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UTILITY COMMITTEE AGENDA January 10, 2011 - 5:00 P.M. - Council Chambers - City Hall - City of Dover Public comments are welcomed on any item and will be permitted at appropriate times. When possible, please notify the City Clerk (736-7008 or e-m ail at CityClerk@dover.de.us) should you wish to be recognized. AGENDA ADDITIONS/DELETIONS 1. Proposed Ordinance #2011-01 - Amendment to Appendix B - Zoning, Article 5 - Supplementary Regulations, (New) Section 20 - Solar and Small Wind Energy Systems 2. Annual Engineering Consultant's Report on the Operation and Maintenance of the Electric System - Fiscal Year 2010 3. Development Projects - Performance and Maintenance Bonding Concerns 4. Annualized Comparison of Utility Rates 5. Review of Utility Related Capital Investment Plan (CIP) (Electric and Water/Wastewater) (November) 6. Adjournment by 5:55 P.M. /tm S:\AGENDAS & MINUTES\Committee-Agendas\2011\01-10-2011 UTILITY.wpd THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS.

ACTION FORM PROCEEDING Utility Committee DEPARTMENT OF ORIGIN: Planning DATE SUBMITTED: December 30, 2010 PREPARED BY: Ann Marie Townshend, AICP, Director of Planning & Community Development SUBJECT: Proposed ordinance to allow small wind energy systems and solar energy systems as accessory uses in all zoning districts. REFERENCE: Dover Code, Appendix B - Zoning, Article 5 – Supplementary Regulations, and Article 12 - Definitions RELATED PROJECT: N/A REVIEWED BY: N/A EXHIBITS: Draft Ordinance #2011-01 EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED:N/A FUNDING SOURCE (Dept./Page in CIP & Budget): N/A TIME TIMETABLE: RECOMMENDED ACTION: Staff recommends that the Committee forward the proposed ordinance to City Council for first reading on January 24, 2011; referral to the Planning Commission for February 22, 2011; and final reading and public hearing before City Council on March 14, 2011. BACKGROUND AND ANALYSIS The proposed ordinance would allow small wind energy systems and solar energy systems as accessory uses in all zoning districts, and set standards for such systems for residential zones and non-residential zones.

CITY OF DOVER ORDINANCE #2011-01 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN 2 COUNCIL MET: 3 4 That Appendix B - Zoning, Article 5 – Supplementary Regulations be amended by adding a new 5 section 20 as follows: 6 Section 20. Solar and Small Wind Energy Systems. 7 Solar energy systems and small wind energy systems shall be permitted as accessory uses within 8 all zones subject to the following requirements: 9 20.1Residential Zones 10 11 20.11Solar panels shall be affixed to the roof of the structure and shall not be free-standing 12 structures 13 20.12Small wind energy systems in residential zones shall be subject to the following 14 restrictions: 15 a. Small wind energy systems shall be setback 1.0 times the turbine height from 16 adjoining property line. Turbine height means the height of the tower plus the 17 length of 1 blade. 18 b. The aggregate noise or audible sound of a small wind energy system shall not 19 exceed 5 decibels above the existing average noise level of the surrounding 20 area and shall be restricted to a maximum of 60 decibels measured at any 21 location along the property line to the parcel where the wind system is located. 22 c. Small wind energy systems shall be free from signage, advertising, flags, 23 streamers, any decorative items or any item not related to the operation of the 24 wind turbine. Electric wiring for the turbines shall be placed underground for 25 non-building integrated systems. 26 d. Small wind energy systems shall not be permitted within the H (Historic 27 District) Zone. 28 e. Any small wind energy system shall be buffered from any properties or 29 structures included on the National Register of Historic Places. 30 31 20.2Non-Residential Zones 32 20.21 Solar energy systems shall be subject to the following restrictions: 33 a. Ground-mounted solar energy systems shall not occupy more than 25 percent of the 34 lot area. 35 b. If ground-mounted solar energy systems are proposed to occupy more than 25 percent 36 of the lot area, their placement shall be subject to conditional use approval by the 37 Planning Commission.

