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04-453��-r5 ��� - ��S�D� coun�il F;le # —453 Green Sheet# ��` RESOLUTION OF SAINT PAUL, MINNESOTA Presented Referred To Committee Date 31 Resolution to approve District Cooling SL Paul, Inc.'s request to amend their customer bi[ling rates. 1 WHEREAS, District Cooling St. Paul, Inc. filed a notice on July 17, 2003 and an official affidavit on September 17, 2 2003 norifying the City of Saint Paul of a proposed cooling rate increase. The cooling rate increase became effective 3 in October 2003, unril approved or denied by the Saint Paul City Council pursuant to Section .11(e) of the District 4 Cooling Franchise; and 5 WHEREAS, District Cooling St. Paul, Inc. agreed to an extension for review of the request by the City of Saint Paul 6 until May 5, 2004; and 7 WHEREAS, evidence and recommendations have been presented to the City Council in the manner of a City staff 8 report submitted to the City Council on April 12, 2004, in conjunction with a public hearing on this matter; now 9 therefore be it 10 RESOLVED, the Fiscal Year 2004 cooling system customer billing rates proposed by District Cooling St. 11 Paul, Inc. appear to be reasonable in today's market conditions, and thus formal approval by City Council 12 Resolution is recommended based on the following: 13 14 15 1) The cooling demand rate changes from $22.82 to $23.28 per ton per month, an increase of 2.0 %. 2) The cooling energy rate remains $0.061 per ton-hour. If actual energy costs are less than estimated, customers receive a refund, and be it; 16 FURTHER RESOLVED, District Cooling is operating in an expanding/growth mode; therefore, it is 17 18 19 20 - - - - ... - - � ..- - . ��. . �� .. ., - .. - - - _ �,�.� .� _ � � ; . - . . . 21 2) District Cooling provide the City with an opporhxnity to review, at the District Cooling offices, 22 the confidential and proprietary four year pTan related to system expansion and capitai 23 maintenance, with anticipated debt financing and, or refinancing, whenever a customer billing 24 rate application is submitted; and be it recommended that: 25 FURTHER RESOLVED, it was difficult for City Staffto determine the appropriate level of cash and 26 reserve balances required for all current and anticipated needs of District Cooling's operations for 2004 and 27 for the foreseeable future; therefore it is recommended that: 1�-1-�153 i) District Cooling's Board of Director's continue to specify desired cash balances and reserves for general operations, rate stabilization, debt service, and capital repair and maintenance which includes supporting docuxnentation as to why these amounts aze at an appropriate level for both 4 rate payers and the company, and a policy for spending these reserves. 5 6 2) District Coolzng provide the Ciry with an opportunity to review, at the District Cooling offices, 7 the confidential and proprietary Boazd of Director's policy statements whenever they are adopted, 8 amended or when a customer billing rate application is submitted; and be it 9 FINALLY RESOLVED, any modifications to the Cost Allocation Agreements for District Energy, District 10 Cooling and Market Street Energy can have a significant effect on both annual budgets and billing rates; 11 therefore it is recommended that: 12 1) District Cooling notify the City of any changes to the cost allocation agreements and provide the 13 City with the most current cost allocation agreements. ** Amended lanugage for lines 18-20 (Page 1) District Cooling provide documentation to the city that the current customer billing rate will remain iust, reasonable and nondiscriminatorv to customers in the future a year �uuu. �4 b s tc.-I.