HomeMy WebLinkAboutMN-HDPC-1988-08-30 HYDROPOWER COMMISSION
MINUTES
AUGUST 30, 1988
The meeting was called to order at 7 :40 p.m. by Chairman Dan
Hoffman.
Chairman Hoffman stated that the objective of this meeting
was to decide on what recommendations the Commission would make
to Common Council.
COMMITTEE REPORTS
Environmental Committee. Cathy Emilian reported that the
environmental committee feels that there is a need for a long-
term EAF on the Six Mile Creek project, which is- currently being
done. The committee recommends that an environmental study be
done on plant life. They would like to have assimilations as to
what the completed project would be. The Environmental Committee
does not feel that recreation would be adversely affected. The
safety of the walkway was considered, as the plant may be an
enticement for people. Members of this committee asked for
clarification needed as to whether or not additional studies are
necessary no matter what happens or only if the creek would be
used for restocking of fish. Helen responded based on the
license for the project, a stipulation with a condition that if
the DEC gave them notice that additional studies would have to be
done to monitor the adequacy of the minimum flow.
Ed Brothers ' informed the Commission that he met with Hal
Kraft and Henry Doney to discuss the flow patterns in Fall Creek
which may affect the result of a Triphammer plant. They informed
Mr. Brothers that there are conditions in their operation which
could result in fluctuations in flow and they discussed what may
occur at start-up and shut--down and spurious shut-downs and their
problem arises because Beebe Lake is being drawn down during
operation of the plant about 6" . In the future the Environmental
committee will monitor this during planned shut-downs and start-
ups so they can see what happens . If the plant is in operation,
it takes ":a while for the 6" to be refilled before water flows
over the notch in the Triphammer Darn at a rate which is equal to
the flow rate into Fall Creek at the top of Forest Home and that
could result in- a lower fall for a period of time. The minimum
release required in their license is only 5 CFS, and it is
conceivable to reach that level for a period of time going down
not only through. Triphammer to their plant, but continuing right
down through Fall Creek until the flow catches up as Beebe Lake
fills . There is also a condition in which higher water levels
may occur as water coming into the turbines catches up with water
going over the dam as they first start up; somewhat like a crest
moving down the gorge. This may result in a higher flow than
expected. They are willing to cooperate with the City in ways
which will eliminate problems their plants may create for Fall
Creek. Helen was in touch with the DEC with regard to the
license. DEC asked Helen to provide documentation concerning
Cornell's stopping the flow of water in the creek. The DEC said
they would contact FERC and CU to follow through. Ed Brothers is
not interested in putting a gauging system downstream and would
assume the City pay for their own in Forest Home also. Slides
can be used for evidence. A member of the audience discussed how
the camera was ready but their was not enough rain to take good
pictures . Without a lot of rain their won't be a lot to take
pictures of. Helen is concerned as to whether or not the
evidence is concrete enough. If voters say yes, another gauge
should be used in order to check on the water flow.
Economic Committee. The economic analysis by Peter Skinner
of White Water Fountain was discussed. His cash flow figures
included some things that were not appropriate, like tax losses.
Energy estimates are a little off. The cost has been revised by
Stetson-Harza. They used the levelized system and they would not
use that kind of pay-back schedule. The early years are lower
and the later years are higher. They dial not include
conservation flow release. The project would generate over 9
million kwh. There is positive cash flow in every year except
the year in which construction occurs . To date, Helen has been
working on revised cash flow estimates .
Updated economic factors : 1) Base cost risen to
$4, 600,000. 2) Still looking at 6. 9 cents per kwh for the sale
of the power. According to NYSEG that would remain stable until
bidding systems come into place, December 31, 1988 . If a-
contract can be signed they could still be looking at the number.
If bidding comes in there may be an exemption for small-scale
hydropower plants. Given these changes, the cash flow is now
looking like ten years worth of net losses. The picture looks
like it has changed a lot.
Enterprise Fund would anticipate a certain amount of losses . Put
in reserve funds from the general fund to cover the losses . As
the project made money, it would pay the general fund back. Alex
Skutt asked what the sum of the ten-year losses would be. Helen
responded that it would be approximately a $230, 000 loss over ten
years, including operations and maintenance and 5 percent down
time or time of unscheduled maintenance.
The benefit of going with levelized in the early years is that
the revenue is guaranteed and later on in a few years you don't
get the higher revenues that you would be getting. Levelized
contract is enforced for 15 years .
Two extension requests were made. Two years extension was given
on the Ithaca Falls and on 60' dam projects . January 9 is the
date of the extension. It is clear from Council people reluctant
to spend the money FERC is going to require to be spend on the
studies. People don't want to put money into that. It is the
construction costs that makes the difference.
