October 15, 2009
The regular meeting of the Board of Directors of the Omaha Public Power District was held in the Board Room on the Atrium Level of Energy Plaza East, on October 15, 2009, at 10:00 a.m.
Present were Directors M. J. Cavanaugh, N. P. Dodge Jr., J. K. Green, G. C. Hall, A. L. McGuire, J. R. Thompson, F. J. Ulrich and D. D. Weber. Also present were W. G. Gates, President; M. C. Bodammer, Corporate Secretary; and S. M. Bruckner, General Counsel for the District. Mr. Ulrich, Board Chair, presided, and Mrs. Bodammer, Corporate Secretary, recorded the minutes. Other members of Management present were D. J. Bannister, T. J. Burke, E. E. Easterlin, A. J. Minks, D. F. Widoe, G. R. Williams, J. J. Hanson, J. T. Hansen, R. T. Boro, S. M. Floerchinger and D. K. Petrus. Others present included Lynn Moorer (attorney from Lincoln); C. E. Perkins from I.B.E.W. Local #763; R. Simon from Siemens Power Systems; and approximately five additional customer-owners and employees of the District.
The Corporate Secretary read the following:
“Notice of the time and place of this meeting was publicized by notifying the area news media; by publicizing same in the Omaha World-Herald and Outlets; by displaying such notice on the Arcade Level of Energy Plaza since October 9, 2009; and by mailing such notice to each of the District’s Directors on that same date.
“A copy of the proposed agenda for this meeting has been maintained, on a current basis, and is readily available for public inspection in the office of the District’s Corporate Secretary.
“Additionally, a copy of the Open Meetings Law is available for inspection in the public meeting book located in this meeting room.”
It was moved and seconded that the Board reviewed the August 2009 Comprehensive Financial and Operating Report and that the minutes for the last meeting be approved. The vote was recorded as follows: Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; and Ulrich - Yes. The motion carried.
Thereafter, the Corporate Secretary read the following:
“Persons wishing to address the Board on a particular item are asked to approach the microphone as that agenda item is discussed. Comments will be heard following Board discussion of the item and prior to a vote by the Board.”
The following resolutions were then read, and upon motion duly seconded, were placed on roll call. The vote on each resolution is indicated following the description of that resolution.
RESOLUTION NO. 5798 approves the final reports regarding consideration of five new standards enacted by the Energy Independence and Security Act of 2007 (EISA). Director Thompson led the discussion stating that two of the standards being considered pertain primarily to investor-owned utilities and not public utilities. These included the “Rate Design Modifications to Promote Energy Efficiency Investments” and “Smart Grid Investment” standards. Public input was solicited and received by the District for all the new standards. Following the discussion, the vote was recorded as follows: Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5799 approves the award of a contract to Fuel Tech, Inc. to engineer, procure and construct a low nitrous oxide combustion system and perform tubing replacement work at Nebraska City Station Unit 1 (NC1) in the amount of $12,650,185. Director Hall led the discussion stating that Management was previously authorized to negotiate a contract to complete this work (Resolution No. 5771). He further said the recommended least-cost method complies with federal requirements and involves replacement of the burners on the boiler, as well as modification of the furnace combustion air systems. Based on the proposed contract, NC1 will realize a nearly 50-percent improvement rate in nitrous oxide emissions and Fuel Tech, Inc. has defined an acceptable “make-good” provision in the contract to guarantee reduced emissions in compliance with federal hazing rules. At this time, Ms. Lynn Moorer (404 South 27th Street, Lincoln, Nebraska), an attorney representing certain OPPD customers, approached the podium to comment. Ms. Moorer requested clarification for use of the term “make-good” as it relates to the contract under consideration. Specifically, she wanted to know if the contract terms as written ensure that the 50-percent reduction in nitrous oxide emissions is guaranteed. She also inquired whether a time limit has been established in the contract for completion of any “make-good” work if corrective measures become necessary. Vice President Widoe affirmed it is the District’s expectation that any work performed by Fuel Tech, Inc. will meet the specifications when emission testing is completed; if not, he said make-good work will be scheduled to coincide with the outage planning schedule. Board Chair Ulrich commented that Management would review the contract language in regard to Ms. Moorer’s questions. Steve Bruckner, representing General Counsel, commented that the contract is not yet final and is subject to review by the District’s General Counsel. He added that a specific deadline for completion of make-good work would not be desirable for the District.
