SPECIAL UTILITY COMMITTEE

A Special Utility Committee Meeting was held on August 26, 2003, at 11:00 a.m. with Chairman Ruane presiding. Members present were Mr. Carey, Mr. Lambert, and Mr. Farling. Mr. Ritter was absent. Others present were Mr. Speed, and Mr. McGlumphy.

AGENDA ADDITIONS/DELETIONS

Mr. Carey moved for approval of the agenda, seconded by Mr. Lambert and unanimously carried.

FINAL REPORT - ELECTRIC RATE STUDY - BURNS & MCDONNELL (Comprehensive Electric Revenue Requirement, Cost of Service, and Rate Design Study)

As a follow-up to the Special Utility Committee Meeting of April 8, 2003, Mr. Brian Farber, Burns & McDonnell, presented a draft Report on the Comprehensive Electric Revenue Requirements/Cost of Service/Rate Design Study (Attachment #1) . Mr. Farber indicated that the report has been revised to include suggestions from the previous three (3) meetings held.

Mr. Farber explained that several factors were considered when designing the proposed rate schedule, as follows: 1) existing City of Dover rate schedule; 2) rate schedules of competitors (i.e. Milford, Newark, Smyrna, Delaware Electric Cooperative, and Conectiv); and 3) historical billing data for existing City of Dover customers.

It was recommended that the City minimize/combine the existing 29 categories for rate classes to seven (7), to include the following: Residential, Small Commercial, Medium Commercial, Large Commercial, Primary Metering, Street Lighting, and Security Lighting. Mr. Farber noted that there were five (5) individual large customers (Dover Air Force Base, Kraft, Proctor & Gamble, Tilcon Delaware, and First State Power Management) that have separate rates. As stated in a previous meeting, there were several “deals” made in the past (with and without written agreements) in regards to special rates. To maintain positive customer relations, he suggested the five (5) customers continue to pay the agreed rate, and requested that staff review the expiration dates of the agreements. Once the agreements expire, it would be necessary to re-classify the customer accordingly.

Mr. Ruane and Mr. McGlumphy requested staff to define the different classes of rates, the criteria range used for determining what rate is assigned to a particular account, and examples of what customers (i.e. fast foods or department stores) are classified as a small, medium, or large customer. Furthermore, Mr. Ruane requested staff to provide a list of primary electric customers that own their transformers.

Mr. DePrima recommended that the study be referred back to staff so that an implementation plan could be developed. Several issues such as timing, rate shifting, special rates, impact on customers, and power factor adjustments must be addressed prior to increasing the rates.

To avoid delays, Mr. Ruane requested that staff develop a specific time table of events for implementing the proposed rate adjustments. He requested that the time table be presented to the Utility Committee in approximately two (2) weeks.

Mr. Ruane moved for adjournment, seconded by Mr. Carey and unanimously carried.

Meeting Adjourned at 12:30 P.M.

Respectfully submitted,

Eugene B. Ruane

Chairman

EBR/lcg

S:ClerksOfficeAgendas&MinutesCommittee-Minutes20038-26-2003-Special-Utility.wpd

Attachment on File at the City Clerk’s Office

Attachment #1 - Report on the Comprehensive Electric Revenue Requirements/Cost of Service/Rate Design Study