� �'� Benanav B Hazris Helgen Lantry Thur Adopt Adopt By: Appro By: G:\Shaz� � � - � � � � � Requested by Departmem o£ Office of Financial Services By: � Form Approved by City Attorney „ :, . � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet 5 � Departmentloffice/counci4: Date Initiated: Fs -����;ats�� ,2-APR� Green Sheet NO: 3014875 CoMact Berson & Phone � Department Sent To Person Initial/Date Lori Lee 0 ' n"al ervi 266-$$22 ASSign 1 "nancial Servic De ar�ent Director Must Be on Council qqenda by (Datej: Number g - nanciat ervi O c Itinancia Se ' 2&APR-04 For - � Roating 3 i Atto ne Order 4 r' ffice dAssista t 5 ouncil i Council 6 i ler i eTk Total # of Signafure Pages _(Clip All Locations forSignature) Adion Requested: Approval of Dishict Cooling's request to amend the Fiscal Yeaz 2004 cooling customer billing rates. Recommendations: Approve (A) or Reject (R): Personal Service Contrects Must Answer the Following Questions: Planning Commission 1. Has this person/firm ever worked under a contract for this department? CIB Committee Yes No Civil Service Commission 2. Has this personffirm ever been a city employee? Yes No 3. Does this persoNfirm possess a skill not normally possessed by any current city employee? Yes No � Explain all yes answers on separate sheet and attach to green sheet initiating Problem, lssues, Opportunity (Who, What, When, Where, Why): � � In accordance with the cooling francbise agreement, Disfrict Cooling has filed notice to amend Schedule A of Saint Paul Legislarive Code, Appendix K, as amended. The City Couacil must review the evidence of this rate case and approve or deny theu request. The attached resolution recommends �pproval of the new rates_ AdvaMaS�es If Approved: ' � . Dishict Cooling's demand rate will be sufficient to cover demand-related costs. DisadvaMages If Approved: � None. DisadvanWges If Not Approved: � The rates would not be sufficient to cover demand-related costs. ToTal Amount of CostlRevenue Budgeted: Trensadion; ' Funding Source: Activity Number: ���� �¢��`���'� �'���� Financial information: (Explain) �FR 19 2�04 City of Saint Paul Interdepartmental Memorandum To: Council Members From: Lori Lee Date: May 5, 2004 Subject: Amendment to Item 32 CF 04-453 At the public hearing on Aprii 28, District Cooling requested that the resolution approving the cooling rate be amended by strikiug out the staffrecommendations begimiing on page l, line 16. Stating they were outside of the Franchise and the provisions of (Sec.) 11. In response, Lisa Veith, Assistant City Attomey and member of the Franchise Team has reviewed this language. In her opinion "the council, as rate regulator and pursuant to the applicable franchises, has the legal authority to approve the recommendations set forth in both of these resolutions", with the exception of recommendation 2, which limits the rate to FY 2008 (lines 18-20). District Cooling has a point that the francliise states that proposed changes to the rate can only be approved or denied, and cannot be modified or amended. Therefore staff recommends the following amended language to lines 18 - 20. District Cooling provide documentation to the city that the current customer billing rate will remain just, reasonable and nondiscriminatory to customers in the future as required by the franchise agreement if they do not request a rate change before fiscal yeaz 2008. The team believes the remaining recommendations are necessary and required to fulfill the city's regulatory duties and to protect the city's investment. The City is not only this franchise's rate regulator; it is also a customer and an investor in the company. Page 1 of 1 Lori Lee - District Cooling Rate Resolufion From: Lisa Veith To: Lee, Lori Date: 4/29l2004 3:29 PM Subject: District Cooling Rate Resolution CC: Cervantes, Manuel; Hurley, Todd; Moermond, Marcia L,ori: this comes in response to your quesrion at our meeting today. I reviewed and approved both the Heating and Cooling Resolutions regarding rates prior to submission to Council. As I understand it, you plan to amend the language of Cooling rate recommendation no. 1 to be more in line with the heating rate recommendation. My opinion remains the same that the council, as rate regulator and pursuant to the applicable franchises, has the legai authority to approve the recommendations set forth in both of these resolutions. Lisa Lynn Veith Assistant City Attorney 400 City Hall and Courthouse 15 W. Kellogg Boulevard City of St. Paul, MN 55102 (651) 266-8710 lisa.veithC�ci.stpaul.mn.us file://C:�Documents%20and%20Settings�lee�I,oca1%20Settings\Temp\GW}00002.HTM 5/5/2004 a{.