HomeMy Public PortalAbout07-19-1993 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
MONDAY.JULY 19.1993
1 The Common Council of the City of Richmond, Indiana, serving as a Board in charge of the operations the
2 Richmond Power& Light Plant met in regular session at 7 p.m. Monday,July 19, 1993, in the Municipal Bui ding
3 in said City. Chairperson Brookbank presided with the following Councilmembers in attendance: Elstro, L ndy,
4 Donat, McBride,Parker, Allen, Dickman and Hutton. The following business was had to-wit:
5
6 APPROVAL OF MINUTES OF JULY 6.1993
7
8 Councilmember McBriiie moved to approve the minutes of the previous meeting as prepared, seconds• by
9 Councilmember Lundy and on unanimous voice vote the motion was carried.
10
11 APPROVAL OF BILLS. INVESTMENTS AND TRANSFERS
12
13 Finding an error in the totals after reading them aloud,Councilmember Allen moved to approve the following •ills
14 for payment subject to re-review,seconded by Councilmember McBride and by unanimous voice vote the mo ion
15 carried.
16
17 Bills Already Paid
18 Payroll and Deductions 209,873.42
19
20
21 Investments Purchased From:
22 Cash Operating Fund 1,950,000.00
23 Bond Sinking Fund
24 Utility Bond Reserve Fund
25 Depreciation Reserve Fund
26 Insurance Reserve Fund
27 Consumer Deposit Fund •
28 Cash Reserve Fund
29 Group Insurance Fund
30
31 Total Investments
32
33
34 Transfer to City in Lieu of Taxes;
35
36 Transfer from Cash Operating Fund to;
37 Payroll Deduction Fund
38
39 Transfers from Depreciation Reserve to:
40 Cash Operating Fund
41
42 Transfers from Consumer Deposit to:
43 Cash Operating Fund
44
45 Transfers from Utility Bond Reserve Fund to;
46 Bond Sinking Fund
47
48 Transfers from Cash Operating ;
49 Interest and Bond Principal
50 Bond Sinking Fund
51 Cash Reserve Fund
52 Utility Bond Sinking Fund
53 Depreciation Reserve Fund
54 Insurance Reserve Fund
55 Consumer Deposit Fund
56 Interest and Band Principal
57
58 End of Month Petty Cash
59 Revenue Bonds
60 Interest Coupons Redeemed
61 Bond Coupons
62 Miscellaneous Bills Already Paid 112,681.21
63 Total prepaid invoices 2,272,554.63
64 Total Bills Not Paid 621,741.58
65
Grand Total 2,894,296.21
RP&L Minutes Cont'd
July 19, 1993
Page 2
1 REMARKS BY CHAIRPERSON
2
3 None
4
5 UNFINISHED BUSINESS
6
7 Councilmember Allen asked her fellow Councilmembers to take under consideration the fact that she is proposing
8 a motion to increase the payment from RP &L to the City. She said all Councilmembers know that the City needs
9 additional revenues and that the amounts from the accounts payable at the end of 1993 will be in the amount of
10 $2,475,000 to be paid to the City. She said this amount has already been budgeted for and expensed,six months
11 of it in 1992 and 12 months of it in 1993. Noting that a young lady stood in Council chambers during a meeting
12 and intimated that the City should not be rubbing its nose up to the window of RP& L just because it couldn't run
13 its affairs as efficiently as RP & L, Councilmember Allen pointed out the differences. She said RP & L sets
14 revenue rates based on the amount of money needed to cover expenses regardless of expenses which include
15 raises for employees every year, continued upgrading of its facilities, capital expenditures, additional money
16 beyond the contract to put in the pension fund,travel, and enough money to allow for return on investment. She
17 said the City does not have that luxury. It must provide police and fire protection, roads, infrastructure, park and
18 recreation facilities and ask their employees to provide those services.The City revenues are mostly based on per
19 capita, and it is losing ground, going from a population of 40,000 to 38,000 which decreases revenue but
20 continuing to provide services. With the unemployment rate at 12 percent those people are not adding to the
21 county tax figures. Therefore the CAGIT rate that the City receives is decreasing. With all those decreased
22 revenues, the last item that can go down as a revenue source is property tax,but that is frozen so that it can only
23 be raised no more than 5 percent of what it was the year before. The City has a serious problem and, in her
24 opinion, RP & L can help with additional funding. She moved that the payment to the City in January 1994 be in
25 $2,475,000, adding that if the cash reserve fund needs to reflect that amount in the June 30, 1993, cash
26 statement, that an adjustment be made to reflect that amount. The motion was seconded by Councilmember
