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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 .