-K53 City of Saint Paul Interdepartmental Memorandum To: Council President Bostrom Councilmember Benanav Councilmember Harris CounciImember HeIgen Councilmember Lanhy Councilmember Montgomery Councilmember Thune From: Date: Matt Smitk, Director ofFinanciaT Service ��-- Lori Lee, Office of Financial ServicepJ%� April 12, 2004 ` Subject: StaffReport Regarding District Cooling's Rate Increase Request District Cooling submitted a request to the City of Saint Paul on September i7, 2003 stating that a rate increase wauld go into effect October 2003. Dishict Cooling agreed to extend the deadiine for the review and approval of the cooling rates to May 5, 2004. The attached staffreport pzovides an overview of District Cooling's request and the Rate Review Team's recommendarions. The public hearing has been requested for Apri128, 2004. After the public hearing is closed, Council should direct staff to submit the appropriate resolution. It is imperative that the Council decide whether to approve or deny District Cooling's request on oz before May 5, 2004. If the Councif does not pass a resolution by May 5, 2004, District Cooling's rate increase request is automaticaTly approved per the District Cooling Franchise Agreement. If you have any questions, please contact Matt Smith (266-8796) or Lori Lee (266-8822). cc: Mayor Kelly Dennis Flaherty Anders Ryclaker Andrew Kasid Franchise Review Tea�n Todd Hurley Lori Lee Marcia Moermond Lisa Veith Legislative Aides Ellen Biales Jennifer Dunn Imani Jaafar-Mohunmad John Marshall Jane Prince Scott Renstrom Donna Swanson Renee Tyler G:\Shared\O F S�Franchises\DHDC Rate Review�2004Vteport Cover Memo.wpd (�t-'�53 City of Saint Paul Interdepartmental Mexnorandum To: Matt Smith Financial Services From: I,ori Lee, Ch V��� i C Franchise Re ew eam Date_ April 9, 2004 Subject: Staff Report for Proposed Fiscal Yeaz 2004 District Cooling Rates This memorandum discusses the Franchise Review Team's analysis of District Cooling St. Paul, Inc. proposed rate changes for fiscal year 2004. PROCEDURAI. HISTORY Pursuant to Section .11(e) of Saint Paul Legislative Code, Appendix K(City Ordinance 17816, adopted March 28, 1991); District Cooling St. Paul, Inc. filed notice on July 17, 2003 with the City Clerk of its intent to change cooling rates effective October 1, 2003. The company stated in this request that the proposed rate changes were determined in accordance with the District Cooling Service Agreement and approved unanimously by the Board of Directors on June 13, 2003. Subsequently, on September 17, 2003, District Cooling St. Paul, Inc. filed an affidavit with the City, along with an amended Schedule A. The affidavit confirmed that all signed District Cooling customers were notified of the proposed rate changes and the required customer meeting was held on August 13, 2003. The Franchise Team, requested additional information regarding the cooling rate increase. Todd Hurly, Lori Lee and Marcia Moermond met with Dishict Cooling staff Joyce Anderson and Andrew Kasid to review District Cooling documents and clarify District Cooling's responses to the team's questions. Froper notice, publication, and public hearing on the proposed rate changes will be completed by Apri128, 2004, within the agreed upon extension time line. These steps, along with the process to date, satisfy ali procedural requirements of the franchise agreement. Staff Report for Proposed FY 2004 Dishict Cooling Rates Apri19,2004 Page 2 PROPOSED CHANGES District Cooling St. Paul, Inc. proposes the following changes to Schedule A: �tt-�153 The cooling demand rate changes from $22.82 to $23.28 per ton per month, an increase of 2.0 %. 