Minutes
These minutes are the official minutes of the MSC's July 2008 meeting held July 22, 2008 as approved at the Commission's August 12, 2008 meeting.
Minutes of the regular monthly meeting of the Municipal Services Commission held July 22, 2008 at the office of the Commission, 216 Chestnut Street.
The meeting was called to order at 9:30 A.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, IV, SecretarySpecial Guest: Supervisor Tom Spicer, Supervisor Jay Guyer, Assistant Supervisor Ryan Jaeger
MINUTES
With the concurrence of all the Commissioners the minutes of the June 11, 2008 regular monthly meeting were approved without alterations.
SECRETARY'S REPORT
Secretary Patterson reported there was no June DEMEC meeting. Secretary Patterson said he forwarded to the Commissioners in advance of the meeting DEMEC’s June delivered energy report which shows a 30% increase in the cost of energy over what DEMEC was able to secure in May. The Secretary said the MSC was prepared for a 5.5% increase but President McCullar said fuel costs, congestion and capacity charges combined to increase DEMEC’s actual bill an additional 25% higher than anticipated.
The Secretary told the Commissioners under Old Business he has included an item to address water and electric rates.
The Secretary, Supervisors Spicer and Guyer described a meeting with Mr. Joseph Capano on Friday July 18, 2008 to discuss water for the Riverbend in Old New Castle subdivision. Mr. Capano presented a set of altered engineered drawings previously prepared by Greenstone Engineering in which he illustrated proposed easements for water and electric which do not comply with MSC standards. Staff described Mr. Capano’s position as the MSC will just have to live with what he has to offer and he is prepared to go to court if necessary to get what he wants. The Commissioners asked if Mr. Capano submitted an electric plan. Supervisor Spicer said he met with Mr. Cannon of Carew Associates on numerous occasions to discuss concepts but there has been no submission. Secretary Patterson said Mr. Capano claims the MSC has had the Greenstone water design for some seventeen months but he is going to verify that with Bruce Jones of Greenstone. The Secretary says Mr. Capano alludes to agreements he claims the MSC is committed to but on his part he has committed to nothing. The Commissioners reiterated their position that the MSC staff should not approve a water design without seeing an electric design. Supervisor Guyer said Greenstone Engineering never submitted a water plan and the document Mr. Capano brought to the meeting was an unsigned engineered drawing Mr. Capano marked up himself. Supervisor Guyer suggested to Mr. Capano that he submit signed and sealed engineered drawings which incorporate the changes he is proposing and the MSC will review them with its consultants and respond. Supervisor Guyer advised Mr. Capano that he will be responsible for the cost of engineering review for compliance with MSC standards and he will secure an estimate of the cost of review from URS. Staff assured the Commissioners they are prepared to compromise where it makes sense but they can not live with a plan that would put transformers and fire hydrants in a drainage ditch or doesn’t allow for future maintenance without extraordinary expense.
The Secretary reported City Solicitor Roger Akin has Burris Logistic’s executed easement documents but has failed to deliver a revised easement to Paul McConnell’s assistant, Shona Grace, which incorporate the changes Mr. McConnell requested. The Secretary said he made a second request to Mr. Akin that morning by e-mail to confirm he has sent the documents to Ms. Grace. The Secretary told the Commissioners staff advised Mr. Capano of the status of the easement at their Friday meeting.
Supervisors Spicer and Guyer brought the Commissioners current on Riveredge Business Park and construction of the Pencader Charter School’s new building. Supervisor Spicer told the Commissioners without approved plans Daystar Sills subcontractor Area Electric installed 1000 KCM electric cables. Supervisor Spicer said when he was told they had begun trenching to install the cables he went out and saw to it they did the installation according to MSC specifications. The cables were tested July 21st, 2008. Supervisor Spicer said he will not turn the service on until he receives engineered drawings. Supervisor Guyer said after several meetings and submissions for water Daystar Sills produced a water plan that was approved. Supervisor Guyer said MSC has inspected all installations for conformance with MSC standards. Supervisor Guyer also made a case that the MSC should request that the city by ordinance give authority to the MSC for all water installations and inspection between the curb and the first valve inside a building.
