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HomeMy WebLinkAboutMinutes 1989DRAFT - NOT APPROVED Minutes Commonwealth Task Force March 23, 1989 Present: Ronanne Dineen, David Kraft, Pled Lauterbach, Phil Lewis, Charles Lippitz, Jan Schakowsky, Jim Suhr Absent: William Hartgeri.ng, Ann Dienner, Edmund Pasbt, Norman Raedle Staff: Silly Roethle, Joel Asprooth Guest: Robert Dwyer, Commonwealth Edison Chair: Phil Lewis Summary of Action Chair Lewis welcomed those present for the first task force meeting and encouraged members to take this opportunity to get acquainted. He explained his interest in open discussion of topics of interest to all members and encouraged each to send to staff, for distribution to the Task Force, any materials related to the broad spectrum of energy use and options studies. Lewis asked that members contact him regarding topics of particular interest and suggested creating related subcommittees. Lewis mentioned a 3/23 news item regarding advances in fusion energy research conducted at the University of Utah and suggested contact with researchers involved to lend support for their development of a prototype including a campaign for federal funding for further research. He also suggested review of a recent news article included in materials provided at the meeting regarding development and future use of orbiting satellites to generate solar power. Lewis noted that a City of Chicago task force on electric options is in the process of preparing recommendations for the Chicago franchise agreement renegotiations which may be of particular interest. Staff was requested to provide to each member a copy of the Beck Report prepared for Chicago and to contact the Chicago group to express the mutual interests of the Evanston Task Force as Evanston prepares for franchise renewal in 1992. Lewis also noted that requests have been sent for additional information on a pollution free solar mobile developed in Switzerland and recent developments at the Max Planck institute regarding pollution free energy supply technology. In addition Lewis stated that a recent MRA graduate from Northwestern University has offered to do studies on electric power supply rates of return, equities of sale and how these affect consumption. Chair Lewis then asked each member to state possible financial conflicts related to the work of the Task Force. Lewis stated that owns a certain amount of Commonwealth Edison stock. Ned Lauterbach stated that his spouse owns some utility stock and David Kraft stated that he owns a very minimal amount to entitle him to attend shareholders meetings. Commonwealth Edison Task Force March 23, 1989...2 City Manager Joel lsprooth advised that Task Force members request an advisory opinion from the City Board of Ethicn as to a potential conflict of interest in this regard. Discussion began regarding the purpose of the Task Force. Lauterbach asked if the thrust will be to determine a supplier for of electric power. Kraft stated that with the Nuclear Enercf'! Information Service (PIEIS) he has worked for about two years with consumer interest groups on the Chicago electric options campaign and strongly eniggested extending the timeline required for the work of the Task Force. Charles Lippitz informed the group of his personal experience with numerouis power outages last sumrrper and agreed on the need for more tirrne to allow the 'rack Force was to look carefully at Evanston's experiences with current elrc;r.ric utility services. Lewis explained that the Mayor's intentions for the work of the Task Force were broad in scope and go beyond limitations in the current franchise agreement. In response to Jim Suhr's question about separate financial payments from Com Ed, City Manager hsprooth stated that there are free services granted for some municipal operations to the City and provisions in the franchise agreement for utility line burial which have also been required for about the past twenty years in other area suburbs. Suhr suggested that the Task Force study the full financial ramifications of the franchise agreement. Lewis said that he had calculated Ccm Ed billing revenues from Evanston based municipal taxes collected but was interested in the annual value savings for city operations based on free service provided for certain municipal uses and the actual worth of the current franchise agreement. Lewis noted interest in asking northwestern University for some assistance in the study and research efforts of the Task Force. Kraft suggested asking Professor Path, D-2partu.ent of Industrial Engineering and Management Sciences, who designs undergraduate level analysis and study projects. It was agreed that such a project may be a good idea but would be limited in scope and expertise in terns of the purpose and goals of the Task Force. Discussion continued regarding a timeline for the work of the Task Force report. Kraft noted that Evanston may want to consider studies on regional suburban networks or with Chicago or professional consulting services which will recuire additional ti e. Lewis suggested contacting the Mayor to suggest a Spring 1990 time line for a recaTsrendation report the City Council. Kraft suggested that members may rant to attend meetings of Chicago's Task Force which he described as a knowledgeable and diverse group but suggested that a new mayor in Chicago may want to proceed with studies in a different manner. Lewis suggested contacting the Village of Winnetka to learn more about their municipally owned utility. Lippitz expressed interest in contacting a broad cross section of cities across the nation noting that projects such as cogeneration are not limited to the metropolitan Chicago area. He suggested =_ that the Task Force consider reaching out to broader information sources and finding information repositories on power supply services and options. Lewis agreed and suggested ♦ Car=nwealth Edison Task Force March 23, 1989...3 Northwestern as a local source. Ffe recalled involving power loss on campus was a somewhat recent incident on certain experiments and having rrep°rted to have ca;u.red serious disruption that cogeneration was not a possibly that tIU Vice -President Lee Ellis stated contacting Geneva and St. Charles, Ill? for Northwestern. Kraft suggested rzfi:er source systems which are unique kaothlsoalearn morF about their electric In response to Suhr's suggenLion t the terms of agreement other local ub hat the Task Fora -learn more about "ur�z have recently negotiated with Com Ed, the City Manager stated that �u:I preparing to negotiate new franchl.r;,e and northwest. r:uburbs, also Northwest Municipal Conference, gas; haagreements, have joined with the research fund to better represent rnu s the City of Evanston, to create a legal Suhr requested a listing of local t�rt�al interests in future negotiations. franchise agreements with Can Ed; Utaffsuburbs and expiration dates on their noted that written contact is underway with requested to provide same. Lewis reiterated the need to extend the r� h these municipalities. Lippitz offered to provide names of contact arch scope to a national level; Kraft organizations and will send same to staff. Lewis explained a system used in tlaszachusetts in which paddle wheels are used to generate electricity which generation is stored for later use. i�owns purchase in bulk, excess does not have the necessary hydro s W rces Manager Asprooth noted that Evanston if that were the case, under Public Utilitneeded for that kind of system and regulations Com Ed would rave to buy Y Regulatory Power Act (PURPA) that the City looked into generating �Ck excess energy generated. He noted resource recovery plant for solid wa5and Selling back energy produced by a to he more economical. Asprooth alsq e disPosal and found that landfill use capacity electric power generator at noted that there is a very limited the Ecology Center. Lewis spoke about a central heat• used prior to World War II in do.mtcP,,,1ng system for steam vault generation lire this is in use in St. Paul, Muir, Evanston. Kraft noted that a system Responding to Suhr's questions As University is required to purchase and Asp stated that Northwestern source as the City. Suhr suggested that Ys for electric power from the same university used another powar source oo the City could lose revenue if the Director has advised that the City c�uPtkon: Lewis noted that the City Finance in that event. Lewis noted that Rep. Ro continue to collect a municipal tax Tax Reform Act prohibit municipal use stenkowski's amendments to the recent equip —.rent. In discussion City ManagQA of tax free bonds to purchase utility between tax exampt and taxable bonds r AsPrOoth commented that the difference percentage points. lS in interest rates of two full Kraft suggested that as a counter lease back system with a third party su measure the City might consider a system distribution management because pplier and contracting