Following the discussion, the vote was recorded as follows: Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; and Ulrich - Yes. The motion carried.
RESOLUTION NO. 5800 authorizes Management to enter into a contract with LES/Urenco (Louisiana Energy Services LCC) for uranium enrichment services for Fort Calhoun Station for the period 2014-2024 for an estimated contract amount of $167,473,000. Director Hall led the discussion and noted that the world-wide market is changing with nuclear energy becoming a more viable alternative energy source. He commented uranium prices will likely increase in the upcoming years and this contract allows the District to immediately lock in an attractive price. Director Hall also said the District utilized a consultant (Energy Resources International, Inc.) to examine the vendor’s proposal, as well as Management’s evaluations and data analyses, and supports the conclusions reached. Thereafter, the inflation rate was discussed and explained. Director McGuire called upon President Gates to provide current numbers on new nuclear plant construction projects. Mr. Gates reported there have been eight start-up construction projects in 2009 and approximately ten scheduled for 2010. Currently there are 438 operating reactors in the world and the prediction is that by 2030 there will be 1,200 nuclear plants. Mr. Gates further explained the mission of the World Association of Nuclear Operators (WANO), an international organization comprised of utilities that own nuclear reactors and pledge to assure safety standards are applied universally around the world. Mr. Gates currently serves on its board of directors. Director Thompson inquired about the potential use of spent nuclear fuel in the future. Mr. Gates said it is a technically feasible option that will likely be discussed by the Blue Ribbon Commission, a newly formed U.S. organization that will be confirmed by the President by the end of 2009. Candidates for the Commission will be nominated by DOE, the utility industry and the scientific community. Mr. Gates commented that any conclusions reached by the Blue Ribbon Commission would comprise an independent report to the Administration. Following the discussion, the vote was recorded as follows: Dodge – Yes; Green – Yes; Hall – Yes; McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; and Ulrich - Yes. The motion carried.
Copies of the foregoing resolutions are filed in the District’s Corporate Records file.
The next order of business was the opportunity for public comment on other items of District business. Chairman Ulrich recognized Mr. John Pollack (1412 North 35th Street, Omaha, Nebraska 68131). Mr. Pollack said he has been a meteorologist in Omaha for the past 30 years. He referenced the September issue of Outlets which is an insert included in the customer statements. Mr. Pollack said OPPD made a political statement when an opposing opinion to the cap and trade legislation currently being considered in the State legislature was published in Outlets that addressed substantially higher costs. He maintained this is not neutral information to provide ratepayers because most representatives and senators already oppose the bill in its current form. Thereafter, Mr. Pollack summarized current worldwide research regarding climate change and referenced several articles from Nature Geoscience magazine. He commented the rate of melting ice in the Arctic Ocean is due to a substantial increase in the production of carbon dioxide. Mr. Pollack also referenced another article concerning carbon respiration from subsurface peat accelerated by climate warming in the subarctic. He said the article also reported an increase in carbon dioxide released into the atmosphere created by the breakdown of frozen material (composed of peat) in the Arctic Ocean. He also reported that sea level data indicates a significant increase in sea levels worldwide. Mr. Pollack suggested the Board consider the potential increased costs resulting from cap and trade legislation compared to increased costs resulting from consequences of elevated carbon dioxide emissions. He also mentioned Nebraska is north of a major belt of winter ice storms occurring in the plains states (Kansas, Missouri, Oklahoma and Arkansas). Normal air circulation patterns make it difficult for large amounts of moisture to reach Nebraska in the wintertime. He commented that, as climate zones shift north, more moisture will collect in Nebraska during the winter making OPPD’s network vulnerable to ice loads more frequently which will affect ratepayers with increased costs and outages. With respect to the Outlets article, Mr. Pollack invited the Board to keep a broader perspective because he believes not all costs are being considered.
Board Chair Ulrich asked President Gates to address Mr. Pollack’s concern regarding the Outlets article. Mr. Gates took responsibility for the contents of Outlets and commented OPPD is committed to sustainable energy in its energy mix and, in particular, has invested considerably in wind generation. He said OPPD’s issue with cap and trade legislation relates to trade and how that process works. If money is to be spent, he stated it should be spent on meaningful change such as the carbon reduction rather than a trading allowances system. Thereafter, Mr. Gates offered to speak to Mr. Pollack after the meeting.
There being no further business, the meeting adjourned at 10:38 a.m.
A. J. Minks M. C. Bodammer
Assistant Secretary Corporate Secretary