The Secretary reported on the Water Supply Coordinating Council meeting held June 12, 2008 in Dover. The Secretary said the Council had previously recommended cancelation of the drought watch which had been instituted earlier in the year. The Secretary said DENREC and the Delaware Geological Association floated the concept of a water user fee to fund a series of observation wells to monitor water levels and flows in the aquifers serving northern New Castle County. The Secretary went on to say observation wells were a recommendation of the Corp of Engineers after completing their study of the water supply above the C&D Canal. The Secretary said one investor owned utility immediately expressed concerns about imposition of any fees on their customer base. The Secretary said he believes the MSC should support a charge to monitor supply so the state can adopt prudent water supply policies.
The Secretary spoke about his meeting with Cynthia Marshall and City Administrator Cathie Thomas to discuss a shared quarterly news publication. The Commissioners after discussion directed the Secretary to develop a quarterly publication without the City’s participation. The Commissioners said they felt a joint publication would dilute the MSC’s message.
Supervisor Spicer reported on the Electric Department’s operations and told the Commissioners in addition to things they have already discussed the line crew has been performing clean up work on poles in the West End occasioned by the construction of the new 340 line through that area. Supervisor Spicer said he has received positive feed back from the community regarding this work. Supervisor Spicer mentioned that there is a meeting scheduled for Thursday the 24th of July with Norm Baron of Utility Engineers, Pat McCullar of DEMEC and MSC Staff for engineering services for the new substation and changes to the existing substation. He continued with his report and told the Commissioners Jay Jones was continuing to enter data for the GIS mapping program and he concluded by saying there were no outages since the last meeting. Commissioner Knox asked about efforts to find an assistant for Supervisor Spicer. The Secretary and Supervisor Spicer talked about the difficulties in finding an assistant and the option of trying to develop someone in-house.
Supervisor Guyer handed the Commissioners copies of his Water Department report and began by talking about the progress on the upgrades to the MSC water facilities. Supervisor Guyer said he has building permits for work at Frenchtown Road well and Gray Street water tank. He continued by saying footers and foundations have been laid for the new building at Frenchtown Road and he replaced flanged components for the well with new mechanical joints. Supervisor Guyer said the plans for the precast concrete building have been approved and he should have a delivery date this week. He added that Delmarva Power must install cut-outs to allow for a crane to set the building and for any future work on the well. Supervisor Guyer said this added an additional $4,500 to the project. He continued by saying at Gray Street he is looking for final plans for the precast building for the altitude valve and components. Supervisor Guyer said the water crew is cleaning up the Basin Road pump station and he provided information to Davis, Bowen & Friedel on the School Lane facility so they can complete their design. He continued and said, at the Secretary’s request he spoke to Rob Penman of Artesian Water Company to discuss logistics if the Commission needs to buy water during work on the School Lane facility. He said Mr. Penman told him Artesian would be happy to provide assistance during construction and shared information on contractors who have done work for Artesian. Commissioner Appleby asked him about the budget for these projects. Supervisor Guyer said he would update the numbers but he felt he might exceed the budgeted numbers.
Supervisor Guyer reported on water plans for the townhouses on West 9th Street by School Street being built by Williams Construction. He brought the Commissioners current on lead and copper testing for compliance with the Clean Drinking Water Act and creating reflective bands on city hydrants to be in compliance with the state fire code. Commissioner Appleby said there was a lot of material to cover at the meeting and if Supervisor Guyer didn’t mind the Commissioners would read his written report to bring themselves current on Water Department’s activities.
OLD BUSINESS
Secretary Patterson said Supervisor Spicer, Comptroller Patone and he reviewed the engineering contracts for the new substation and Wilmington Road substation. The Secretary said they have requested certain changes in the contract. He went on to say Norm Baron is leaving Quad 3 Group and creating his own engineering firm Utility Engineers PC and the contract for services is from this new firm. The Commissioners discussed the change of engineering services. Both Secretary Patterson and Superintendent Spicer said they are comfortable with the change from Quad 3 Group to Utility Engineers PC and reminded the Commissioners that the relationship has been with Norm Baron not his firm. The Secretary asked for the Commissioners authorization to sign the contracts for engineering services when he is satisfied the contracts reflects the changes staff requested.
