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Minutes of Utilities Task Force, 06/18/2015

AGENDA: Utilities Task Force

RECEIVED 06/22/2015 8:30am
Michele R. Grande – Redding Town Clerk

Minutes

Present: Donald Cullman,Wes Higgins, Leon Karvelis, Henry Polio, Susan Clark
Also present : Charles Burnham, John Ferrelli, and Greta Mead from Eversource

The meeting was called to order by Leon at 2:05 pm at Town Hall Conference Room

Adoption of Minutes
The proposed minutes from the June 4th meeting was discussed. Leon indicated that James Miller had noted that he had been misunderstood and the water treatment plant did not use any propane gas in its operation.

Motion– to adopt the minutes with amendment. Polio, Karvelis. Adopted 3-0, Clark abstained.

Eversource Energy Presentation
John Ferrelli, Eversource Supervisor from their Waterbury Office, began a discussion regarding natural gas service policies and practices in the region. Eversource had studied the Gilbert and Bennett Development master plan when it had called for several miles of mains to be installed on the parcel to connect over 400 meters for gas services. At the time the size of the project had justified the investment by Eversource.

In 2008 Eversource had installed a “sleeve” in the vicinity of the intersect of route 107 and route 57 that ran to the intersection of route 107 and route 7 to ensure that if gas service was installed at some future date it wouldn’t require excavation of route 107.

John explained that all projects required a return on capital of 7.48%, and that projects are typically only undertaken to connect to locations where significant demand resides, either from conversion from oil or from new construction. The first step is to estimate the demand by survey of potential customers. He promised to provide the Task Force a survey form they currently use. From survey results the utility estimates the demand for gas and calculates a revenue estimate. Installation costs to the utility are then estimated, which in areas of rock can run over $200-$300 a foot to trench and install (or roughly $1 to $1.5 million per mile). The largest cost driver is the repair of the road surface, particularly costly on state roads. The revenue and cost data are evaluated in a financial model that incorporates capital usage to determine the return on capital and compare to the 7.48% hurdle rate. If the return is above that hurdle the investment is made. If the rate is just under the required return then the developer or property owner can make a payment, a “contribution in aid of construction”, to allow Eversource to reach its necessary revenue requirement.

Henry asked if it is realistic to expect service to be extended to Georgetown in the near future. Greta Mead, Eversource Account Executive from their Norwalk Office, responded that to achieve the revenue required to build a connection there needs to be significant numbers of users and typically a large commercial user or public facility like a school to satisfy the revenue requirements of the economic model.  In the case of the Wilton pipeline extension from the intersection of routes 7 and 33 up to the River Road area there required commitments to service the high school and numerous businesses in the vicinity.

John also discussed the constraints that might exist from capacity limits of the pipelines that would bring gas to the Georgetown area. Building a pipeline up route 7 would likely be excessively expensive; however it might be possible to connect to the CNG pipeline that feeds Meadow Ridge that runs up from Weston. He indicated that he would investigate the capacity of that service line.

Leon asked about fuel cells and micro grids. John stated that he believes only one university operates such a system in the state.

Wes asked how the recent effort by the Malloy administration in Hartford impacted Eversource’s economic analysis. John explained that under the new law the rate of return is calculated on a 25 year horizon, extended from the prior use of a 15 yr horizon. In addition new users on a distribution main would be charged a 10% premium to be connected, while a user off the main that needs an extension of existing pipelines would be charged a 30% premium.

Don asked if it is really economic for a residential customer to find conversion an attractive option. Greta said that for customers that reside on a main pipeline, conversion costs typically run $5,000-$10,000 per household.

Fiber Optic Cable
After the Eversource presentation, Susan Clark indicated that she will lead a discussion on high speed fiber-optic cable at a subsequent meeting.

Follow Up Plans
Leon discussed future topics and suggested that members of the Task Force would spearhead the effort to research and report back on each one. Wes volunteered to provide a summary of the 2013 legislation that was designed to promote expansion of natural gas service in Connecticut. Don offered to contact Wilton officials to learn about their efforts to expand gas service in their town. Henry made the same offer for Ridgefield.

Other future topics will include discussion with local officials responsible for the town’s fire, highway department, and waste water treatment facility regarding the benefits and problems related to natural gas service.  Fuel cell technology will be explored. The existing gas and fiber optic infrastructure will be summarized including the gas service from Eversource and CNG provided to surrounding towns. The economics for both the consumers and utilities providing gas and fiber optic service will be examined to determine the benefits accuring to each.

Adjournment
A motion was made to adjourn the meeting. Polio. Cullman. Approved. Unanimous

The meeting was adjourned at 3.30 pm.

Submitted by Wes Higgins