2_ The cooling energy rate will remain at $0.061 per ton-hour. 3. No changes to District Cooling Service charges are proposed. COOLING RATE REVIEW The team reviewed: • Comparison of cooling rates • Change in overall rates • Cost allocation agreement • Customer Survey Results Rates Demand ($fton/mo) Energy ($/ton hr) Overall cost at 1200 hrs Increase as % Demand ($/ton/mo) Energy ($/ton hr) Overall cost at 1200 hrs Revenues Demand Energy (after rebate) Chanee in Overall Rates • Capital Plan • Capital expenditures • Debt Service Obligations • Reserve Accounts Actual Actual FY 2000 FY 2001 $21.73 $21.73 $0.055 $0.057 $0.273 $0.274 Actual Actual FY 2002 FY 2003 $22.38 $22.82 $0.056 $0.058 $0.279 $0.286 Budget FY 2004 $23.28 $0.061 $0.294 2.02% 5.17% 2.80% $5,838,624 $1,439,600 0.00% 0.00% 2.99% 1.97% 0.00% 3.64% -1.75% 3.57% 0.00% 0.37% 1.82% 2.51% $3,591,007 $4,594,096 $4,973,090 $5,492,837 $1,177,363 $1,305,572 $1,334,457 $1,427,541 Over the past ten years, overall cooling rates have increased by an annual average of 1.7%. The proposed 2004 rate assumes a 5.1% growth in customer demand. The demand rate covers operations and maintenance; general and administrative; reseazch and development; debt and capital expenses. Total demand related cost are expected to increase by $543,106, due to an increase of $695,597 in net cash debt service requirements. The energy rate is a pass through to the customer. The rate is based on the projected cost of electricity, which is the major fuel source for cooling. If actual costs are less than budgeted, customers receive a refund. The actua12003 energy rate was $0.058 compared to the 2003 budgeted rate of $0.061. District Cooling refunded customers a totai of $81,692. Staff Report for Proposed FY 2004 Dashict Cooling Rates Aprii 9, 2004 Page 3 Cost Allocation between Heatine and Cooling t��L-�53 Allocated costs between District Energy and District Cooling are based on the Cost Allocation Agreement dated October 1, 1991 as approved by the Board of Directors. This agreement provides that jointly used plant labor, maintenance, distribution and general and adwinistrative items are allocated based on the percentage of energy sales for each company. All other personnel costs are allocated based on a d'uect allocation of time sheet information. Below is the calculation of the cost allocation percentage from FY 2002 to FI' 2004. The actual FY 2003 allocarion from cooling to heating is $944,344. Cost Allocafion Percentage FY-2002: Enerev Assumptions: TOTAL District Energy - Demand (K4� 164,250 District Energy - Energy Sales (MWH) 300,000 DC - Demand (Tons) 18,183 DC - Energy Sales (Ton-hr) 21,507,942 DC - Energy Sales (Mwh) (Ton-hrs X 0.0035) 75,278 Cost Allocation Percentage [DC Sales /(DC Sales + DE Sales)] 20.06% Cost AIIocation Percentage FY-2003: EnerQV Assumutions: TOTAL District Energy - Demand (KW) 168,500 Dish Energy - Energy Sales (MWH) 315,000 DC - Demand (Tons) 19,338 DC - Energy Sales (Ton-hr) 22,400,000 DC - Energy Sales (MWII) (Ton-hrs X 0.0035) 78,400 Cost Allocarion Percentage [DC Sales /(DC Sales + DE Sales)] 19.93% Cost Allocation Percentage FY-2004: Enerev Assumptions: TOTAL District Energy - Dexnand (KW) 171,500 District Enexgy - Energy Sales (MWH) 320,000 DC - Demand (Tons) 20,900 DC - Energy Sales (Ton-hr) 23,600,000 DC - Energy Sales (MWH) (Ton-hrs X 0.0035) 82,600 Cost Allocation Percentage [DC Sales /(DC Sales + DE Sales)J 20.52% Staff Report for Proposed FI' 2004 Dishict Cooling Rates Apri19,2004 Page 4 Customer Survev Results �,-�53 The City of Saint Paul, as the chief regulatory authority overseeing District Cooling, has had no customer complaints in the tune period since its last rate increase. Dishict Cooling and District Energy have joinfly undertaken periodic customer service surveys. District Cooling reported that the 2003 customer survey had responses from 45% of their 163 customers. A suumiary of the survey results indicates the foliowing: Customers rated the following services as being extremely important to them: A. Responsiveness (timeliness and reliability of sta� B. Technical support (problem solving and planning) C. Value (risk management, operating simplicity, training and cost control). The survey noted that the main concern of customers had to do with the price of services. On average, survey respondents indicated they found District Cooling's and District Energy's to be a slightly better value than their competitors. (Rating of approximately 2.4 on a scale where 2 is "the same as" and 3 is "superior to.") Customers responded that District Cooling's