27 McBride.
28
29 Councilmember Parker said$150,000 in that amount is earmarked for economic development which needs to be
30 taken out of there and that was discussed earlier. He added that it was his understanding that that fund is not
31 being funded to that amount and there may not be that kind of money in there at the end'of the year. Herschel
32 Philpot, RP& L's Finance Manager, said it hasn't been funded in that amount. Councilmember Allen said he was
33 talking about the cash reserve fund, not about the accrual which will continue to go on if RP & L continues to put
34 in $137,500 each month. She said it is still going to be in the accrual and the expenses. Councilmember Parker
35 said he understood that what can be put in the budget is what was in there in June 1993. Councilmember Allen
36 said he was talking about the statute and she read:"After creation of a cash reserve fund the legislative body may
37 conclude the municipal general fund as revenue in leiu of taxes and the amount equal to the actual balance in the
38 cash reserve fund of June 30 of the current year."Councilmember Allen said if there is more in there then it could
39 be done and an adjustment to that account would make it equal to that. She said the point is that the legislative
40 body,which is the Common Council,can appropriate that. Huffman questioned as to whether or not it also stated
41 that an emergency must be declared and action of the council to transfer the additional funds. He said that would
42 be robbing the 1995 revenues to be transferred to the City from the 1994 revenues. He said his interpretation is
43 that the money must be in there by June 30 and the amount that's been accumulated for next year can be
44 transferred. However, any money over and above, must be declared an emergency requirement and you can
45 transfer for 1994 only that amount that has been put into that fund as of December 1993. Councilmember Allen
46 responded that management is the one that's transferring the funds and looking at the December 1992 statement,
47 that amount is$2,946,632 as of December 31.
48
49 City Attorney Thomas Milligan said that Councilmember Allen's motion was appropriate, pointing out that this.
50 Board is the manager of RP & L and Huffman is employed as the general manager. The Board is in a position to
51 fund that payment to the City in the way which Councilmember Allen's motion sets forth. That motion is that the
52 amount of $2,475,000 be transferred to the City in January 1994. Councilmember Elstro stated that every dollar
53 that is taken away from RP& L is more or less a tax for every citizen,for every homeowner, because every dollar
54 taken out sooner or later the people in the City are going to pay for it.
55 The motion was defeated by the following call of the roll:
56
57 Nays:Elstro, Lundy, Donat, Parker and Hutton(5) 111
58 Ayes:McBride,Allen, Dickman and Brookbank(4)
59
60 Chairperson Brookbank noted that a month had elapsed since the conference in Annaheim and asked Huffman if
61 he had received all the outstanding receipts and expense reports. He answered that he had not. Councilmember
62 Elstro noted that he had received a memo on that subject and he felt those paying their own expenses didn't have
63 to account to the Board. Councilmember Brookbank reminded him that if he looked back to 1983,the State Board
64 of Accounts was doing that for the Board because it wasn't keeping close enough tabs. Huffman said it is RP &
65 L's policy to publish any figure that has been expensed by RP & L but he felt those expenses paid by the four
dependents of Board members are not subject to review.
RP&L Minutes Cont'd
July 19, 1993
Page 3
1 STREET LIGHT COMMITTEE REPORT
2
3 None
4
5 RP&L OWNERSHIP
6
7 Milligan explained that minute books go all the way back to when the City was organized. He said Robert
8 Valentine, a senior at Notre Dame,started three weeks ago as a temporary summer employee in the Department
9 of Law receiving$5.50 an hour. He added that Valentine had gone through the minutes housed in the vault irl the
10 City Clerk's office and he called on the student to present the results of his research.Valentine presented a book
11 which contained copies of almost every single minute between 1893 and 1935 which pertained to the ownership
12 of Richmond Power&Light,formerly known as the Municipal Electric Light&Power Plant. He said he highlighted
13 some of the most important parts and retyped some of the script handwriting, noting that he had provided each
14 Councilmember with the main points of the minutes. Huffman also requested a copy. Milligan said a copy would
15 be on file in the City Clerk's office.
