HomeMy Public PortalAbout01-04-2000 PROCEEDINGS OF THE COMMON COUNCIL OF THE
CITY OF RICHMOND,INDIANA,SERVING AS A BOARD
IN CHARGE OF THE OPERATION OF THE RICHMOND POWER&LIGHT PLANT
TUESDAY,JANUARY 4,2000
The Common Council of the City of Richmond,Indiana,serving as a Board in charge of the operations of the
Richmond Power&Light Plant met in regular session at 7 p.m.Tuesday,January 4,2000 in the Council Chambers in
the Municipal Building in said City.Newly elected Chairperson Bing Welch presided with the following
Councilmembers in attendance:Howard"Jack"Elstro,Etta J.Lundy,Phil Dickman,Sarah"Sally"Hutton, Paul
Combs,Karl Sharp,Bruce Wissel and Larry Parker.The following business was conducted:
ROLL CALL
Nine present.
APPROVAL OF MINUTES
The minutes of the meetings of December 20, 1999 were approved on a motion by Councilmember Hutton,second by
Councilmember Parker and the motion was carried on a unanimous voice vote.
APPROVAL OF BILLS,INVESTMENTS AND TRANSFERS
Upon recommendation of the Finance Committee,Councilmember Hutton moved to approve the following bills for
payment,seconded by Councilmember Wissel and by unanimous voice vote the motion was carried.
Bills Already Paid:
Payroll and Deductions $233,915.81
Investments Purchased From:
Cash Operating Fund 900,000.00
Bond Sinking Fund
Utility Bond Reserve Fund
Depreciation Reserve Fund 91,000.00
Insurance Reserve Fund
Consumer Deposit Fund
Cash Reserve Fund 178,309.00
Group Insurance Fund
Total Investments $1,169,309.00
Transfer from Cash Operating Fund to:
Cash Reserve Fund for Payment
To City in lieu of taxes
Transfer from Cash Operating Fund to:
Depreciation Reserve Fund
For Property&Plant
Transfers from Depreciation Reserve to:
Cash Operating Fund
Transfers from Consumer Deposit to:
Cash Operating Fund
Transfers from Utility Bond Reserve Fund to:
Bond Sinking Fund
Transfers from Cash Operating to:
Interest and Bond Principal
Bond Sinking Fund
Cash Reserve Fund
Utility Bond Sinking Fund
Depreciation Reserve Fund
Insurance Reserve Fund
Consumer Deposit Fund
Interest and Bond Principal
End of Month Petty Cash
Revenue Bonds
Interest Coupons Redeemed
Interest Coupons Redeemed
Bond Coupons
Miscellaneous Prepaid Invoices $ 191,491.78
Total Prepaid Invoices 1,594,716.59
Total EFT/Direct Deposit of Payroll: (70,151.96)
Total Prepaid Invoices: 1,524,564.63
Total EFT Transfers: 431,665.95
Total Prepaids plus EFT Transfers: 1,956,230.58
Total Bills Not Paid: 405,799.61
Grand Total of Bills to be approved: $2,362,030.19
RP&L Minutes Cant'd
January 4,2000
Page 2
REMARKS BY CHAIRPERSON
Chairperson Welch stated that he would announce committee appointments at the next meeting and requested that those
Board members having a preference as to which committees they would like to be on make that known to him.He said
he would try to honor those preferences if possible.
UNFINISHED BUSINESS
There was none.
STREET LIGHT COMMITTEE REPORT
Councilmember Elstro said there was no report.
REPORT BY GENERAL MANAGER
General Manager David Osburn welcomed the three new Board members,Phil Dickman,Paul Combs and Karl Sharp,
stating that he was looking forward to working with them.
Alluding to the bids received at the December 20, 1999 meeting on a 2000 four-door passenger vehicle,Osburn said all
met the bid,each having some minor exceptions but nothing major,which meant all qualified.He said he
recommended purchasing the 2000 Chrysler Concorde LX,stating that it is the second lowest bid which is$19,925
(less trade ins)and only about$700 more than the lowest bid.He explained that his primary reason for recommending
this bid is because that it is his preference on driving vehicles and it has more legroom in the rear for passengers than
the Mercury.Councilmember Dickman moved to approve the recommendation,second by Councilmember Parker and
the motion was carried on a unanimous voice vote.
Osburn asked the Board to authorize him to proceed with the Zero Discharge Project at the Whitewater Valley Station.
In giving abrief update,Osbum said this stems back to 1992 at which time RP&L was issued a permit for its
wastewater discharged into a ditch which eventually goes into the Whitewater River.He said RP&L believes there
was an error made in that permit which wasn't caught and the utility has been suffering the consequences ever since,
adding that they have been trying to get IDEM to loosen the requirements on it but they refuse to do it.He said IDEM
said since it was not brought to their attention within the typical appeal period,the utility simply has to live with it.