September 19, 1991 is the deadline to begin construction and
September 1993 to complete the Ithaca Falls plant.
Chairman Hoffman asked the Commission if they were ready to make
a recommendation. Bill Allen, a hydropower developer present in
the audience. Helen voiced some concern about legislature to
push back a decision on the project until deadlines are forcing
them to do it. Just because they have a two-year extension, it
doesn't mean they should put it off at all. Other concerns
regarding getting a set price for the sale of the power were
discussed. If they get in before the bidding they know they are
in the $ . 07 range, however, they can not get that locked in until
they have a signed contract agreement with NYSEG and they can not
do that until they have voter approval. There are trade offs
into going ahead sooner or waiting.
Proposed local laws have been given to people so they can vote on
them. This step must be done by next week in order to get on the
ballot. There is a different local law for each of the projects
so Council could act on any combination of them. Dan said the
Commission should discuss each one differently.
The Commission decided to begin with the Ithaca Falls project.
Construction must begin by September 1991 . City will take no
steps until it has voter approval. The understanding is that
voter approval could come from a regular election or a special
election. More people vote in a presidential election year and a
regular meeting than in a congressional year and less than in a
local election. There are three general elections between now
and September 1991 . ( '88 presidential election, '89 local
election, 190 congressional election)
This year or 1989 which is a local election would be the best.
Commission could schedule a special election as necessary. Dan
wants to brainstorm on reasons for going to referendum in
November or not to go to referendum in November. One member
stated that there was too little time to education the public
about hydropower. She feels there is not sufficient time between
now and this November. Helen pointed out there would be some
pros to putting the project on the ballot in November. The
public would be educated by putting it on the ballot. She also
stated that people who are apposed to an issue are the ones who
really get educated about an issue and people who are for it
generally do not come out and get educated.
Dan pointed out that at this point, the Commission is even still
trying to gather information, and how could they possibly get it
to the public already. Beth asked if it would become contentious
or to be a democratic or republican issue. If it were, maybe
people would tri and use it as an issue. Almost one-half of the
voters come in general elections than do in national elections .
Helen asked the Commission what would be a realistic public
information probe. She suggested advertisements during news
hours during September and October, public service announcements,
radio spots, displays, and leaflets that could be mailed to City
households. The Commission could supplement that with segments
on regular television shows that are local . Ellen asked if the
ads would be recommending a yes vote. Helen responded that the
purpose would be more informational than asking for a vote one
way or the other, and to show the public what their votes mean to
the project. The public should be educated that they have the
option to say yes or not to the City about the development of the
projects, but they would not have that option concerning a
private developer. Alex asked if it is legal to advertise an
opinion to the public at the bottom of a leaflet, for example,
such as "the Hydropower Commission recommends a YES vote" . The
Commission asked if Council could still say no to building the
project if the majority vote was yes .
An additional factor which the Commission wants to address
concerns the financial situation after the first year. With bids
coming on, it is going to be a situation with people competing to
provide this source of power. Ellen commented that the levelized
method may not be so good if the contract is for 15 years and
three years of that is solely construction. Chairman Hoffman
responded that if referendum is approved they don't have to
negotiate with NYSEG and they could decide to do that. He
commented further that when the financial factor is setting a
limit on how much you are going to spend in the referendum the
longer you wait the less chance of being able to spend that_
little later on. Interest rates will also be rising, which will
have a great effect on the economics of the project. Ed Brothers
said the sooner they get started the better off the whole
situation will be. Dan commented that his guess is the
electorate that is going to be at the voting booth in November it
will likely be yes, a lot of people may not have strong feelings
or many will not even be very familiar with the proposed falls
site. It might be the best chance for a yes vote. Considering
the green house effect, it might be beneficial to give voters a
chance to vote for some favorable way of producing energy.
Chairman Hoffman went around the table and asked Commission
members their ideas on the matter. Ellen commented she would be
in favor of going to referendum this fall on the Ithaca Falls
project.
Ed Brothers voiced concern about the short term before the
election and getting out enough information to make the public
have an informed decision. He feels there is a problem of
misinformation. He is unsure in terms of the financial situation
whether or not the City can even do it. His main concern is
money. This fall does have the advantages; not negotiating
price, getting another referendum. If he were convinced of the
financial and public information he would recommend this year,
but he is too uncertain.
Beth Mulholland said she would like to go to referendum this
November, but there is so much work left to be done. (Helen will
follow through with how much information can be fed into the
ballots . )
Kathy Emilian said she is also concerned about the education of
the public, but there are certain things to be gained by going
ahead with it this fall . She also wants more clear cut
information on the cost and knowing they could get to the public
in an adequate fashion.