and District Energy's communication, technical support, responsiveness and environxnental responsibility were somewhat better than the competirion. (Raring of approximately 2.6 on a scale where 2 is "the same as" and 3 is "superiorto.") On average, customers indicate they are satisfied with the services they receive; in some cases, very satisfied. Information on "not satisfied" customers was not included in the materials reviewed. Capital Plan District Cooling obtained a review of its Statement of Forecasted Repair and Replacement Expenses for the yeazs ending September 30, 2004, 2005 and 2006 from an independent consultant, Stanley Consultants. The consultant determined that the statement considered the effect and timing of major non-recurring maintenance projects and found it to be reasonable in relation to amounts forecasted in prior years. The consultant also obtained written representation from District Cooling's management that the Statement of Forecasted Repair and Replacement Expenses is complete and represents its best estimate of future repair and replacement expenses, and that management believes that a systematic process is followed in anticipating and preparing for required repair and replacements. Staff Report for Proposed FY 2004 Dishict Cooling Rates Apri19, 2004 Page 5 Capital Expenditures �-K53 The 2004 budgeted capital eacpense is $ 44,800 compazed to actua12003 eapenses of $6,429,803. This aznount includes $3.9 associated with plant improvements and $2.5 associated with the distribution system. The decrease is due to the complerion of the new chilled water storage tank on 10�' Street. After the budget was approved, District Cooling issued two additional variable rate tax- exempt bonds, in the amounts of $1 million and $3 million, to fund consriuction of new distribution projects. Therefore, actual capital expenditures during 2004 may be closer to $4 million. Debt Service Oblieations The net principal and interest paid on debt service obligations are covered by the demand rate and represents 74% of 2004 budgeted demand related cost, exciuding capital expenditures and use of reserves. The total approved net debt service budget for fiscal year 2004 is $4.8 million, which includes $1.6 million of principal and $3.2 million for interest expense. The total principal outstanding as of September 30, 2003 was $50.2 million. Of this debt, approximately $39.9 million is variable rate and $103 million is fixed rate. Therefore, with 80% of the debt outstanding being variable rate, it is difficult to accurately budget for the interest expense. Distrlct Cooling has entered into interest rate cap agreements to limit the interest rate expense exposure. One reason for the issuance of variabie rate debt is that financial institutions are hesitant to provide financing for a period longer than the terms of the current francMse agreement. The Dishict Cooling Boazd of Directars approved the 2004 debt service budget in June of 2003 using an overall auerage interest rate of 5.6%. This was based on the long term rate history of District Energy's 1982 Series A Bonds which had averaged 4.25% from January 1983 through June 2003, combined with estimated rates for District Cooling's taacable debt and its applicable letter of credit fees. A similar method was used in estimating the interest expense in each ofthe last two years, resulting in $1.2 million and $l.l million positive variances in 20Q2 and 20Q3, respectively. District Cooling does not make mid-year budget adjushnents for interest expense during the year. If rates are below the budgeted level, funds are initially placed in reserve accounts and are used to offset other demand related costs. If rates exceed the budgeted level, District Cooling will draw from reserves to meet the interest expenses. However, with current variable interest rates at less than 1.5%, it is highly unlikely that this will occur in 2004. Reserve Accounts On June 13, 2003, the District Cooling Board approved a policy statement in conjunction with its 2004 budget establishing a Supplemental Debt Service and Rate Stabilization Reserve account within the