16
17 Valentine read Ordinance No. 1085,dated February 8, 1935,which is referred to in the report:
18
19 "BE IT ORDAINED by the Common Council of the City of Richmond, Indiana,as follows,to-wit:
20
21 Section 1.That after the adoption of this ordinance,the operation, management and control of the Municipal
22 Electric Lighting and Power Plant of the City of Richmond, Indiana,shall be by and under the power of authority of
23 the Common Council of the City of Richmond, Indiana, and not otherwise,according to and under the power and
24 authority established and provided by Section 19 of an "Act of the General Assembly of the State of Indiana,
25 approved March 8, 1933, being Chapter 190 of the acts of said General Assembly of said year 1933.
26
27 Section 2.This ordinance shall be in full force and effect from and after its passage in the manner provided b
111 28 law, and shall be considered as establishing and determining the policy of this Common Council as to the m hod
29 of the management,operation and control of the business and affairs of said utility."
30
31 It was passed by the Common Council of the City of Richmond, Indiana,on the 8th day of February, 1935 an
32 approved and signed by Mayor Joseph M.Waltermann.
33
34 Also included in Councilmembers'packets was a chronology of events dating from July 16, 1888 through A gust
35 15, 1960,when the Municipal Electric Light&Power Plant changed to Richmond Power&Light by an ordina ce
36 of the Common Council.Valentine read the summary of the research pertaining to this particular issue.The
37 summary in its entirety is in the RP& L file in the City Clerk's office.
38
39 Councilmember Lundy said she asked to have a document prepared because she felt it was necessary for
40 citizens to know who owns RP&L and stated that from reading this it seems evident.She said she also ask d
41 Huffman to present a document. In response, Huffman said he went out and looked for information that reall is
42 important, adding that who owns RP& L is really a stupid determination, maybe not stupid,but one that is n that
43 important. He said he had asked RP& L's rate consultant, Don Gimbal,a rate consultant for both private an
44 municipal owned utilities for 35 years,to come before the Board and make a presentation.
45
46 Gimbal prefaced his remarks with the statement that he agreed with Huffman's statement that it is not debat ble
47 who owns RP& L,adding that the big question is what should be done with the revenues and the money th has
48 been accumulated by RP&L. He added that RP&L is under the jurisdiction of the Indiana Unitility Regulat ry
49 Commission which has certain rules and policies that all utilities have to follow.Tthe revenues the ratepayer pay
50 are for purposes of equaling the revenue requirements that this Commission has dealt with,Gimbal said, ad ing
51 that this has been in effect since he started appearing before the Commission. He explained that the Commi sion
52 makes the determinaVon of how much money RP& L needed in order to serve its customers with reliable an low
53 cost service. Included in the revenue requirement was a rate return,the rate of return that RP&L receives frpm
54 the Commission.The last order, he said,was for one purpose only and that was to make extensions and
55 replacements to improve the service to the ratepayers.As an example of this, he used the Peru electric utilit rate
56 case where the manager was asked by Commissioner Cline what he was going to use the rate of return for i it
57 was allowed and he answered that it was to make further extensions and replacements.Gimbal said he coul
58 guarantee that if his response had been to give the civil city over and above the payment in leiu of taxes he ould
59 have ended up with a zero rate of return.He said the Commission today has no set rule or policy as far as h w
60 much a municipal electric utility can give to the civil city over and above what is allowed in what is called a
61 payment in lieu of property taxes.He said there is a set formula that the Commission advocates and everyo a in
62 a rate case has to use. He said in RP&L's rate case,during the test period,which is a 12-month period end ng
63 March 1992, RP&L gave to the City$1.65 million. He noted that the Commission only allowed for rate pay ent
64 purposes one half million dollars, adding that the difference was what the Commission then considered"ex ss
65 profits."He said if the municipal utility is forced to give too much of its revenue back to the civil city it cannot n the
future make extensions and replacements.