Mark Walker commented that the big factor that is unresolved is
whether or not this project is going to be a source of income or
a burden to the tax payers. He wants that information to be
available to the voters in November if they do it that soon. He
is in favor of getting the process rolling but not at the expense
of getting all of the information out to the public.
Helen stated there had been interest in developing the VanAtta
site and Bill Allen was here and he is the developer interested
in the project. Synergics is also still very interested.
Chairman Hoffman said there are a lot of strategic reasons for
going to referendum on this project now. The presidential
election voters would be the best possible group of voters but
feels that there is a lot of information to be given out to the
public.
Helen went over the financial report and gave some clarification
to the Commission members as to what the different columns
represented. Definition by economist of each column was given.
The point was made that the mortgage/levelized method was the
most realistic. Mark Walker stated that someone should check up
on Peter Skinner's work to be sure that the information is
accurate and that the analysis was complete. Helen
Helen did some example calculations to be show the Commission
members how the columns work. Ellen asked why depreciation was
not an issue in the analysis. Helen responded because the City
is not being taxed and depreciation is a taxation issue. Kathy
asked if the project made it to referendum, would they still be
able to do the project with a project developer. The City could
undertake the project in combination with other private or public
developers . Mark Walker moved to put off referendum until next
November, 1989 . Alex Skutt seconded the motion.
Chairman Hoffman opened discussion on the motion. Ellen asked
what is the likelihood of the economics changing so that they
would have to start all over again with them. Helen said it is
very likely because construction costs change daily and interest
rates are likely to go up. Beth stated that they really are not
in a position to recommend anything. She added that they don't
have a economists view on the future of hydropower plants . Alex
said it was actually a bless to get the extension so that they
can get some good, basic information together.
Dan brought up the point that voters have to be told about the
pay-back figures as well as the cost of construction. Ellen
commented that she was surprised that Council made very little
mention, if at all, as to environmental information. Their
discussion seemed to revolve around economics.
Mark Walker recommended that they retain the option to suggest
that Council recommend that they go to referendum later. He
believes it is a local issue and the mayoral election should be
the time and place to vote on this project.
Ed Brothers agreed that the presidential election ear contains
too much and the project would not get the attention needed and
an additional year would allow the public more time to get
information that they deserve on the topic. This would avoid the
hydropower issue from getting lost in the various topics of a
presidential election year.
The Commission voted on making a recommendation to Council to go
to referendum in 1988 but bring the Ithaca Falls project to
referendum in 1989 . The vote was five (5) (to wait until
November 1989 ) and 2 opposed.
Discussion then went to the VanAtta's Dam project. Construction
on this project must begin by March 1990 . If the City wants to
do this project, it must go on the ballot for this coming
election. Ellen asked if there was any information on the
project for VanAtta's . Dan brought up a question concerning the
age of the economic figures for this project. Helen stated they
were old and they were not good then and even worse now. Council
is less inclinced to act on the 60 ' dam project. The Commission
was informed that there would be 20 years of negative cash floc
for VanAtta' s dam project. Helen said there was a private
developer showing interest in this project and he had very
different economic projections . Bill Allen stated that he would
build a plant less than one-half the size of the proposed
VanAtta's damn project plant and spend much less money and still
make a considerable amount in return. He said the proposed plant
was much too large for the location and the water supply.
According to the City Attorney, a project can be done (public or
private) without going to referendum. Bill Allen recommends
going to referendum and if they lose, he will petition FERC to
have the City relinquish their license so he can construct a
plant on his own.
Kathy moved to recommend to go to Council and recommend to go to
referndum with VanAtta' s Dam this November with a lower amount
sufficient to cover negotiating expenses . Ed Brothers seconded
the motion. Vote 5-0 in favor.
... .._. ._ _.. _ 11 _ 1. _ _ _ 1 - __ . }11:'1.,.i..�."`,
The 60' dam must begin construction by August 1990 . The City
would have to spend at least $10, 000 on the next step by January
1989, and there may be other expenses coming after that. It is
the least economically justifiable project of the three. Dan
stated that there were clear environmental impacts in building in
this location. He asked Helen if she thought this project should
be dropped, since it is the most environmentally sensitive. FERC
implements federal rules of safety, they do not write for form
them. Ed Brothers made a motion to recommend to go to vote in
November 1988 with a reduction in cost to make a lease
arrangement with a private developer. Seconded by Kathy Emilian.
Question at Council whether or not in sending these issues to
vote constitute Council to make a decision on the project to
secure. If so, the environmental study must be completed.
In favor of going to referendum this year with lower costs; vote
5-1 .