Documents reveal volume of details about Berea’s electric power choice

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Is the City of Berea making the right decision when it comes to securing a wholesale power provider, securing electric transmission facilities, and buying seasonal capacity? Those are questions some Berea City Council members say have made for the most challenging and complicated decisions of their careers as public officials.

Not only is that evident in the hours of public discussion on the issue, but also in the sheer volume of information city officials have had to consider when making the decision to break with Kentucky Utilities, then form new relationships with American Municipal Power (AMP) and the Kentucky Municipal Energy Agency (KyMEA).

Below are links to documents referenced by advocates of the city’s current energy policy, as well as those who question certain elements of Berea’s recent wholesale power decisions.

Understanding Berea’s Wholesale Electric Power Purchase Contracts Length: 7 pages. Prepared by Mayor Steven Connelly, this summary gives an overview of Berea’s purchase power history, including Berea College Utilities and Berea Municipal Utility’s lengthy partnerships with municipal power cooperatives dating back to 1975. It recommends maintaining the relationship with KyMEA based on projected energy cost savings, among other advantages. It further suggests adopting long-term energy strategies for Berea.

Goss Report Length: 26 pages. Compiled by Attorney Mark David Goss, this report was commissioned by the city as part of an effort to explore the implications of rescinding a contract with KyMEA. The report raises questions, but reaches no final legal opinion, about the legality of forming KyMEA, and about the agency’s billing practices. The report offers no opinion on the possible purchase of an additional 10 mw of seasonal capacity (emergency winter power supply), instead stating that it is a business decision for the city. The Goss opinion contains several attached documents that are included below.

Interlocal Agreement Length: 24 pages. Certified in 2015, this document establishes the Kentucky Municipal Energy Agency (KyMEA), including the signatures of several municipal power members. The document includes the certification by Kentucky Attorney General Jack Conway and Secretary of State Alison Lundergan Grimes.

Correspondence – Addendum Length: 17 pages. File includes a letter from Attorney Charles S. Musson to Attorney Mark David Goss on the legality of forming KyMEA. Also attached is the addendum to the KyMEA interlocal cooperation agreement, making Berea a member.

Ordinance – Minutes Length: 4 pages. Filed as attachments to the Goss Report, Ordinance #16- 2016 recognizes the creation of KyMEA, approves the interlocal cooperative agreement, appoints Berea representatives to the board, outlines payment of expenses, and authorizes city officers to execute necessary documents. Also included is a passage from the minutes of the Berea City Council meeting of September 6, 2016.

Transmission – Master Services Agreement Length: 39 pages. Agency agreement between the City of Berea and KyMEA for transmission services, and the Master Services Agreement between the City of Berea, American Municipal Power, and AMP-affiliated entities. Also included is a transaction confirmation from NextEra Energy.

Energy Supply Schedule – Berea – AMP Length: 6 pages. The energy supply schedule, among other things, sets the terms for the delivery of power to Berea Municipal Utilities, including establishinkilowatt-month power at $1.50 per kilowatt month.

As part of the city’s due diligence process in response to a proposal to rescind the contract with KyMEA, several additional reports were solicited, including:

Fortner Analysis Length: 9 pages. Then-Berea Municipal Utilities Director Ed Fortner outlined the rationale for joining KyMEA, including significant savings in power costs (as much as 13% over KU over 5 years), sharing of costs among members, mutual aid among members, and a steep discount in the purchase of seasonal capacity, potentially resulting in $1.2 million in savings over five years.

Hensley Report – Auditor Assessment Length: 9 pages. An auditor/consultant on the financial compliance status of Berea utilities for over 22 years, Jerry W. Hensley produced a report affirming the prospect that Berea could save up to $7.5 million, or 13.5 percent, on energy costs over a five -year period compared to costs if Berea had remained with Kentucky Utilities. Hensley also referenced the opinions of Berea’s energy consultants advocating the purchase seasonal capacity, which, according to them, potentially allows Berea to save $1.2 million for seasonal capacity over the life of the five-year contract.

BUAB – Conclusions Length: 2 pages. In response to the proposal to rescind an agreement with KyMEA, the Berea Utility Advisory Board (BUAB) met and weighed in on whether membership in KyMEA exposes the city to financial risk or unreliable electric service. On those questions, BUAB members voted KyMEA does not expose the city to financial risk nor interruption of service. Moreover, BUAB members also asserted their opinion that the purchase of 10mw of seasonal capacity is a reasonable course of action.

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Additional reading: Berea Due Diligence Full Report Link https://bereaky.gov/wp-content/uploads/2018/03/KyMEA-Due-Diligence-Full-Report-2018.pdf

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