out for utility With their own distribution system are in better bargaining positio,s Commonwealth Edison Task Force 11-larch 23, 1989...4 Lewis stated that Wisconsin Power has an excellent low cost conservation program and suggested the desirability of a situation in which Ccmm. nuealth Edison would invest in conservation programs rather than more nuclear reactors. Kraft concurred and suggested this for future bargaining purposes. Iie suggested that the Public utilities Art will change regarding the lease back clause, impact recommendations by I:he Task Force and require more flexibility from utility companies. Responding to Suhr's questions alw)ut renewal of the northern Illinois Gas franchise agreement Asprooth stated that the issues were substantially different, affected by deregulation, and the City's decision to purchaan from the wellhead. Lippitz and Suhr reiterated the need for additional time for Task Force study and recommendations. Suhr suggested that at the next meeting the group create an agenda and timetable. Lewis requested from each member a communication proposing ideas for the Tank Force agenda. Kraft suggested setting ground rules for conduct of meetings regarding participation by observers, public notice of meeting times and dates. Asprooth commented that all public groups are subject to the Illinois Open Meetings Act and that the City posts me-etings times and dates in advance in the Civic Center and the city cable channel. Lewis also suggested sending notices in advance to the local media including the Evanston Community Television Corporation and to community groups as proposals for changes are ready for presentation. Suhr suggested that Commonwealth Edison representatives make a presentation to the Task Force. Lewis concurred and suggested that members make a list of topics for discussion with the Company. In response to Kraft's comment about a missing provision in the Evanston franchise agreement which would allow the City to get "discovery" questions answered, Asprooth commented that in the past Commonwealth Edison has cooperated and provided information requested by the City. Rosanne Dineen offered to provide assistance in contacting various municipalities and organizations that can provide information of interest to the Task Force. The Task Force agreed to meet again on Thursday, tray 4, 1989 at 7:30 p.m.. This meeting will be held in Roca 2404 of the Evanston Civic Center, 2100 Ridge Avenue. The Task Force adjourned at approximately 9.15 p.m. :4 Staff 7- cc: Joel Asprooth, City Manager . DRAFT - NOT APPROVED Minutes Commonwealth Task Force May 4, 1989 Present: Ann Dienner, William Hartgering, David Kraft, Ned Lauterbach, Phil Lewis, Charles Lippitz, Edmund Pasbt, Norman Raedle, Jan Schakowsky Absent: Rosanne Dineen, Jim Suhr Staff: Sally Roethle, Joel Asprooth Guests: Robert Dwyer, Commonwealth Edison; Jacob Aronov Chair: Phil Lewis Summary of Action Chair Lewis called the meeting to order at 7:45 p.m. Approval of Minutes Minutes of 3/23/89 Task Force meeting were corrected as follows: page 11 paragraph 4: "Lewis stated that he owns a certain amount of Commonwealth Edison stock. Ned Lauterbach stated that his spouse owns some (utility) Commonwealth Edison stock...."; and on page 40 paragraph 1: "Kraft... suggested... that the Public Utilities Act will change regarding the (lease back) least cost clause...." With these corrections the minutes were approved. Conunications Task Force members were reminded to file a Financial Disclosure and Affiliation Statement with the City Clerk's office. Lewis noted that Norman Raedle will review Commonwealth Edison Annual Reports for 1984 - 1988 to determine revenue derived from Evanston customers. He encouraged members to attend the Illinois Commerce Commission/Center for Regulatory Studies workshop on Least Cost Planning in Chicago on 5/10/89. Lewis announced that Mr. Gary Zimmerman, Regional. Director of the Illinois Municipal Electric Agency (IMEA) and former manager of the Village of Winnetka Water and Electric System, will meet with the Task Force on 6/1/89 to explain the role of IMEA and its work on behalf of municipally owned electric systems. Lewis urged members to invite other residents to this meeting in the interest of fostering public support and understanding of future recommendations to City Council. Commonwealth Edison Task Force May 4, 1989...2 Current Evanston Franchise Agreement with Commonwealth Edison In discussion Schakowsky noted that an option to purchase, at replacement costs less depreciation, was the most salient difference between the Evanston and Chicago utility agreements and asked if an Evanston option to do so is precluded. In response to Chair 'Lewis' remarks about the lack of a buy back option in the Evanston agreement, City Manager Asprooth noted fundamental differences between Corn Ed operations in Chicano and Evanston including two generating stations in Chicago and noted that Evanston's electric utility agreement is similar that of most Chicago suburbs. Lewis recalled that prior to 1945 Evanston had a public heating system for downtown Evanston and suggested it should have been taken into account when the current franchise agreement was accepted in 1957. Ann Dienner stated that the system was very limited. She recalled the City's interest in cutting back the system, that it was a coal fired heat generating system, that excess heat was distributed only as far E,s the perimeter of the downtown area, and that as area homes were modernized residents disconnected from the system. Asprooth stated that there was a coal gasification plant along Maple Avenue between Clark and the University which may have been the power generating source station. Dieneer agreed noting that creation of an incinerator station in 1947 may have been part of an operations phase out. Ned Lauterbach asked how the Task Force might consider a buy back option and reminded members of David Kraft's 3/15/89 communication on problem areas in the current Evanston agreement. Lewis commented that the agreement limits bargaining power and suggested that leverage requires a qualified consultant's study to determine costs of creating a municipal transmission and distribution system. Raedle suggested consideration of right of eminent domain. Kraft noted that municipal band issues could be used to finance construction costs; Asprooth reviewed tax requirements for same and interest rates at 200 basis points. Kraft suggested consideration of system lease back for Evanston; he noted that cost estimates made by the City of Chicago and Com Ed on a buy back option differ in billions of dollars and that a court challenge by Com Ed is possible if Chicago pursues the option. Bill Hartgering suggested that the Task Force request a legal opinion regarding the right of eminent domain. Raedle commented that time and cost could extend these considerations years into the future. Hartgering noted that ` Con Ed could face the same problems. Lippitz agreed that the City should know if eminent domain possibilities exist. The City Manager suggested that utility law expertise may be necessary in this regard and that statutes provide for the exercise of eminent domain to acquire property for a legitimate public purpose but severely limit other circumstances. An information response was requested by the Task Force on use of eminent domain as a viable legal alternative for Evanston to purchase the electric power distribution system. Commonwealth Edison Task Force May 4, 1989...3 Lewis requested figures on value of costs of service to the City of Evanston and Lauterbach requested identification of government customers as listed on the revenue summary report provided by Staff. Lewis noted that publicly available materials will be provided on Spring Grove, Illinois and issues surrounding its agreement with Com Ed. in response to Dieneen's questions about municipal operations, Lewis suggested that a city run operation would include system operation and meter readings by city employees. Asprooth responded that a City operated system would be structured as an enterprise fund like the water utility for which there are two taxes. He noted that such a utility may have to pay corporate income tax and may collect a utility excess surtax from customers to the extent that it applied; an electric enterprise would be similar to the Winnetka and Naperville operations. Staff noted that the St. Charles IL system charges a state tax and a municipal tax and that it is regulated by the Federal Energy Regulatory Commission. Hartgering commented on a recent National Public Radio program about electric energy conservation measures in other parts of the country. Lewis noted that written information on same is now available in Roethle's office with other materials collected for the Task Force. He also noted that the Least Cost Planning seminar on 5/10 will include presentations by speakers from the Northeast