priced power, or both.

*Utilities will notify BPA by November 1, 2009, of their election: non-federal resources, BPA Tier 2 priced power, or both. Election will be for FY 2012-2014.

*Above HWM Load amounts for the first rate period (FY2012-2013) will be established by BPA in May 2009. These will be in flat annual blocks and the utility will be responsible for providing non-federal resources or paying Tier 2 rates for this amount of power. Thereafter, above HWM loads will be established prior to each two-year rate period.

*As a load following customer, BPA will cover all load fluctuations within the period.

Purpose and History of NRU LLC

*NRU LLC set about developing an organization to aggregate and serve participants above HWM loads with non-federal resources. Currently there are 45 participants, including cooperatives, municipalities, PUDs and special districts from 7 states.

Goals of the New Organization

*Group above RHWM needs to maximize economics of scale and attract resource developers and managers and provide long-term power supply at a reasonable cost.

*Develop the most efficient organizational structure while recognizing differing legal requirements and abilities of cooperatives, municipals, PUDs and special districts in 7 states.

*Work with utilities in NRU that share common interests as load following customers.

*Offer flexibility to participants in amount of load placed on organization and what type of resources purchased; utility involvement in selecting resources and managing resource prices.

*Obtain load commitments by utilities with sufficient lead-time to procure longer term resources.

*Provide choice of resources: renewables  (that meet renewable portfolio standards (RPS) requirements) and all-sources.

New Organizational Structure

*For legal purposes, we have formed 2 entities for utilities to join, based on type:

            *Northwest Intergovernmental Energy Supply (NIES) - includes all             municipalities, PUDs and special districts.

            *Northwest Energy Supply Cooperative (NESC) - includes all cooperatives.

*Utilities have until April 30, 2009, to join the organization.

            *Sign the Load Commitment Agreement and Membership Agreement.

*Administrative Services Cooperative (ASC - “heart and brains”; pools load requirements of participants; negotiates, secures and manages resources to serve loads; performs administrative services; etc.

Load Commitment and Resource Pools

*Each participant is required to place at least 50% if its above HWM load on its entity.

*Has the option to purchase from two resource pools: one renewable (will meet any applicable Renewable Portfolio Standard requirements), and one all-source.

*Each resource pool will be operated as a tight pool.

Transmission

*BPA has issued a letter to the NRU LLC agreeing to a power exchange in which NRU LLC resources are connected to the BPA grid, and then BPA delivers the power to the NRU LLC members load.

            *For both customers connected to the grid and those served by transfer.

            *Eases administrative burdens, allows NRU LLC to perform administrative tasks    on behalf of the participants.

Why NRU LLC is the Preferred Power Supply Option

*BPA Tier 2 rates will be at the cost of new resources, with prices not set until FY 2012 rate case.

*Customer is a renter from BPA with no rights to the resources you paid for at the end of the contract -FY2028.

*BPA supports local utilities participating in non-federal resource development.

*The competitive markets trade in units of 25 a MW. We need to act collectively because individual utilities will likely have above HWM loads of 1-2 a MW - small-scale penalties.

*The administrative costs of managing 25 a MW in total are likely no higher than 1 a MW, resulting in economics of scale.

*Load following customers of BPA simply don’t have the expertise in-house to manage small resources individually.

*We have negotiated favorable transmission terms with BPA for the movement of non-federal resources.

*Working with a group of utilities avoids the risk of putting all of your eggs in one resource specific basket.

*Flexibility to place 50 % or more of new load on the organization, and to select between renewables and all sources portfolio.

*Participation costs for smaller utilities under $10,000 per year with the right to place future load in the tight pool.

*NRU LLC provides opportunities for long-term resource ownership rights with other utilities that you know and share common business interests.

After discussion John Saven informed the Mayor and Council that basically what I need to know is if the City of Heyburn is interested or not interested.

Mayor Anderson adjourned the meeting at 8:30 p.m.

/s/George A. Anderson, Mayor

/s/Linda L. Dayley, City Clerk/Treasurer