Operating Reserve. It authorized initial funding for this reserve of $800,000. The purpose of this reserve is to enhance the financial stability of the company and moderate the impact of fixture rate increases necessitated by the company's financial obligations. Staff Report for Proposed FY 2004 Dishict Cooling Rates Apri19, 2004 Page 6 The balances at year end for cash and selected reserve accounts were as follows: Cash and Cash Equivalents Operating Reserve Debt Service Reseroe Supplemental Debt and Rate Stabilization Reserve Repair and Replacement Account 2002 342,084 1,977,000 4,212,000 0 277,000 RECOMMENDATIONS TO THE MAYOR AND CITY COUNCIL �`t-�t53 2003 435,159 1,171,763 4,340,907 800,000 315,226 1. The Fiscal Year 2004 cooling system customer billing rates proposed by District Cooling St. Paul, Inc. in their request dated September 17, 2003 appear to be reasonable in today's market conditions, and thus, formal approval by City Council Resolurion is recommended. 2. District Cooling is operating in an expanding/growth mode. The team recommends: A. The City Council approved customer billing rates for 2004, be limited to District Cooling's operating years of 2004 through 2007; and, that a new customer billing rate applicarion be submitted no later than fiscal year 2008. B. District Cooling continue to provide the City with an opportunity to review, at the District Cooling offices, the confidential and proprietary four year plan related to system expansion and capital maintenance, with anticipated debt financing and, or refinancing, whenever a customer billing rate application is submitted. 3. It continues to be difficult for City Staff to determine the appropriate level of cash and reserve balances required for all current and anticipated needs of District Cooling's operations for 2004 and for the foreseeable future. The team recommends: A. District Cooling's Board of Director's specify desired cash balances or reserves for general operations, rate stabilization, debt service, and capital repair and maintenance which includes supporting documentation as to why these amounts are at an appropriate level for both rate payers and the company, and a policy for spending these reserves. B. District Cooling continue to provide the City with an opportunity to review, at the District Cooling offices, the confidential and proprietary Boazd of Director's policy statements whenever they are adopted, amended or when a customer biliing rate application is submitted. 6`l-y'S3 Staff Report for Proposed FY 2004 Distdct Cooling Rates Apri19, 2004 Page 7 4. Any modifications to the Cost Allocarion Agreements far District Energy, District Cooling and Market Street Energy can have a significant effect on both annual budgets and biliing rates. The team recommends: A. District Cooling notify the City of any changes to the cost allocation agreements and provide the City with the most current cost allocation agreements. cc: Franchise Review Team Todd Hurley Marcia Moermond Lisa Veith Q:�Shazed�FranchiseTeam�DADC Rate Review�DC Staff Report FY04.wpd �•�ts3 :,� � 4�� °°,. > w� CITY OF SAINT PAUL OFFICE OF THE CITY COUNCIL MEMOIZ�INDUM Date: April 1, 2004 To: Councii President Daniel Bostrom Councilmember Jay Benanav Councilmember Patrick Harris Counciimember Lee Helgen Councilmember Kathy Lantry Councilmember Debbie Montgomery Councilmember Dave Thune From: Marcia Moermond, Policy and Research Lead and Franchise Team Member Re: District Cooling Rate Increase � A,t � '" This memo is to request a pubiic hearing for April 28, 2004 to consider District Cooling's request for a cooling rate increase pursuant to Chapter 16 of the Saint Paul City Charter, which states: `Before any franchise ordinance is adopted or any rates, fares or prices to be charged by a public utility are increased by the council, the council sha11 hold a public hearing on the matter. Notice of such heazing shail be published at least once in the official newspaper not less than ten (10) days prior to the date of the heazing." District Cooling submitted a request to the City of Saint Paul on September 17, 2043 stating an interim rate went