Utilities group and the State of Wisconsin. He noted that the Northeast Utilities group made a compact with conservation groups to promote conservation and suggested that the City Council may want to urge the Illinois State legislature to promote similar measures to reduce wasteful energy use, that without these efforts utilities can argue the need for more nuclear generating facilities, and that the problem then remains one of wastes created by nuclear generating facilities. Kraft noted that this concept has been pursued for many years in the Pacific Northwest. Hartgering stated interest in the agreement between various northeast utilities and conservation groups. He provided an overview of significant events which led to compromises acceptable to both groups and suggested that this may be an approach of interest to the Task Force. He noted that such a process takes a time and resources and that in the northeast plan the utility paid for a consultant chosen by the Conservation Foundation. Kraft suggested that information is needed on the rate structure in such areas including whether or not the first block of electricity is higher or lower than subsequent blocks. He commented that the Illinois rates stifle conservation because consumers are penalized for the first block of energy, the more used, the less paid, and that problems exist beyond conservation; lower income customers are victimized and penalized and large industrial users pay less. Kraft suggested there may be an opportunity to work on both systems. Commonwealth Edison Task Force May 4, 1989...4 Lewis suggested the City look at a parallel situation in which traffic studies have shown that for major downtown areas there should be an inverse ratio between parking spaces and rates, a very small cost to park for the first half hour and the longer you stay the higher the rate, to get shoppers quickly in and out and bring more business and higher sales taxes revenues. Pabst clarified the point on electric rates noting that if you paid less at the beginning and paid more with additional usage, conservation would be forced economically. Raedle concurred on the volume discount in Illinois for higher kilowatt hour users. Hartgering began discussion on the type of approach to take on utility issues in Evanston. Lewis stated that the Mayor asked the Task Force to research options on alternatives and to recommend provisions for a new agreement. He stated that this does not constrain the Task Force to a particular approach and that the Task Force was asked to provide a preliminary report to City Council by the end of September and a final report in Spring 1990. The City Manager suggested that the Task Force provide City Council with information on its timeline, ideas and descriptions of the broad range of options and alternatives within options. He advised the Task Force of the need to seek Council approval to fund a consultants study. Lewis informed members of correspondence received from Dr. Simpson of the University of Chicago Astrophysics Department on solar energy research and that he planned to schedule speaker from the University for a Task Force meeting in July or August. He noted that water and solar power are the only non-polluting sources of energy power. Lauterbach stated that although it is interesting he is not comfortable dealing with future power sources and suggested efforts toward developing available power source recommendations. Lewis stated that future possibilities are igportant in recommending a franchise with a modified time period. Lippitz warned of the possibility of developing ideas without a basis to judge validity of same and suggested that the Task Force sladly narrow its field as more is learned. Asprooth agreed but suggested consideration of options which are more likely and the need to develop a rationale for a consultant noting that solar power may be several years ahead and may be beyond the practical range of the Task Force. He suggested the Task Force limit its own work, considering time limitations and the need to provide City Council with informed recommendations. Schakowsy stated that the choice of a consultant may be one of the most important decisions made by the Task Force and the process should start soon. Asprooth concurred that time is of the essence and urges] to the Task Force not to diminish the importance to reporting soon to City Council. Kraft commented that Evanston is in the vanguard in this effort, suggested parameters beyond technology and the need to be clear about general categories. Commonwealth Edison Task Force May 41 1989...5 Dieneer began discussion on options and noted that work by the City of Chicago provides a good framework. Kraft suggested that a flaw exists in Chicago's Beck study, that it is too compartmentalized. He proposed that Evanston be creative in its proposals, integrating our energy system to other aspects of city management. Pabst stated that options for renewal must be separated and explored and a decision reached on what a consultant will do. Kraft utated that other concepts for franchise negotiation are important including flexibility in response to technological and sociological change and the ability to give notice to change or terminate service. Lippitz reiterated the need to understand possibilities for a consultant's study and to develop an options framework. In response to Raedle's request for comment on the City relationship with Com Ed and what might be expected in future negotiations, Asprooth stated that he has worked with various utility representatives on maintenance of the utility system and utility involvement in construction of public improvements. He noted that the relationship has changed because of service issues and problems last summer which resulted in a great deal of ongoing construction activity. Asprooth described the relationship as similar to that of any governmental body and a utility, that it is not adversarial or acrimonious but not without some tension. He stated bin expectation that a franchise negotiation would be handled as a reasonable exchange, both sides represented by officials and expert attorneys and that to the extent possible the City will rely on legal research developed by the northwest Municipal Conference. In response to Lewis' suggestion that Com Ed may be tinprading now only because of Evanston's franchise renewal process, Bob Dwyer, Can Ed District Supervisor responded that similar work is ongoing in various sections of Can Ed's north suburban service territory. The Task Force then discussed Chicago's options studies. Kraft stated that if recommended and approved Chicago must provide Can Ed with a notice of non -renewal by the end of this year. Lauterbach stated that Chicago has already done considerable research and suggested that the Task Force monitor their work. Kraft concurred and noted that the City's Energy Task Force recent meetings included a presentation by Com Ed and comments by various consumer groups. Schakowsky noted that if Chicago adopted an option other than renewing with Cam Ed, all other customers would be burdened with loss of revenue for Cam Ed. Kraft concurred noting that Chicago represents 33% of Gam Ed's customer base. Pabst commented on the one year time line for Chicago's meetings before a final recommendation is due, the order of its agenda, and stated that the Evanston Task Force is scheduling an Edison report, but does not have a session scheduled for consumer perspectives, nor is there a group to represent Evanston consumers before this Task Force. Commonwealth Edison Task Force May 4, 1989...6 Kraft suggested the need to build an awareness of among Evanston residents, that consumer groups can be identified and noted that electric service has been an issue in Chicago since 1984. Pabst stated concern that unlike Chicago, Evanston must consider options before hiring a consultant. Kraft stated the Chicago's process has been ongoing for three to four years, that Evanston has more time and that a consultant may be needed more directly for the Task Force than for residents of Evanston. Pabst asked for aumnaty of Chicago Task Force meetings. The Task force agreed to meet June 1 and on June 15. Lauterbach asked that staff provide a summary of the 6/6/89 Chicago Energy Task Force meeting. Schakowsky suggested that the Task Force develop a future agenda and timetable. The Task Force then considered a subcommittee structure and created a list of topics for same: options for renewal, options for non -renewal, regulatory/legislative issues, broad ecosystems technology, review of other communities. It was agreed that a decision on subcommittees would be made after the June 15 meeting. Adjournment The Task Force adjourned at approximately 10 p.m. The next Task Force meeting will be held June 1. JAb�4 ff cc: Joel Asprooth, City Manager "MW ,m Minutes COMMONWEALTH EDISON TASK FORCE June 1, 1989 PRESENT: Ann Dienner, Rosanne