COUNCIL COMMITTEES

The Council Committees Meeting was held on July 22, 2002, at 6:15 p.m., with Council President Carey presiding. Members of Council present were Mr. Ritter, Mr. Pitts, Mrs. Williams, Mr. Truitt, Mr. McGlumphy, Mr. Speed, Mr. Salters, and Mr. Ruane. Mayor Hutchison and Mr. McGlumphy were absent.

AGENDA ADDITIONS/DELETIONS

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

UTILITY COMMITTEE

The Utility Committee met with Chairman Ruane presiding. Members present were Councilmen Speed and Ritter, and Mr. Lambert. Mr. Snaman was absent.

Clean Air Act - NOx Reduction Project

As presented at the Utility Committee meeting on April 8, 2002, the Dover electrical generation facilities are required to comply with the 1998 Environmental Protection Agency NOx SIP call and reduce its nitrogen oxide emissions. Per Section 3.8 of the Wholesale Power Supply and Services Contract executed between the City and Duke Energy, Dover shall reimburse Duke for costs incurred for compliance with any federal or state regulations which were promulgated, enacted or imposed after the date of the contract. As indicated in Section 3.8, if Duke incurs regulatory costs for which Dover is responsible, Dover shall reimburse Duke within 15 days of receipt of Duke’s invoice.

Duke has completed an extensive study outlining the recommended course of action to best comply with these regulations in the most cost-effective manner. This study recommends numerous incremental NOx reduction alternatives, including installation of variable air damper drives, installation of overfire air, installation of new countant burners (COFIR), and improved instrumentation. These four items, along with some miscellaneous items, are estimated to take up to one year to complete.

The total cost is estimated to approach $3 million. A breakdown of these cost estimates follows:

                        Install variable drives and controls

9 drives$ 80,000

                        Controls package                                                       350,000

                        Labor to install                                                            50,000

                        Engineering and design                                             64,000

                        Total                                                                       $544,000

Install OFA

Tubing$ 90,000

Ports and ducts and misc. materials 440,000

Labor to install 555,000

Engineering and design 271,000

Total$1,356,000

Install COFIR

COFIR tubing$100,000

Burners duct misc. materials180,000

Labor200,000

Engineering and design 120,000

Total$600,000

Instrumentation

CO monitors$75,000

                        Labor to install                                                            25,000

Misc. wiring 25,000

Total$125,000

Miscellaneous Improvements

Furnace flow testing$25,000

Relocate O2 analyzers10,000

Tune firing controls25,000

Replace oil gun tips with larger size65,000

Install additional test taps 25,000

Total$150,000

Estimated Subtotal$2,775,000

Contingency (8%) 225,000

                                                Project Total                               $3,000,000

All estimates are budgetary and should not be considered firm price quotes. All purchases will be made in accordance with Duke’s bidding and purchasing policies. Members were reminded that Council approved funds for this expense in the 2002–2003 budget in the Electric Administration, Construction - Purchase account in the amount of $4 million. The funding source is the Future Capacity Reserve.

The timeline for the project is immediate and began with the study mentioned above. Efforts are underway to obtain information and develop specifications and bid packages. Specific milestones along the way include:

            April 2001                  –          Phase I study complete

            Fall 2001                    –          Commenced Phase II study

            April 2002                  –          Presentation to the Utility Committee

            May 2002                   –          Phase II study complete

            June/July                     –          Meet with vendors to collect product information

            July/August                –         Develop bid packages and Request for Proposals

August/September – On site pre-bid meetings; begin procurement

            September/October     –          Unit 3 fall outage; install drives and control package, install instrumentation

November/December – Unit 3 tuning and testing

January/February– Stage OFA and COFIR materials on site

            March/April                –          Unit 3 spring outage; install OFA and COFIR

            April/May                   –          Unit 3 tuning and testing

            May 1, 2003               –          Start of NOx season.

Mr. Dean Blaha, Production Manager, stated that, due to the magnitude of the project, it is necessary for him to begin obtaining contractors to perform the work. He noted that there is a significant portion of labor which will be performed by his staff at no additional charge to the City.

Responding to Mr. Ritter, Mr. Blaha stated that the estimates in the study were based on industry standards. Mr. DePrima noted that Duke has a corporate policy which requires specifications and quotes for these projects in order to control costs.

Staff recommended that City Council authorize Duke Energy Trading & Marketing to start the NOx reduction project for the estimated project cost of $3 million, including an estimated contingency of $225,000. The City will reimburse Duke in accordance with the contract for all costs associated with the project as highlighted above.

Mr. Lambert moved to recommend approval of staff’s recommendation, seconded by Mr. Speed and unanimously carried. It was noted that, due to time constraints, staff requested that this matter be considered during the Council Meeting later this evening for final approval.

Mr. Speed moved to adjourn into executive session to discuss legal matters, seconded by Mr. Ruane and unanimously carried.

Meeting Adjourned at 7:03 P.M.

                                                                                    Respectfully submitted,

                                                                                    Carleton E. Carey, Sr.

                                                                                    Council President

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