RP&L Minutes Cont'd
July 19, 1993
Page 4
1 He said the only recourse would be to file a petition with the Commission in order to seek higher rates from the
2 ratepayers, adding that the contributions to the civil city should be kept within guidelines and no amount of the rate
3 of return which the Commission has allotted to the utility should be given to the civil city.Gimbal said Herschel
4 Philpot, RP&L's finance manager,gave Board members a copy of the most concise and to the point policy of the
5 Commission.
6
7 Councilmember Dickman asked if there was a formula for a reasonable rate of return.Gimbal answered that the
8 key word in the issue of rate of return is"excessive."He said if too big a transfer of funds to the City is made then
9 the utility goes to the Commission for rates and is ordered to make extensions and replacements the utility would
10 probably have to ask for 7 percent in order to meet the requirements. Councilmember Dickman said 6 percent
11 seems a fair rate of return.
12
13 Huffman said Councilmember Dickman and Gimbal were not on the same wave length. Milligan interjected that the
14 citizens own the utility and Gimbal agreed. He said the amount that comes back to the City as a rate of return is
15 less than13/4 percent.Gimbal said that if you figure out what is reasonable 6 percent is probably way too high.
16 After you take all other elements of what are revenue requirements the 6 percent is based on the contribution to the
17 civil city based on the Commission's formula. If it gives to the civil city$2 million instead of the half million it would
18 naturally drive up the rate of return.
19
20 Milligan stated that in the rate case RP&L did not ask for any expansion of revenue for the depreciation reserve
21 fund which is spelled out in the December 1992 order and Gimbal participated as a witness on the rate making. It
22 was spelled out as the replacement and expansion fund. In addition to that fund, RP& L decided not to try to
23 expand that fund,basically representing to the Commission there were sufficient revenues in that fund. It was
24 described in the order for the purpose of replacement and expansion of the capital plan.
25
26 Gimbal said the rate of return that is discussed in the order is 6.5 percent compared to a rate of return that an
27 investor owned utility would have.A municipality would not have the obligation to pay dividends to investors. He
28 added that in the transcript of the testimony the 6.5 percent is the rate of return on investment to the owner and
29 there is no limitation placed on the amount of money that is paid over and above the payment in lieu of taxes and
30 RP& L is now paying somewhere less than 13/4 percent.Gimbal said it is conceivable that they could pay in
31 excess of that but should not pay 6.5 percent, adding that there should be some margin. He said some utilities give
32 nothing to the civil city.
33
34 Councilmmeber Lundy asked what formula used.Gimbal answered that you take the service number, divide by
35 three which is the straight property tax, assessment caluculation,multiply that times the civil city tax rate excluding
36 schools, libraries and a couple others, and whatever amount of money that is, is what the Commission says is a
37 legal contribution from the utilitiy to the civil city in lieu of taxes. Huffman said that amount is$545,816 per RP&L's
38 rate case. Councilmember Dickman asked about the percentage of the dividend for the City above the payment in
39 lieu of taxes.Gimbal said in a lot of cases that is zero.
40
41 Huffman stated that the important issue is who controls RP& L funds and that is this Board,but RP& L is regulated
42 by the Indiana Utility Regulatory Commission and the Commission has indicated that the ratepayers are not to
43 subsidize the taxpayers.He said that was brought out in Gimbal's report,and each should bear its own burden. He
44 added that if any fines were levied upon RP& L they would be borne by RP &L and paid by the reserves. If there is
45 a short fall in available money it would be borne by the ratepayer through future reveues. In the event of a fine the
46 taxpayers are not in jeopardy,only the ratepayer.