Dineen, William Hartgering, Dave Kraft, Had Lauterbach, Phil Lewis, Charles Lippitz, Norman Raedle, Jan Schakowsky, James Suhr ABSENT: Edmund Pabst GUESTS: Gary Zimmerman, rllinois Municipal Electric Agency; John S. Maxson, and William P. Herdegen, III, Commonwealth Edison; Jacob Arnov STAFF: Sally Roethle PRESIDING: Phil Lewis, Chair MINUTES the minutes of the May 4,1989 meeting were approved as submitted. CHAIRMAN'S REMARKS Lewis announced the appointment of a subcommittee to prepare a brief summary report of Task Force activities and the need for a consultant's services for draft review at the Task Force's August 3 meeting and presentation to the City Council in September. Bill Hartgering, Dave Kraft, Jan Schakowsky and Rosanne Dineen will serve on the subcommittee. Lewis then reviewed highlights of a 5/22/89 seminar on least cost planning, sponsored by the Illinois Commerce Commission and City of Chicago Planning Department, with guest speakers associated with electric utility operations in Wisconsin. Nevada and Massachusetts. According. to Lewis the concept of least cost planning was presented as increased cost of unit output from any new electric generating facility created today versus the same facility built one or more years ago. Any way to avoid construction of new facilities allows for the possibility of low cost technology and energy conservation which becomes the principal means of holding down utility costs. New England was of particular interest in the use of economic incentives for more efficient electric uses such as rebates for energy efficient appliances, and under certain conditions, low cost loans for retrofitting which provide a higher rate of return than new construction. Studies indicate the U.S. is the most inefficient user of electricity among major industrial countries. Conservation efforts do not diminish electric power consumption, but do diminish the need for expanding power generating facilities, according to utility experts. COMMONWEALTH EDISON TASK FORCE Minutes of 6/1/89 . . . 2 Lewis also noted that Dr. Charles Williams, Director of Energy Management, City of Chicago, stated his willingness to provide an update on energy planning for Chicago and assist Evanston in setting criteria for consulting services. Lewis .requested preliminary proposals from two consultants he met at this seminar. Kraft suggested that the Task Force follow up on Dr. Williams' offer. Dineen stated that she has developed a list of five other consultants. Hartgering suggested creating a standard request for proposal. Lewis asked that the new subcommittee develop this RFP by the mid -July meeting as part of the September report to Council. Raedle suggested that the City Council be given the option to select a consultant based on Task Force suggestions, considering future Council need for consulting services up to the time of refranchising. The Task Force agreed to present options on services and costs for five consultants with a recommendation. PRESENTATION BY GARY ZIMMERMAN, EXECUTIVE DIRECTOR, ILLINOIS MUNICIPAL ELECTRIC AGENCY (IMEA) Zimmerman explained the benefits of municipally owned electric systems, citing the example of the Village of Winnetka system, revenues from which provide a $350,000 direct cost transfer to the general fund annually and sharing of administrative services and equipment for other municipal services. In Winnetka, population 13,800, the electric service revenues. over five years, were equal to the total tax base of the general fund. It adds an annual revenue stream of $6.5 million, $1 million in cash flow annually with very little debt. Recent capital outlay included the purchase of two large diesel generators for $2 million in 1978 at 5.4% interest for start-up engines to power the Winnetka system. A referendum to sell the system to Edison in 1957 at $3 million, over a SO year period] was defeated by a two thirds vote. Book value on the Winnetka • system has risen to $12.5 million. IMEA, a municipal corporation, created in 1984 under a 1983 state statute, managed by Zimmerman, has a joint intergovernmental agreement with other municipalities that own electric systems to secure power supply and transmission access to serve the distribution systems within the corporate limits. It sells to 23 cities in Illinois, half of which have generators for all or part of their electric generation needs. the other half have none. Historically small public power utilities joined together due to astronomical power cost increases in the 1970's and 19801s; wholesale costs were rising 307. every two to three years. Rate cases for public power systems are settled at the Federal Energy Regulatory Commission (FERC) in Washington, D.C. Rate cases are very expensive for municipalities and rate increases must be paid until cases are settled. Shared costs among municipalities help in these control areas. IHEA was formed to stabilize the cost of power. Typically 80-90% of the cost of electric power is production and transmission; 10-20% is distribution related. COMMONWEALTH EDISON TASK FORCE Minutes of 6/l/89 . . . 3 To control costs, production costs need to be controlled. Under IMEA enabling legislation, the organization can buy and own plants and contract for power. IMEA has replaced cost of service tariffs with negotiated contracts in a competitive fashion by soliciting proposals from suppliers interested in dealing with IMEA to serve the combined membership. IMEA solicits bids from potential suppliers for its member cities. The organization's first group contract will expire in 1991, with another group in 1993, and has provided customers extremely competitive rates at wholesale, below the actual cost of production (if all costs were included on the generating plants of the private utility companies. Zimmerman noted that many utilities have excess capacity; marginal pricing above variable costs is income for utilities. IMEA and ICC analysis of marketplace conditions indicate that the current excess in this region may not exist in 1990, resulting in a sellers market, until a new wave of plant construction commences around the year 2000. Zimmerman discussed independent power producers (IPPs) as unique and new in the marketplace; some traditional private utilities are forming their own IPps. He noted that the power industry is in a change mode, restructuring itself. Zimmerman explained that CON ED proposed spinning off three of its nuclear plants to create a subsidiary and sell power to the distribution companyj. ultimately at market rates, regulated by FERC. Regarding IMEA, Zimmerman stated that flexibility is important for its member municipalities. Capital investments are low to keep risks low because of Possible changes in future technologies. Responding to Suhr's question about IMEA and power production, Zimmerman stated that IMEA does not produce power. There was a peak demand from 23 member cities last summer of about 260 megawatts; IMEA has about 206 megawatts of installed capacity among the member cities. The cities own and operate that generation but IMEA worked an agreement out where it pays a fixed charge per month for that capacity. For that payment, IMEA has the right to dispatch the capacity or tell them when to operate. IMEA then is buying non -firm energy against this generating capacity, that is the economy rate, very low priced energy. If that energy which is not firm, is interrupted, IMEA would have to get its equipment on and run it. IMEA purchases low cost energy and since 1986 has had no power interruptions. It was also noted that IMEA can issue revenue bonds to fund projects. Each member city, regardless of size, selects a representative for the IMEA Board of Directors. Springfield, IL is the largest member city where residential rates average about 60 per kilowatt hour. Zimmerman stated that transmission is the controlling factor; the monopoly aspect of electric power and that access to the transmission system, not distribution or generation, is key to the process. He noted that independent power producers and the IMEA are a "can of worms" for private utilities that waist to keep and maintain control of their systems. According to Zimmerman, _ if Evanston controlled the load or distribution system, then the City could go to the marketplace for its power supply. M _ . COMMONWEALTH EDISON TASK FORCE Minutes of 6/1/89 . . . 