into effect on October 1, 2003. An extension of the review and approval by District Cooling was approved for the City of Saint Paul until May 5, 2003. Hereby, we formally request a public hearing be set for Apri128, 2004 regarding this matter. Copy: Matt Smith, Director of Financial Services Lori Lee, Financial Services and Franchise Team Lead Todd Hurley, Financial Services and Franchise Team Lisa Veith, City Attorney's Office and Franchise Team CITY HALL THIRD FLOOR 15 WEST KELLOGG BOULEVARD SAINT PAUL, NIINNESOTA 55102-1615 � AA-ADA-EEO Employer -��.:; � �i� � �i� � COOLING St. Paul, Inc. t�t•'�5S �:e�.;t�Y�C' �1�2� i T � tGG� �'Iiy �� ER� September 17, 2003 Donald Luna Citizen Service Office/City Clerk 170 City Hall 15 West Kellogg Boulevard St. Paul, MN 55102 Re: District Cooling Rates Dear Mr. Luna: Pursuant to the district cooling franchise and previous notice �iled July 17, 2003, District Cooling St. Paul, inc., hereby files its amended Schedule A. The rates therein wifl be charged on all bills for chilled water service beginning with the billing month of October 2003 and will remain in effect untii superseded. This is a routine annual rate adjustment as envisioned by the franchise and the District Cooling Service Agreement. Please contact me at (651) 297-8955 if there are any questions regarding this matter. Sincerely, DISTRICT COQLI� ST. PAUL INC. 1l!!.U/'�'�-vv� � G�-��_- Anders J. RydakerJ President i . �.� ��iJi Attachments: Schedule A (Amended) Affidavit cc: Matt Smith, Lori Lee, Manuel Cervantes, Sia Lo Wilfiam Mahlum, Joyce Anderson, Andrew Kasid (�{•�t53 SCHEDULE A (AMENDED) to DISTRICT COOLING FRANCHISE granted to DISTRICT COOLING ST. PAUL, INC. f.k.a. District Energy Services, Inc. by the CITY OF ST. PAUL (Ordinance No. 17816, adopted March 28, 1991) RATES: The following rates shall be effective beginning with the billing month of October 2003 and shall remain in effect until superseded: Demand: $23.28 per ton per month Energy: $0.061 perton-hour PROMPT PAYMENT PROVISiON: A charge of 5 percent will be added to the net bill computed at the rates shown above, which charge shall constitute a discount from the gross bili for payment within the discount period, all as more specifically provided in the District Cooling Service Agreement. SURCHARGE: A City franchise fee surcharge of 3.5 percent will be added to the gross and net monthly bills computed under this rate schedule except as otherwise provided by law. SERVICE CHARGES: The attached service charges shatl be effective beginning with the biiling month of October 2003 and shall remain in effect untii superseded. tls\ratescig\schedula.doc 0�-453 Schedule A Attachmenti DISTRICT COOLING ST. PAUL, INC. Service Charges Effective October 2003 Pursuant to Sections 8.3 and 8.4 of the District Cooling Service Agreement as amended, the following rates are established for performance of specific services more properly charged to an individual Customer than to ali Customers as a whole. Service charges are payable within 30 days of billing and are in addition to Demand Charges and Energy Charges. 1. Restoration of service after shutoff by District Cooling: Flat charge: $100.00 2. Damage to district cooling system equipment: Actuai cost of repair or replacement as determined by District Cooling plus service charge of $30.00. 3. Unauthorized drainage of district cooling system water: The sum of the following: (a) Estimated quantity of water lost times combined water and sewage rate and prorated water treatment cost paid by District Cooling during period of drainage; (b) Estimated thermal energy value of water lost times applicable Energy Rate; and (c) Service charge of $70.00/hour. Note: Drainage of system water may cause harm to other Customers and is cause for suspension of service until corrected. 