Osburn said they have asked IDEM to change the limits for RP&L and they say they can't do that because they have a
policy against what they call backsliding.Since RP&L and IDEM have not ever come to any compromise on the
limits,he said,they cannot be met.He added that the only control technology that could be put on that,which would
allow RP&L to meet that and still discharge,would be in the millions of dollars.He said,however,the utility is able
to recycle that wastewater,adding that it has never been done in the past because they didn't have to.He said there was
no reason to spend the money to do that if it wasn't necessary.
Now,he said,if the utility proceeds with this project it will do away with its discharge by recycling it back through the
system.He said this would involve the cleaning out of some of the ponds,which were used for temporary storage and
containment.He said they would have to put in some new pumps and more piping as well as a connection with the
wastewater treatment plant,adding that if for some reason the utility cannot recycle,it would be pumped to the
wastewater treatment plant so it would still not be discharged.
Osburn said IDEM is pleased about this because it does away with the discharge,which is one of their goals.The
benefits of doing this is that the utility will not have to deal with it anymore.Where it stands now,Osbum said,is that
RP&L has made the proposal to IDEM to do this contingent upon this Board's approval and the utility is waiting on
the approval of IDEM.Osbum said he is asking for the Board's approval and once IDEM approves RP&L's offer they
can proceed with the project.
Councilmember Dickman asked if there is any monetary penalty from IDEM on this and Osburn said the penalties
stand at$34,000,but by doing this project it goes well beyond what they expect the utility to do as far as control and
they will waive about 80 percent of that,leaving about a$6,000 fine.Osbum said City Attorney Bob Bever has
reviewed the agreed order and it was his recommendation to enter into this agreement.Councilmember Parker moved
to authorize Osburn to proceed with the Zero Discharge Project and enter into the agreed order with IDEM,second by
Councilmember Hutton and the motion was carried on a unanimous voice vote.
Osbum gave an updated report on the extent of the damages to Unit No.2,stating that RP&L's Plant Manager Bob
Crye is here tonight to answer questions.He said he brought with him tonight a broken blade on one of the turbines,
and a good one,so Board members could make the comparison and see the damage for themselves.He said he and
Crye went to the GE service center in Cincinnati,Ohio,today where the turbines are being worked on.He said they had
found cracks at some of the bases of those blades(buckets)in that stage,stating that there are 168 of those and they
found cracks in 41 of them.He said they have found them only in that stage and his recommendation is not to take any
more chances and go ahead and replace all of those blades(buckets)in that stage which will amount roughly to
$300,000.
He said RP&L already has to bear the cost of tearing the unit down and putting it back together again later on and that
is going to be in the neighborhood of$250,000.He added that there would be a lot of miscellaneous costs which will
all add up.He said taking a turbine apart like this is typically done about every five years and is a major undertaking.
He said when it was done in 1997 there was no indication of this problem then,and said he is recommending that this
be treated as a major undertaking doing additional work while it is off line.He said in doing that,it should be another
five years before it has to be done,so that would push back the maintenance schedule for five years.He said they are
also doing everything in-house right now while the unit is off line so the spring outage will be skipped.He said right
now the total cost estimated for repairs is about$931,000,adding that he feels by the time it's all finished it will run
about$1 million for the repairs.
RP&L Minutes Cont'd
January 4,2000
Page 3
Osbum said something else that he does not have a handle on right now is that while this unit is off-line,replacement
power has to be purchased.Initially,he said,it was purchased at a premium and the first week alone RP&L paid
approximately$100,000 for that replacement power.He said now that IMPA knows that the unit is going to be off-line
for a month or more he feels they may be able to buy a block of power for a longer period of time and it's not as severe
a penalty anymore to purchase power.He said there was quite a bit of damage to Unit No.2 and although RP&L has
insurance,it has a$250,000 deductible,so the question at this time is how much of this the insurance will cover.He
said they are going to contact EPRI on this because they want their opinion on the life of these blades.He added that,
frankly,he doesn't think this should have happened,thus the need to consult someone with a lot more expertise in
metallurgy than he has.
As a point of information,just in case someone might wonder if it's worth it to make these repairs if they are going to
run around$1 million,Osbum said that unit contributes roughly over$13 million a year in revenue.He added that if
you take away the expenses from that and talk only about profit,that unit alone probably brings about$3 million in
profit over a year,which means you would recoup that$1 million within three or four months.