4 Regarding IMEA, Zimmerman noted that 14 power utilities responded to its request for proposals. IMEA has no retail customers, only wholesale. Zimmerman suggested that demand size management can easily skim lox of demand. Zimmerman stated that the recent tax reform act grandfathered existing public systems but damaged possibilities for municipalities like Evanston to purchase the transmission and distribution system. In response to discussion questions, Zimmerman stated that in negotiating with Com Ed, Evanston must realize that Com Ed does not want to give up/sell its existing plant; that it would be extremely difficult to acquire. Complicated legal and financial aspects would have to be studied in depth. He also noted that tremendous benefits could be realized but must be weighed against possibilities of future technological change. Replacement of central plants by Com Ed due to future change would be preferable to City requirements to do the same (if the system could be acquired). Regarding the infrastructure needs to service a municipal power system, Zimmerman mentioned that these would be staggering and include: qualified, trained personnel, safety and liability responsibilities, specialized equipment, meter readings, a billing system, software programs, rate structure and reserve funds. At the conclusion of his remarks, Zimmerman provided materials from the American public Power Association, a trade association which represents municipally owned power systems, of which there are 1,800 in the United States. BOARD OF ETHICS RESPONSE Lewis distributed a memo from the Board of Ethics which advised that a conflict exists for Task Force members who directly or indirectly have a financial interest in Com Ed. Lewis stated that he is taking action to follow the direction of the Board on his behalf and advised members to resolve any issues or conflicts they may have through discussion with Mayor Barr. FINANCIAL REPORTS 0!! COM ED REVE11UE Norman Raedle distributed a summary report comparing Com Ed revenues and Evanston customer revenues which will be discussed at the next Task Force meeting. ADJOURNMENT The meeting adjourned at approximately 9:40 p.m. The next meeting will be held on Thursday, July 6, 1989 at 7:30 p.m. in Room 2402 of the Civic Center. -c1L Sally RRsthle, Staff cc: Joel Asprooth n zjtuu 1 — 1�ui eirrhuVnij Minutes COMMONWEALTH EDISON TASK FORCE July 8, 1989 PRESENZ: Ann Diener, Rosannn Dineen, William HartgerinK, Dave Kraft, Ned Lauterbnch, Phil Lewis, Charles Li.ppitx, Norman Raedle, Jan Schakowsky, James Suhr ABSENT: Edmund Pabst r,UESTS: John Maxson, Ray O'Leary, Jacob Aronov, Judy Aiello, Bob Dwyer, Bill Herdegen, Paul McCoy, John Bukovski, Daren O'Leary, Frank Clark SEE: Vincent Adamus Rapsnjur'- Phil Lewis, Chair The meeting was called to order at 7:35. MINUTES The minutes of the June 1, 1989 meeting were approved as submitted. SUBCOMMITTEE REPORTS Ha.rtgering, Chair of the Report Subcommittee, announced that the subcommittee will have to meet again, and he will have a report at the next Task Force meeting. REPORT ON MASSENA, NY POWER ACQUISITION Dineen passed out working notes from and presented a verbal report highlighting information received in a telephone conversation with Adamus and Clifford Engstrom, General Manager of the Massena, NY _ Electric Department, a municipally -operated electric utility. The Tillage of Massena purchased its electric utility system from Niagara -Mohawk Power Corp. Engstrom's responses, as reported by Dineen, were as follows: The legal basis for Massena's acquisition was condemnation of the electric system. The legal battle took seven years. The most important areas to study when deciding on system acquisition are: (1) the power source must be located, and (2) the cost of power must be identified. It is important that the power contract not expire before the expiration of the acquisition bond. July 6, Task Force Minutes page 2 Massena paid approximately $8 million for its acquisition, $5.6 for the book value and the rest for the legal costs -"associated with the acquisition. These costs included four substations and the population of Massena is approximately 12,000. Mr. Engstrom is the only technically -oriented parson on the staff; lie is a cavil engineer. Massena's costs are now 40/ less than when the utility was privately operated, and the net savings/year are approximately $2 million. Mr. Engstrom feels that economically, the buyout has been a success. COMPARISON OF EVANSTON'S OPERATIONS Member Raedle referred to the table he had compiled using comparative ComEd and City of Evanston revenues, kilowatt hour usage, and customers. It was noted that with Chicago singled out, Evanston can be seen as an important customer to the ComEd system. Evanston's customers account for approximately one percent of the total ComEd system. A number of Task Force questions were raised as follow ups to this table: what percentage of ComEd's system does Chicago account for, and what is Evanston's relative profitability to other system members? Staff was instructed to pose written questions to Bob Dwyer, representative of Commonwealth Edison. COMMONWEALTH EDISON PRESENTATION Bob Dwyer introduced representatives of Commonwealth Edison, who had prepared presentations for the Task Force. Dwyer noted that ComEd had been serving for over one hundred years. Speakers introduced were William Herdegen, Paul. McCoy, John Bukovski, Karen O'Leary, and Frank. Clark. Dwyer offered to provide the Task Force with summaries of each presentation for the next Task Force meeting. Clark moderated a question and answer period following the presentations. In response to member and audience questions, Clark clarified that the peak demand had risen 110 recently, while overall consumption grew six percent. Demand for electricity grows with the gross national product and the economy. Two and one half percent growth is predicted this year. Hartgering asked if, with new clean air provisions, ComEd- s Kinkaid plant would need cleaning. Also, with new legislation, wouldn't costs go up in the near future? Clark replied that ComEd's price is higher than they would like, but that that price is buying the most modern system in the country, and that ComEd now has enough power generating capacity for the 21st Century. ComEd's current moderniwation will keep costs low in the future. Dineen asked for an explanation of the power outage of June 25. Clark explained that a squirrel had shorted out a line, and that this type of event could be considered "normal" every two years or so. Dineen questioned whether ComEd had sacrificed upkeep of the distribution July 6, Task Force Minutes page 3 Suhr questioned whether there were any taxes imposed on ComEd in addition to utility taxes, and whether or not service to Northwestern University is covered under the existing franchise with the City of Evanston. Clark answered that no, there were no other taxes, and yes, NU is considered one of their Evanston customers. Concerning automatic distribution, all of ComEd's substations are automatic, requiring no human interventions. Concerning redundancy situations, the customer pays for redundancy Lippita questioned whether, if Evanston bought out ComEd's distribution system, Evanston would lose the ability to inter --connect with other regional systems. rl.nrk answered that without the capacity for regional interconnection, the system would require 3501D excess capacity (for power generation), versus the 15-20% required now. Currently, ComEd has 300 excess, versus the nationwide average of 20%. Lewis commented that stockholders, not customers, should pay for the poor planning that has led to the excess capacity of the system. Bukovski stated that stockholders are getting a nine percent return, as opposed to the usual return of 13.40. Kraft asked about pilot education projects, to which Clark answered that $25 million is being spent on these, and that in Evanston, the Jewish Reconstructionist Synagogue has been targeted. In response to Task Force statements that philosophy is important in Evanston, Clark stated that ComEd views electricity as a privelege and as a need; they are the suppliers. For future reference, Hartgering questioned what ComEd would be willing to put on the table in any upcoming franchise negotiations, and also questioned how Evanston's rates would compare four or five years from now, Also, had there been an independent assessment of the modernization level of electrical systems? In response to questions from Aranov, Clark stated that response time for electrical accidents was 30 minutes or less, per the Northeastern Illinois Fire Chiefs. Also, exported power rates were set by market considerations; if ComEd can export power cheaper than other utilities can generate it and still make a profit, they will export. Kraft noted the importance of plant --lire extension of existing facilities and questioned ComEd's preparations. In response to questions posed by Aienner, Clark noted that concerning time -of -day rates, residential structuring has not been successfull, but that industrial customers can be the recipients of manadatory time -of -day rate structures. ,,, 11W A July 6, Task Force Minutes page: 2 Concluding remarks by ComEd representatives underlined the fact that the City of Evanston is an important customer to Commonwealth Edison. 