4. Service calis made at Customer's request by District Cooling personnel for problems found to be in Customer's and not District Cooling's equipment: Between 8:00 a.m. and 3:30 p.m. on Monday through Friday (excluding holidays observed by Distric: Ccoling): $?0.00/hour Ail other times: $105.00/hour 5. Charge for chiilesl water fiow excaeding 190 gallons per ton-hour during June, July, August or September billing period: $0.60 per thousand gallons above 103 gallons per ton-hour. 6. Credit for chilled water flow below 75 gallons per ton-hour during June, July, August or September billing period: ($0.60) per thousand gallons below 103 galions per ton-hour. tlsUatesclgGservchg.doc Or-t- �153 DISTRICT COOLINC�a ST. PAUL, INC. AFFIDAVIT District Cooling St. Paul inc. states the following facts with regard to the process followed in communicating its FY 2004 cooling rates: 1. District Cooling gave notice of its intent to file a new or amended Schedule A in a letter dated-July 17, 2003, filed with the City Clerk on that date. 2. District Cooling sent or delivered a notice of its rate filing and the related customer meeting to all signed district cooling customers on July 21, 2003. The notice included the new rates sought by District Cooling; the time, date, and place of the customer meeting; and the Notice of Customer Rights. A copy of the notice was provided to the President of the Greater St. Paul Building Owners and Managers Association (BOMA). 3. District Cooling held the required customer meeting on August 13, 2003, at 3:00 p.m. in District Cooling's conference room, Hans O. Nyman Energy Center, 76 West Kellogg Boulevard, St. Paul. Three people representing district cooling/heating customers attended, along with three other individuals. Three members of the City's rate review staff also attended. Copies of District Cooling's filing notice with the City, the proposed new Schedule A, and the chilled water franchise (Ordinance No. 17816) were made available to meeting attendees. The new rates were explained, customers were advised that the City Council must approve the new rates before they become finally effective, and customers were allowed a reasonable opportunity to comment on the proposed rates both formally and informally. / , � � � t�l ,?/Yl � 1 � Anders J. Rydakerl President �/� 7 ��,� Date � tls\ratesclg�aff idavt.doc �� ' �i,�� ��� DISTRICT COOLING ST. PAUL STATEMEN'I' Apri128, 2004 �� �s.3 District Cooling St. Paul ("District Cooling") STATEMENT regazding Resolution 04.453-Approving District Cooling's Request to Amend the Fiscal Year 2004 Cooling customer Billing Rates (Agenda Item No. 31, Public Hearing) President Bostrom and Members of the Council: City Staff Report recommends approval of the District Cooling rate as filed. We wish to thank the City Staff for this recommendation of approval. Please see Recommendation No. 1 of the City Staff Report and the recommendations in the first RESOLVED in the Resolution before the Council today. However, the staff recommendations that aze set out after the first RESOLVED were not District Cooling's proposed changes to Schedule A, and, therefore, are outside the Franchise and the provisions of [Sec.] 11 of that document. District Cooling and the City of Saint Paul entered into a Franchise Agreement in 1991. That Franchise is a contract between the City and District Cooling. Sec. 11 of that Franchise states: [Sec.] .11. Rates and regulation. (g) Proposed changes to Schedule A can only be approved, apnroved in part if severable, or denied and cannot be modified or amended. The city shall require DES to refund or credit to its customers any increases in rates which are in excess of the lawful and reasonable rates as finally deternuned. (Emphasis added) Hans O. Nyman Energy Center 76 Kellogg Blvd. W. St. Paui, MN 55102-t6'I'I Tel 65t297.8955 Fax 65t22L0353 wwv�.d is[ric[energy,com District Cooling, consistent with past pracfices, is happy to consider the staff recommendations set forth in Pazagraphs 2, 3 and 4 of the Staff Report, but, for the record, District Cooling is not obligated to follow the staff recommendations. Therefore, we respectfully request that the proposed Resolution be approved through line 15 after the first RESOLVED. Commencing on line 16 and thereafter, the Resolution should be amended to strika that language. As above, District Cooling will consider the staff recommendations as set forth in the balance of the stricken Resolution. Thank you.