The Commissioners entered into a lengthy discussion of the 30% increase DEMEC experienced in its June energy purchase and how they would pass the cost along to MSC customers. They struggled with the nature of this cost of energy increase and whether it represented a short or long term spike in energy prices or whether it represented something that was of a permanent nature. Commissioner Appleby said after the July 23, 2008 DEMEC meeting the MSC would have more information on how President McCullar sees the market and what they could expect. The Commissioners agreed that the cost should be passed along through the Purchase Power Adjustment clause of the tariff rather than a rate change until the nature of the increase can be determined and for the time being they would defer an increase in water rates they were contemplating. The Commissioners debated how much of the increase should be passed to customers in their August electric bill and whether they should use a portion of MSC reserve to soft load the impact. The Commissioners asked the Secretary how he would address the increase to the customers. The Secretary said he would create a bill stuffer that would explain what was occurring and that the Commission will need to address any increase on a month by month basis until the market settles down. The Commissioners agreed to pass along 15% of the increase in the August 1st bill. The Secretary said in 2004 when the last spike occurred the Commissioners waived the PPA charge for seniors and those on disability who received the city tax exemption. The Commissioners said they would do that again. Upon motion made and unanimous approval the Commissioners approved activating the Purchase Power Adjustment clause of the tariff to address increases in energy cost they believe to be of a short duration and to exempt those who are on the January 2008 city list qualifying for tax abatement from the PPA charge and authorized the Secretary to recapture approximately 50% of the energy increase DEMEC experienced in June in the Commission’s August 1, 2008 electric bill.
NEW BUSINESSSecretary Patterson told the Commissioners the attorney’s for DEMEC and the MSC had prepared resolutions for both parties to adopt which authorizes amending the Full Requirements Service contract between DEMEC and the MSC to allow for construction operation and maintenance of a new substation for New Castle. The Secretary said he had forwarded to the Commissioners copies of the resolution and the proposed amended Full Requirements Service agreement for their consideration. The Secretary said if there is no objection he would have them vote on the resolution by title and a copy be attached to the minutes of this meeting.
Upon motion made and unanimous approval the Commissioners approved a “Contract Resolution” titled “A Resolution Approving A Project To Be Undertaken By Delaware Municipal Electric Corporation And The Municipal Services Commission Of The City Of New Castle; Authorizing The Execution Of An Amendment Agreement Between The Municipal Services Commission Of The City Of New Castle And The Delaware Municipal Electric Corporation; And Authorizing Other Matters Related Thereto.” a copy of which is attached.
The Secretary said before the Commissioners move on he would like the Commissioners to consider an increase to Comptroller Patone’s salary to reflect the exceptional work she has done since she joined the MSC. The Secretary said Ms. Patone has brought the strong financial controls and procedures to the MSC the Commissioners have sought and are required for compliance with the Sarbanes/Oxley Act. The Commissioners concurred with the Secretary’s opinion and authorized an increase of $5,000 annually.
REVIEW OF FINANCIAL REPORT
Comptroller Patone joined the meeting at this point to present the Draft Financial Report, the First Quarter Financial Report and the Monthly Report.
Comptroller Patone walked the Commissioners through the Draft 2007/2008 Financial Report explaining differences and adjustments that were made in order to accurately state the Commission’s financial picture. The Comptroller said certain items in the 2006/2007 report needed to be restated. The Commissioners queried the Comptroller on certain items for clarification. The Comptroller said Michelle Cross and Greg Sarnecki of Belfint, Lyons and Schuman will be at the next meeting to present the final report. Commissioner Appleby asked Comptroller Patone to review the professional fees expense to identify why there was a significant increase from the prior year. It was also discussed that the uninsured cash balances were large and that a recommendation should be made to the Commissioners regarding minimizing these uninsured balances.
The Comptroller presented the fiscal year 2008/2009 first quarter financial report with accompanying notes. She said she did not include a comparative column from the previous year since she did not prepare those numbers but she offered her explanations for changes in the Commission’s financial picture based on changes from last year’s financial report. She pointed out that Total Assets had increased in the first quarter approximately $222,000 largely due to increased accounts receivables and investment into property, plant and equipment. Liabilities also increased approximately $158,000 largely due to the higher purchase of power expense in the month of June. The net result was an increase in Net Assets of approximately $64,000. Although comparative figures are not available she said, it appears that the first quarter is down approximately $98,000 from the first quarter ending June 30, 2007 largely due to an increase in expenses in the area of power purchases, salaries and insurance. She added in addition to the increase in expenses the investment income is also down in the first quarter.
The Comptroller presented the monthly financial reports and answered the Commissioners questions. 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.
JULY MEETING
The Commissioners set the date of the next monthly meeting to be August 12, 2008 at the office of the Commission, 216 Chestnut Street.
ADJOURNMENT
By motion made and unanimous approval, the Commissioners voted to adjourn.
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