'rho meeting adjourned at 9:57. The next regularly scheduled meeting of the Commonwealth Edison Task Force is August 3, at 7:30 p.m., in room 2402 of the Civic Center. CC' Joel Asprooth, City Manager DRAFT -- NVr APPROVED + Minutes Commonwealth Edison Task Force August 3, 1989 Present:, Ann Dienner, William Hartgering, David Kroft, Phil Lewis, Charles - Lippitz, Edmund Pabst, Norman Raedle, Jan Sehakowsky Absent: Rosanne Dineen, Ned Lauterbach, Jim Suhr Staff: Vince Adamus, Judy Aiello Guests: Dan Alexander; Jacob Aronov; Bob Dwyer and Anne Hafeli, of Commonwealth Edison; Ray O'Leary; Bob Seidenburg, of the Evanston Review Summary of Action Chair Lewis called the meeting to order at 7:40 p.m. Avvroval of Minutes Minutes of 7/06/89 Task Force meeting were approved with the following clarification: at the bottom of page two, the illegible portion on the minute copies should read "sacrificed upkeep of the distribution system for nuclear poser generation." Also, the spelling of member Dienner's name was corrected. C ,,7,unications Chair Lewis referred to the Evanston Review article of August 3, which reviewed the July 24 City Council meeting. In the article, City Manager Joel Asprooth had advised the Council that the Task Force would not be able to negotiate rate structures with Canwnwealth Edison, and that rates were the dominion of the Illinois Commerce Commission. Asprooth advised the Council to _ clarify what the Task Force's goals were. ' Lewis noted Asprooth's remarks were in reference to an article that he had passed out, "Get it Unile it's Hot," produced by Seattle City Light, to members of the Council. In said article, Seattle's electric rates were listed, and Alderman Warshaw had compared her $55 bill to an $11 figure, the amount she would have paid under Seattle's rates. Lewis noted as a caution, however, that Seattle's summer rates were lower than their winter rates (the reverse of our situation), as winter was their peak period due to the fact that most homes were heated by electricity. Seattle's rates are also designed to benefit residential customers. Commonwealth Edison Task Force page 2 8/03/89 Schakowsky noted her anger at the situation, feeling that the City Manager's comments -in a public context undermined the Task Force's authority; she felt that this was unacceptable, and that the remarks made by the City Manager implied that the Task Force was limited in its scope. In response to the City Manager's comments that the City should have begun investigation into the Commonwealth Edison franchise renewal ten years ago, Lewis expressed his opinion that Mr. Asprooth should have notified the City at that time. Craft felt that this issue could turn into a turf war with the City Manager, and that that was not conducive to accomplishing the work of the Task Force. Pabst recommended that, since the City Manager had offered to meet with the Task Force, the Task Force should take him up on the offer. Staff was directed to invite the City Manager to came to the next meeting. Massena, New York and System Buyout Lewis noted that work should be started by the Task Force to find out what the financial details of buying out the ComEd distribution system in Evanston would be, including price for condemnation. It was noted that a bill being introduced by U. S. Representative Rostenkowski would not allow the bonds needed to purchase the system to be tax free, unlike other municipal bonds. Thus, while it took the town of massena only six years to pay back their bonds, it may take longer in Evanston, all else being equal. Raedle noted that only roughly 20% of a utility's costs are related to distribution. Rollinc Meadows, IL Franchise Aarew•m>ent Lewis noted that Rolling Meadows had signed a 50 year franchise agreement on July 24 with ComEd. It was noted that Polling Meadows was originally involved with the group from the Northwest ;Municipal Conference which is currently putting together a model electrical franchise agreement for its members. Task Force members felt that Rolling Meadows was ill advised to sign an agreement on its own at this tide, particularly one with such a long term. Report of Subcommittee on Reoort Hartgering verbally s= narized the preliminary report that had been put together by the subcommittee and distributed to the Task Force. He felt that for the report to City Council it was appropriate to get specific in the Task Force's recom-nendations. The purpose of the preliminary report was to get some direction from the rest of the Task Force on which direction to take for the full write-up. A preliminary target was set for presentation of the report to Council at their second meeting in SepteTber (Sept. 25). Hartgering felt that the issue of who would be doing the actual. negotiations with CcmEd should be addressed, and that the City Council should make a decision on the Task Force's role. Franchise negotiations should start soon, however, and as a tool for those negotiations, the City needs to work out a bargaining position. ccrazitr�ent needs to be made soon by the City Council to financially back up :he time that the Task Force is spending. Commonwealth Edison Task Force page 3 8/03/89 As well as the report, other documents that would be worthwhile to send to the City Council are: (1) the map, produced by the Center for Neighborhood Technology, which shows comparative electric rates for the region; (2) member Raedle's analysis of Commonwealth Edison's financial data; (3) the chart of ComEd's electric rates, and; (4) an earlier list compiled by staff showing franchise expiration dates of surrounding municipalities. A discussion ensued concerning prices for a consultant to perform work for the City. It was felt that an estimate would be helpful to present to the City Council. Sending out a letter to potential consultants was discussed; Aiello cautioned against raising the expectations of potential consultants at this point. It was decided that consultants should not be approached until the City Council has been given a chance to state their mind on this issue. I was felt that the good will of the Council was important, and that the Task Force should convince Council members of the importance of this issue. A discussion ensued concerning the benefits of a municipally operated electric system, inciuding lower costs to residents. A utility tax could still be charged on bills, and some of the billing infrastructure necessary for such a system is already in place, as the City currently operates a water utility. Lippitz felt that it would be important for the City Manager to provide a list of negotiating points in the developing model franchise. Reference was made by Lewis to the letter written to the Commission by Mr. and Mrs. Alexander, residents of the City, urging the City to be more strict on control of Ccrimonwealth Edison. Lewis referred to an informal newspaper survey that he conducted; he read the stock yields of private utilities, and noted that CcmEd's yields were second highest out of 22 companies listed for that day. craft suggested that maybe statewide regulatory changes were necessary. Chicago's Task Force is currently viewing necessary political changes, and the Evanston Task Force should make these concerns known to City Council. He stated that the current situation that the City faces is similar to that faced by the steel industry in the 1950's and 601s: complacency or pruriency are two paths that the City could follow concerning the upcoming franchise negotiations. Task Force members were urged to bring ideas to the next meeting concerning what should be presented to the City Council. The next subcommittee meeting was set for August 17, at 7:30 P.M. Commonwealth Edison Questions Hartgering asked if CcmEd, or any other utility, had a claims mechanism in place for liability of power outages. DwIler answered that claims are handled through a claims department and the courts. The cause of the outage is important, eg. storm -related or through negligence. Claims are decided on a case by case basis. Commonwealth Edison Task Force page 4 8/03/89 The Task Force asked Mr. Dwyer to prepare a response for the next meeting to the question: Do businesses in the Evanston area also pay comparatively higher rates for electric service? - Questiorw were raised for the City Manager concerning the Northwest Municipal Conference. Are they as far along as the Task Force in their investigations; have all of the members agreed to abide by the guidelines produced by the committee charged with model franchise investigation; and has the option to buy been raised by the committee? It was felt that a discussion with the City Manager to outline the role of the Task Force would be helpful. Public Comment O'Leary, a citizen, expressed his interest to be included on the mailing list for CETF information. Aronov, also a citizen, explained the context of the City Manager's speech concerning the Task Force, outlining Alderman Rai.ney's comments concerning her electric bill and comparing it to Seattle's rates. Mr. Alexander questioned as to the reason for the last power