47
48 The purpose of municipal ownership of utilities,Gimbal said, is to provide adequate,dependable low cost service.
49 The benefits of municipal ownership are to be given back to the ratepayer by way of lower cost rates.The utility is
50 permitted to make payment in lieu of taxes and an appropriate formula has been provided by the Commission. In
51 RP& L's last rate case it was permitted to pay$545,816. RP& L's transfer of$1,650,000 was far in excess of what
52 was permitted. He stated that once again,the Commission says all excess monies should be returned to the
53 ratepayer through lower rates and no customer is to receive subsidized rates or free electric service.The excess
54 amount transferred above is actually a form of hidden tax to the ratepayers. Each$1 million transferred to the City
55 represents a 21/2 percent rate increase to all of RP& L's customers.
56
57 Huffman added that based upon expected revenue of$40 million, each million represents 21/2 percent for each
58 $1 million collected by way of hidden RP& L tax. He said that has more of a detrimental impact on the unemployed
59 and underemployed than$1 million collected by way of increased taxes, adding that people on no or limited income
60 have more of their budgeted monies going toward paying their electric service than going toward taxes. He said an
61 increase in taxes has less impact on these people than does an increase in electric rates. Huffman said he wanted
62 to point out that it is not important who owns RP& L but what the intent is. He asked what is the bottom line-how
63 much money we can get from the utility and transfer to the City in the form of the hidden tax?
64
65
RP&L Minutes Cont'd
July 19, 1993
Page 5
1 Chairperson Brookbaok addressed the issue of the suit filed by the EPA. She said she was startled to get the
2 envelope informing her of the legal action. (Check filed in the City Clerk's office for copy of the letter).She saKi RP
3 & L spent$24,244.89 with the law firm in Indianapolis on this issue and she recalled asking the management at
4 RP&L about it and was assured everything was going to be fine.
5
6
7 Huffman said Barnes &Thornburg had represented RP &_L before the Environmental Management Commi sion
8 for the last three years, noting that Tony Sullivan was in attendance to represent them. He added that a pre ious
9 Board recommended the hiring of Barnes & Thornburg to represent and handle this case. He said he had
10 presented to the Board over the years, comments about the progress of what has been done, talking abbut it
11 since 1978. He said he has invited questions and suggested to new Board members that they talk to RI L
12 about the matter but vane had chosen to do so. Councilmember Dickman said he wasn't made aware there &ere
13 any problems and Councilmember Allen said she thought the issue had been addressed.
14 •
15 In his opening remarks to the Board,Tony Sullivan said the letter that each Councilmember received represents a
16 case where the EPA is threatening to bring a lawsuit against RP&L regarding an air pollution control rule wh ch is
17 extremely more stringent than the rules for other comparable facilities. It is his wish,tonight, he said,to brin the
18 Board up to date as to where it stands and where RP&L intends to go.
19
20 Sullivan said the clean air act is implemented by two different agencies-the Indiana Department of Environm ntal
21 Management and EPA is the federal government. Explaining the way it works, he said the EPa establ hes
22 standards and the state submits what is called State Implementation Plans or SIPs to EPA for its approval. nce
23 that is approved,the state can enforce those plans and EPA can also enforce them.
24
25 One of the aspects of the clean air act, Sullivan said, is that it designates areas of attainment and non-attain ent
26 for particular pollutants.What is addressed as a concern in the letter is called particula and that is basically ust.
27 Attainment,he said, means the area complies with the standards and non-attainment means it doesn't comply. He
28 said the state issues permits that incorporate those standards and it runs for five years. Then, you apply for a
29 new one and as you wait for the state to issue a renewal you operate under the old one.
30
31 Sullivan noted that in 1978 the EPA designated Wayne County as non-attainment for particula emission. That
32 means stricter controls come into play for facilities within that region. Later in 1978, it decided that only four
33 townships - Webster, Boston, Center and Wayne - needed to be non-attainment. Then, in August of 1978,
34 Sullivan said, IDEM issued RP & L a permit but didn't talk about non-attainment at all. In 1980, whil the
35 non-attainment designation was still in place, IDEM adopted a rule of issue. Then, in 1981, EPA determi ed it
36 should never have been non-attainment but should have been something else.