In answer to a question by Councilmember Lundy as to the cause of the damage,Crye said although the exact cause is
not known as yet,they are calling it"high cycle fatigue.Councilmember Sharp asked what a major overhaul would
cost.Crye said in 1997 the total for the five-year major overhaul was$1.3 million and during that outage they also
replaced the 15th and 16t'staged diaphragms.Osburn said a big chunk of this cost now is estimated at$235,000 which
covers the on-site labor to tear the unit apart and do their milling machine and put it back together.On a normal major
overhaul,he added,that is about$500,000 so it is actually a"bargain basement"price because now is a slow time.
Chairperson Welch asked for a general physical dimension of the turbine and Crye responded that the turbine,itself,is
about 12 feet long with the first stage measuring about one and a half feet in diameter and the back stage,about eight
feet.The rotor itself,he said,weighs about 8,000 pounds.He also said the buckets are made of forged stainless steel.
Councilmember Dickman asked if there are going to be any additional expenses,and Osburn said the in-house labor
would be charged off to this maintenance.Councilmember Combs asked what could be done to prevent this from
occurring again.Osburn said unless somebody brings up something that they don't know about,there isn't a lot more
that they can do.However,he said,the first critical stage is getting the Electrical Power Research Institute(EPRI)
involved because they have the experts in this field and the utility will do whatever they request as far as analysis on
the buckets.
Councilmember Wissel moved to authorize Osbum to proceed with the repairs to Unit No.2 at the Whitewater Valley
Generating Station,second by Councilmember Combs and the motion was carried on a unanimous voice vote.
Chairperson Welch pointed out that it is a good thing RP&L keeps cash reserves in order to protect itself in manners
such as this.
Osburn said RP&L had no Y2K-related incidents or outages,adding that they did follow their contingency plan as
scheduled with about 20 people on site either at the service building or at the substations on December 31, 1999.He
said all these people were sent home about 1 a.m.on January 1,2000.He added that he wanted to express his
appreciation to those employees who came in to work.He said they did everything in-house where a lot of utilities paid
consultants a lot of money to come in and analyze their systems and this utility avoided that,doing it at a minimum
cost.Chairperson Welch,speaking for the Board,thanked those employees also for their part in the contingency plan.
Alluding to the recent ruling by EPA stating that RP&L is polluting the air on the east coast,Osburn explained the
action he is requesting the Board to authorize him to take on that at this time.He said that RP&L has identified an
industry group they would like to join which is made up of 30 companies,primarily investor-owned utilities,some coal
companies and some private companies called the Midwest Ozone Group.He said this group is going to appeal the
EPA ruling and RP&L can join as an affiliate member for$3,000 which gives the utility the ability to attend all the
meetings,to give them input and to get copies of all their correspondence and all their documents.
Osburn said it would cost another$10,000 to have voting rights,however,he felt that wasn't that important to pay the
extra money.He said these are his intentions,unless this Board tell him different,to go ahead and work with this group
to get RP&L's input on this critical issue on how the ozone and nox rulings are going to be handled.Also,he said,in
talking with Tony Sullivan,RP&L's environmental attorney,he thinks it is wise that RP&L file its appeal,
independently,and get it on file and on record.He said they have 60 days to file that appeal in the District Court of
Appeals in Washington,D.C.Once that is on record,he said,they would be kept better informed about hearings and
some of the things that are going on.Bever agreed,saying that it would give RP&L access to all of the information
that would be sent to the utility automatically.He said,if for some reason the larger units that are appealing are
successful,by appealing this RP&L might be able to gather onto their coattails and have this utility's appeal reversed.
In answer to a question by Councilmember Sharp,Osburn said RP&L doesn't feel like EPA has ever proven that this
particular plant as an individual source has been responsible for that.He added that he got that a little bit reaffirmed
today because he was talking with IMPA and they are combustion turbines which are already operating on at lower
limits than the ruling tells them to operate at.They are cited in that,too,he said,adding that the word he got from them
was that the USEPA"just arbitrarily picked every power plant on the eastern side of Indiana and named them."He said
he questioned whether or not there was a lot of science in that approach.Councilmember Sharp asked if this was a case
where you are innocent until proven guilty and Osburn said just the contrary.They have to be in compliance by May
2003,he said, and that means they have to go through this process to see if they are going to win or not.If they don't
win,he said,RP&L would have to start planning on how to get in compliance and be done by that deadline.
Councilmember Parker moved to authorize Osbum to enter into an action of submitting an appeal to the motion filed
against RP&L by the federal EPA and that the utility join the consortium named as an associate member to appeal the
overall ruling of the EPA,second by Councilmember Combs and the motion was carried on a unanimous voice vote.
NEW BUSINESS
There was none.
RP&L Miiutes Cont'd
January 4,2000
Page 4
ADJOURNMENT
There being no further business,on a motion duly made,seconded and passed,the meeting was adjourned.
Bing Welch,Chairperson
ATTEST:
Norma Schroeder,Clerk