outage in SE Evanston. Dwyer responded that a joint failure had occurred, and that the actual cable feeding the area was not affected. In response to Task Force questioning, Dwyer stated that regular maintenance is a part of Comd's standard procedures, including line feeder patrolling. An announcement was made of upcoming Chicago Task Force meetings on August 41 16, and an unspecified date in September. A meeting with Evanston cazrwnity groups was discussed, and it was noted that area groups and interested citizens should be notified ahead of time. Public awareness is important, and the Evanston newspapers should be notified of upcoming meetings. The meeting was adjourned at 10:01. The next regular meeting of the Commonwealth Edison Task Force is scheduled for September 7, 1989 at 7:30 p.m. Staff cc: Joel Asprooth Mayor Barr Aldermen MINUTES COMMONWEALTH EDISON TASK FORCE Meeting of September 28, 1989 Members Present: Phil Lewis, Ann Dienner, Rosanne Dineen, David Kraft, Ned Lauterbach, Edmund Pabst, Norman Raedle, Jan Schakowsky, James Suhr, and Kenneth Whitney Members Absent: Charles Lippitz and William Hartgering Staff Present: Judith A. Aiello Others Present: Jacob Arnoff, Bob Dwyer, Ray O'Leary, Bob Brettschneider Presiding Official: Phil Lewis, Chair Summary of Action: 1. Call to Order - The meeting was called to order at 7:40 2. Minutes - The minutes of September 7, 1989 were approved with a correction in the spelling of Mr. Raedle's name. 3. Communications - The Chair acknowledged the communications as submitted, which included Chicago's Franchise Renewal Options, Chicago's questions to the consumer groups, an article regarding Commonwealth Edison, and a letter from Mr. Raymond O'Leary. After discussion by Mr. O'Leary of his communication, the communications were accepted. 4. The Committee then spent the remainder of the meeting reviewing the Draft Report for the Administration & Public Works Committee, and made several substantial modifications to the Report. A copy of the Revised Draft will be distributed to the Committee once more for their review prior to distribution to the Administration & works Committee. It is anticipated that the Task Force will appear before the A & PW Committee on Tuesday, October 10. it was requested that any Committee member who is able to attend the meeting should plan to do so at 7:00 P.M. The Committee then discussed future agendas with the indication that, at the Committee's November 2 meeting, discussion would be held with representatives of the Gas Institute. in addition, if the City Council has approved the Request for Proposals, discussion will commence regarding the RFP process. With no further business, the meeting was adjourned at 9:45 P.M. JAA:ct Respectfully submitted, 4 - Ass s ant ity Manager MINUTES Commonwealth Edison Task Force Meeting of November 9, 1969 Members Present: Ann Dienner, Rosanne Dineen, David Kraft, Norman Raedle, Jan Schakowsky, James Suhr Members Absent: Bill Hartgering, Ned Lauterbach, Phil Lewis, Charles Lippitx, Ed Pabst, Ken Whitney Others Present: Judith Aiello, Jacob Arnov, Bob Dwyer, Raymond O'Leary Presiding: .dames Suhr, Acting Chair Sur tmary of Action: The meeting was called to order at 7:30 p.m. by Acting Chair James Suhr, who advised the Task Force of the condition of Mr. Phil Lewis, who has been the Chairman of the Task Force, and expressed his gratitude to Mr. Lewis for the fine work that he has done for the Task Force to date. Mr. Suhr indicated that Mrs. Lewis would appreciate notes and/or phone calls, as Mr. Lewis is currently in a nursing home. Mr. Suhr then turned the meeting over to Ms. Dineen, who introduced the guest speaker. The speaker for the evening was Mr. Jacob D. Dumelle, who is a Member of the Illinois Pollution Control Board, and had been a former City Manager of Lebanon, New Hampshire, and Peoria, Illinois. Mr. Dumelle spoke of the alternative sources of energy which have come into play since the 1973 energy crisis. Mr. Dumelle spoke of eight different energy alternatives, as follows: 1. Purchasing power from other companies, i.e., Wisconsin 2. Generate own power on Lake Michigan 3. Joint use of the Winnetka power plant 4. Gas turbine 5. Diesel generators B. Photo Thermal 7. Burning waste to energy 8. Fuel cells Mr. Dumelle highlighted the issues with the various alternatives, which ranged from problems with Illinois E.P.A. regarding power generation at the Lakefront to inadequate capacity at the Village of Winnetka and environmental issues on converting waste to energy'. Mr. Dumelle also informed the Task Force of the role of the Illinois Pollution Control Board, which makes rulings on environmental cases brought to them by the Attorney General's Office an permitting variances and landfill sitings. After a period of questions and answers and technical information on photo thermal and fuel cells, Mr. Dumelle concluded his comments, and the Task Force thanked him for his attendance. The Task Force 'then acknowledged communications from their packet of information for the November 2 meeting, which was cancelled due to a iack of a quorum. The communications included a copy of the City of Chicago process and a verbal update from Mr. Kraft that the Chicago report should be available by November 21. A brief discussion was held regarding the Chicago process and the fact that there have been two levels of consultant examination; one with the "Beck" study, which was commissioned under the Washington administration and cost roughly $150,000. r.•�� Cam Ed Task Force Meeting of 11/9/09 -2- The Beck study was followed by the Kommenoff study, which was begun under Washington and continued under Mayor Sawyer. The Kommenoff study cost roughly $200,000, and it was the understanding of the Committee members that the City of Chicago had allocated approximately $700,000 for consultant studies. The Committee then discussed the presentation to the Administration & Public Works Committee and reviewed the questions that the Committee had asked. With the consensus of the Task Force that they would provide to the A & PW Committee a summery of the questions which they believe they have been requested to address. They agreed that they would ask the A & PW Committee to review the questions and determine if they were indeed all that the Committee was seeking. The Committee discussed each question and assignod various members to research the questions and bring information to the next meeting of the Task Force. After an assessment is made as to the time frame to gather additional information, the Task Force will be able to respond to the A & PW Committee. A copy of the questions with the designated research person is attached. In addition to the attached questions, the Committee also spent some time discussing the response to question #18, the kinds of items that Evanston could negotiate. The Committee made a preliminary list, as follows: 1. State of the art technology 2. Voltage regulations 3. Acquisi* ion term option 4. Length of franchise agreement 5. Free electricity 6. Reliability of service 7. Franchise fee 8. Maintenance of equipment 9. Environmental issues 10. Processing fee for utility tax 11. Conservation 12. Damages and penalties for consumer 13. Burying of underground cables 14. Economic development incentives 15. Deterioration of creditworthiness This list will be expanded as the Task Force moves forward. Mr. Suhr indicated that any requests from neighborhood groups to speak should be funneled through the staff. Rosanne Dineen and Jan Schakowsky indicated that they spoke to the Evanston Neighbors Board. Rosanne also indicated that she has spoken to S.E.A., and that she has been requested by for. Pabst to speak to the S.E.E.N. group. It was suggested that, on the future agenda of the Task Force, an item identified as public information programming be included so that the Task Force can begin to address additional public information issues. With no further business, the meeting was adjourned at 9:50 p.m. Staff Representative: Q/OK udith A. Aiello zstant City Manager JAA:ct c 0 DRAFT -NOT APPROVED Minutes COMMONWEALTH EDISON TASK FORCE Meeting of December 7, 1989 Members Present: Ann Dienner. Rosanne Dineen, William Hartgering,l!N``ed Lauterbach, David Kraft, Norman Raedb_, Ed Pabst, Jan Schakowsky, James Suhr, Ken Whitney Members Absent: Charles Lippitz, Phil Lewis Others Present: Bob Dwyer, Raymond O'Leary, Jacob Arnov, Freddie Greenberg Staff Present: Judith Aiello Presiding: James Suhr, Acting Chair Summary of Action:. The meeting was called to order at 7:35 p.m. by Acting Chair James Suhr. The minutes of September 28, 1989 and November 9, 1989 were approved as modified in the November 9th minutes. Mr. Suhr acknowledged the power outage of November 26, 1989 and asked Mr. Dwyer of Commonwealth Edison if he wished to comment. Mr. Dwyer explained that on November 26th at approximately 8:55 p.m. southeast Evansto ex erienced a