37
38 Noting the background, Sullivan said the finding was the city monitor had been unduly influenced b the
39 construction of the county courthouse and the classification should be changed. The monitors were nea the
40 courthouse so they picked up more dust than they should have. However, although the designation was changed
41 the rule was never changed. From 1980 to 1990, the IDEM inspectors and the people his firm was working'with,
42 Sullivan said, told RP & L their permit limit was .37, not 0.040 and 0.070. The limit was comparable to ther
43 facilities and about 10 times what was in the non-attainment rule that never got changed even thoug the
44 classification got changed.
45
46 Sullivan said the inspection report in 1984 stated that RP &L was in compliance but the permit was never is ued
47 in final form and RP & L never got a final permit until 1990. In October 1989 RP & L converted to a new tack
48 resulting in greatly reduced emissions because they flew higher in the atmosphere and went farther.
49
50 IDEM issued RP& L a real permit,the first permit since 1978,which said the particulate should be limited to 0.04
51 pounds per million BTUs.Another permit said 0.07.At this point, RP&L said it had been told for years it was 23.7
52 and now they were being told it was 0.04 and 0.07 which was likely unachievable. RP & L got with the stat and
53 the state agreed, asking where those 1980 numbers came from and said that wasn't right.They said they ould
54 create some new limits for RP & L in line with everybody else's limits, something like .25 rather than .04. ince
55 that time, RP& L filed a request to state the effectiveness of the permit and filed a request to get a variance rom
56 the permit.
57
58 Since that time,Sullivan said, his firm had been working with the state to get a new rule through and the stat has
59 been working with RP & L and EPA to get this new rule through that brings them in line with other comparable
60 facilities. Some of the things that have been done to do this,which the state demanded,was that RP&L conduct
61 air quality to ensure that higher limits would protect the quality standards and variance request.
62
63 While the state was working with RP & L to create this new rule, Sullivan said, in September 1992 EPA issued a
64 notice of violation, saying that it has a right to enforce this also. It said just because RP & L is working with the
65 state doesn't mean the others are wrong.The state responded with a letter to EPA noting it is working with R' &L
RP&L Minutes Cont'd
July 19, 1993
Page 6
1 and met with EPA in September 1992, telling them that this rule is out of line with all comparable rules and that
2 the state is developing a new rule. The EPA requested some information regarding the RP & L facility and that
3 information was provided, Sullivan said. Since that time his firm has been working with the state to define the
4 exact perimeters of the new rule and May 1 of 1993 the state published in the Indiana Register that they plan to
5 change the rule. Since that time, Sullivan said, his firm continued to supply the state with information to get the
6 new rule out
7
8 Sullivan said it was obvious, by the July 7 letter, that the EPA is taking the position that it thinks the rule is valid
9 and it is threatening to enforce it. He said he met with the state last week to further define the perimeters and get
10 a rule in place and will be receiving more information next week. He said there is a meeting scheduled in early
11 August with the Department of Justice to hammer out why this is being done because on the face of it all, it
12 doesn't make sense.
13
14 Sullivan added that he has also filed suit in Wayne County to challenge the original rule and the reason for that is
15 that he didn't want to wait until after the EPA filed a suit because that would dillute some of the requirements. He
16 added that he didn't want to wait until after the Board met because he wanted to get it on file because he was
17 afraid that if EPA would file first it might prejudice RP & L's position. He said if the Board felt that if that suit was
18 not appropriate it could be withdrawn. He explained that the reason a suit had not been filed idn the past to
19 question the validity of the rule was because on its face it seems so unfair because it is so much less than
20 everybody elses. Also, his firm has been working with the state and relied on the state getting out a new rule. He
21 had hoped the EPA would not bring action but now that it is threatening to do so he feels it needs to be moved up
22 a little.