power outage which lasted approximately for-�o''��= The reasons for the outage as indicated by Mr. Dwyer was caused by a cable fault with the cable that feeds southeast Evanston. Mr. Dwyer clarified that the affected area was not part of the area that had been recently upgraded within southeast Evanston nor was it similar to the outage in July which was due to failure in a cable joint. Mr. Suhr thanked Mr. 7vyer for his explanation. Mr.'Kraft then provided the Committee with an update of the franchise renewal negotiations within the City of Chicago. Mr. Kraft 'indicated that the Task Force has issued their recommendations and that a new advisory team has been appointed by Mayor Daley. Mr. Kraft also indicated that the Kommenoff report has not yet been released and that if it is he will try and provide a copy far staff to transmit to the Task Force members. Cam Ed Task Force Meeting of 1217/89 -2- 6r.44LOO, el) Mr. Hartgering indicated th his firm Endi to might be participating in a mediation case in which C monwealth Edison and two other entities wi 1 be involved in the process. Endispute would serve as the mediating entity Mr. Hartgering would -w4Z be directly involved in the case. Mr. Hartgering warted the Task Force to be aware of this situation. The Chair thanked Mr. O'Leary for the electrical glossary which he had provided and -stated that it was of extreme help to the Task Force, and would most likely be a help to the City Council members. After further acknowledgement of other communications the Committee received a presentation from representatives of the Washington, D.C. law firm of Duncan, Allen and Tallmedge. Mr. Greg Ottinger and Mr. James Moran of Duncan, Allen and Talmage, thanked Mr. Suhr and highlighted the work that the firm has done for municipalities and cooperative owned utilities. Mr. Ottinger indicated that the firm has worked with municipalites as they have considered the municipalization process and have advised communities both to proceed and initiate the municipalization process and also have indicated where the municipalization process would not be beneficial to the community. The firm has never represented investor -owned utility companies. One of the communities the firm has -represented, Clyde, Ohio, has initiated a municipalization system and the rates are now 34% less than what they had been With Toledo Edison. They reviewed the process in Clyde and how time was spent educating the community and a public referendum was held. They advised that all of their communities hold a public referendum to decide the issue. Mr. Ottinger provided a brief overview of the electrical energy industry and stated that up until 1970 the electrical load would increase by 6Z to 9X per year and would double every ten years. in the early 70'5 with the oil embargo many utility companies felt there was a need to diversify and look to nuclear energy and low sulphur coal. The move to nuclear energy proved to be a questionable move based on four issues. The first being the double digit inflation, second, the three mile island resulted in extensive review by regulatory agencies; third, due to the increase in cost the demand decreased due to conservation efforts and new technology; and fourth, an issue of Door management in some areas. As all these issues came to play many communities began to look at the options which they had, especially as their franchise agreement terms came to expiration. The two main options the commuaite saw were either to negotiate for a new franchise or to start their own system. Some saw other options and phased in new development of a system and/or they sought new Com Ed Task Force -3- Meeting of 12/7/89 services from other entities. Since a franchise typically runs anywhere from 20 to 50 years, even perpetual, it is not common for a community to have the experience in a negotiation of a franchise agreement. However, the utility company has much more experience and will bring that experience in addition to a wealth of consultant's advise and legal experience to the negotiating table. Therefore, a community needs to be well armed as they enter the negotiating process. Mr. Ottinger then stated that he had provided the Task Force with an outline of the municipalization process which was the result of many speaking engagements that he has had in front of various entities regarding the process. A copy of the outline is attached. Mr. Ottinger indicated that if a community is going to consider a municipalization process, the whole outline can be summarized in four words, spread, head, lead, and bread. By this he means as follows: Spread - is the economics of the system. A community must find a supplier who can provide the electricity at an economical rate. Head -There has to be strong community support by the citizens and the elected officials. If the community choses to do it, it has to be done right. Lead - The community has to be able to sling some lead because he indicated that the electrical companies are going to bring out heavy artilliary to convince the citizens they should not support what the Council feels is a good idea. Strong public relations campaign will be initated by the utility company to highlight all of the negative reasons why the community should not proceed with the municipalization process. Bread - It was going to take dollars and experts, including engineers, lawyers, and other consultants in order to make the municipalization process work. At that point Mr. Orttinger concluded his comments and opened the meetings for questions with the committee. The questions were as follows: Question: There has been difficulty in finding a city that is comparable to Evanston. Are you aware of any? Answer: Duncan, Allen, Talmage has had experience in New Orleans; and Albuquerque, but not with any cities exactly the size of Evanston. However, be assured that there are cities that have the same percentage of residential mix of Evanston. i Com Ed Task Force —4— Meet'ing of 12/7/89 Question: What did Clyde, Ohio, pay for legal fees? Answer: Over a three year period the cost of legal services were $150,000 and this did not include the condemnation process but did include a referendum. What Clyde, Ohio'did was to evaluate the system and they also received bids from other utility companies as to what they felt the system was worth. Question: What will the underwriters requirq as relates to a supply availability in ord to set up a bondV24A� , }/ear Answer: Approximately a O ear supply. Mr. Ottinger indicated that the City could invite bids for service distribution.? Question: How do you get leverage without the threat of municipalization? Answer: The community needs to know what cards they hold and what will happen if the franchise expires. They also need to know the financial feasibility of their own system and that some communities have been able to negotiate new franchise agreements with favorable incentives for new customers and economic development. incentives should be offered at no cost to existing rate payers and that is a consideration to keep in mind. Question: Are there conservation clauses? Answer: It certainly could be part of the negotiation process. Question: Can a phasing of the feasibility study occur? Answer: Mr. Ottinger indicated that a preliminary feasibility study could be done which identifies the issues and determines whether or not there are appropriate suppliers, and whether or not.there are insurmountable legal issues. It can also look at the broad range of options for power suppliers and identify some of the possible engineering constraints. A preliminary feasibility study could cost in the range of $30,000. In conclusion Mr. Ottinger stated that ie is usually economics which determine whether or not a municipality can afford to do a municipalization system and that even if the city finds out in a preliminary study that they cannot handle the four issues they can still maintain a negotiating position albeit with more difficulty. Com Ed Task:Force -5- Meeting of 32/7/89 Mr. 5uhr then thanked Mr. Ottinger and Mr. Moran for attending and for their insight into this process and invited them to remain for the rest of the meeting. The Task Force then discussed the status of the various questions and hoped to have the response back to the Council within 60 days or shorter. The Task Force also indicated that for the next meeting we should probably begin to include representatives or send invitations to the hospitals, Northwestern University and the School Districts. A request was also made that we keep on the agenda the whole issue of public opinion and how we involve the public in the process. Also scheduled for the next meeting will be a presentation by Mr. Wilcox, who is a member of the City of Chicago's Task Force. There being no further business the meeting as adjourned at 10:00 p.m. JAA:1r cc: Joel M. Asprooth - Air. Q:0"4tk As 0 stant City Manager DRAFT - NOT APPROVED