23
24 Councilmember Allen commented that she was on the Chamber Board of Directors in 1978 when a group from
25 Wayne County traveled to Washington, D.C. to find out what was happening in the non-attainment status.
26 Huffman noted that RP&L was not invited to be a part of that group.
27
28 Sullivan said that even assuming that the non-attainment classification had not been changed that others are
29 much lower than RP & L's limits. Councilmember Dickman asked about the meeting in Chicago with the EPA. He
30 said he took the information they asked for and they wanted to see more. He said the federal government has a
31 right to enforce a federally approved SIP and he knew potentially something could come up so his firm requested
32 that they exercise this prosecutory discretion and not bring action when this rule seemed so out of line. However,
33 he left there with a feeling the action could happen. He said he submitted the additional information and had minor
34 communications while working with the state to get the new rule through but nothing tipped him off that EPA
35 would go forward with its action until he received the July 7 notification.
36
37 Councilmember Lundy asked why the EPA was bringing suit if the state said RP & L is okay, and wanted to know
38 what would be the worst thing that could happen. Sullivan said it is too early to tell but he should have that
39 information within the next month. He added that it was his feeling that it seems that any reasonable person
40 reviewing the issue would have a hard time giving much of a penalty if any. However, he said,the environmental
41 laws are very strict.
42
43 In answer to a request by Councilmember Allen, Sullivan said the suit he filed in Wayne County Friday names the
44 state as defendant and seeks to invalidate the rule. He added that the basis for invalidating is that it is out of line
45 with the other rules and the applicant alleges that the EPA did not take into account economic reasonableness
46 and technical feasibilities required by law when it was adopted. Sulivan said the suit is filed in the name of RP&L
47 vs.the Indiana Department of Environmental Management.
48
49 Huffman noted that due to the lateness of the hour the only comment he had was that, once again, he welcomed
50 questions. Councilmember Lundy commented that if something occurs that the Board members do not know
51 about they would like to be informed. Huffman responded that he was not aware of the suit. Councilmember
52 Dickman asked if the potential was strong that EPA had a case. Huffman said the potential is there but he has to
53 think in terms of what has happened in the past which would given him no reason to believe the EPA would take
54 action.
55
56 Milligan said when he was in Indianapolis with Sullivan last week he was informed for the first time that this Board
57 has a pending suit against IDEM in Fayette Circuit Court. He said several members of the Board were unaware of
58 that. Sullivan said the litigation has been pending for several years.
59
60 Giving the background, Sullivan said IDEM passed a rule in 1986 that required RP & L to build a new stack within
61 9 months to control the sulphur dioxide emissions. The rule became effective in October 1987. RP & L hired an
62 engineer and determined it was going to take 15 months to build the stack. Once that was determined they
63 requested from the Indiana Department of Environmental Management a variance from the 9 months to 15
64 months. The state denied the request. At that time RP & L appealed to the Indiana Administrative law judge who
65 agreed with RP& L stating the denial was arbitrary. IDEM appealed the decision to the Indiana Air Pollution
RP&L Board Conti
July 19, 1993
Page 7
1 Control Board who reversed the decision and in 1990 RP & L appealed that decision. He said since then the staff
2 has been depleted and the issues became moot and nothing has happened.
3
4 Huffman offered his explanation of the events which happened, noting that the state had asked how long ' would
5 take to build a stack. He had indicated it would take two years. What followed was a process during which a prove
6 was received and acceptance which took 15 months.The signal to proceed was received but when RP&L l otified
7 the state and requested two years the state became arbitrary and did not change it. Huffman filled Board m mbers
8 in on the steps required which included hiring a consultant to design the criteria to the stack, bids received by the
9 contractor and the design submitted to the consultant for approval.
10
11 The actual construction of the stack, Huffman said,started with 60 12-inch I-beams 72 feet long, each havin to be
12 driven into bed rock, then a 41/2-foot concrete pad poured, plus a reinforced concrete shell. After the sta k was
13 completed, a brick liner had to be placed inside, laying one brick at a time all the way to the top, then a hell tc
14 protect the brick liner and a cap on top of that. Also, an elevator up the side. He said doing all that wo in 15
15 months was a resuk of having a good contractor and consulting engineer and he felt it was unreason-ble on
16 IDEM's part to say 9 months.
17
18 ADJOURNMENT
19
20 There being no further business,on a motion duly maid,seconded and passed,the meeting was adjourned.
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27 Jane R.Brookbank,President
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30 ATTEST:
31 Norma Cames,City Clerk
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