38 c. Ground-mounted solar energy systems shall not be located between the principal 39 structure and the street. 40 d. Solar energy systems, whether roof-mounted or ground-mounted, must comply with 41 all building setback and height requirements for the zoning district where the system 42 is to be installed. 43 20.22Small wind energy systems shall be subject to the following restrictions: 44 a. Small wind energy shall be setback 1.0 times the turbine height from adjoining 45 property line. Turbine height means the height of the tower plus the length of 1 blade. 46 b. The aggregate noise or audible sound of a wind system shall not exceed 5 decibels 47 above the existing average noise level of the surrounding area and shall be restricted 48 to a maximum of 60 decibels measured at any location along the property line to the 49 parcel where the small wind energy system is located. 50 c. Small wind energy systems shall be free from signage, advertising, flags, streamers, 51 any decorative items or any item not related to the operation of the wind turbine. 52 Electric wiring for the turbines shall be placed underground for non-building 53 integrated systems. 54 d. Small wind energy systems shall not be permitted within the H (Historic District) 55 Zone. 56 e. Any small wind energy system shall be buffered from any properties or structures 57 included on the National Register of Historic Places. 58 59 BE IT FURTHER ORDAINED: 60 61 That Appendix B – Zoning, Article 12 – Definitions, be amended to add the following 62 definitions: 63 64 Solar energy system – any solar collector or other solar energy device, or any structural design 65 feature, mounted on a building or on the ground, and whose primary purpose is to provide for the 66 collection, storage, and distribution of solar energy for space heating or cooling, for water 67 heating, or for electricity. 68 69 Small wind energy system - a wind energy conversion system consisting of a wind turbine, a 70 tower, and associated control or conversion electronics, which has a rated capacity of not more 71 than 100 kilowatts (kW) and which is intended to primarily reduce on-site consumption of 72 utility-supplied energy. 73 74 SYNOPSIS 75 The proposed ordinance adds solar energy systems and small wind energy 76 systems as accessory uses within all zoning districts; sets standards for these 77 systems to ensure protection of the character of the zones, as well as public 78 health, safety and welfare; and adds definitions for such systems to the Zoning 79 Ordinance.

Annual Engineering Consultant’s Report on the Operation and Maintenance of the Electric System Fiscal Year 2010 Prepared for the Electric Division City of Dover, Delaware Project Number 59164 December 2010

Annual Engineering Consultant’s Report on the Operation and Maintenance of the Electric System Fiscal Year 2010 Prepared for the Electric Division City of Dover, Delaware December 2010 Project Number 59164 Prepared by Burns & McDonnell Engineering Company, Inc. Kansas City, Missouri COPYRIGHT © 2010 BURNS & McDONNELL ENGINEERING COMPANY, INC.

December 27, 2010 Ms. Donna S. Mitchell, CPA Finance Director City of Dover 15 E. Loockerman St. Dover, Delaware 19903 City of Dover Annual Engineering Consultant’s Report Project Number 59164 Dear Ms. Mitchell: In compliance with the requirements of Section 705 and Section 504 of the City of Dover, Delaware Resolution Authorizing and Securing Electric Revenue Bonds, adopted December 23, 1985 (Resolution), Burns & McDonnell submits this Annual Engineering Consultant’s Report for the fiscal year ended June 30, 2010. This report summarizes our review and assessment of the City of Dover’s (City) Electric System, its existing retail electric rates, its insurance coverage in effect, and its reserve funds. Financial, statistical, and operating data used in preparing the report were taken from the City’s annual financial statements and accounting records, as well as additional information furnished by City and Electric Division staff. In the preparation of this Engineering Consultant’s Report, Burns & McDonnell completed assessments of the electric generating stations and the transmission and distribution system of the City’s Electric Division. Assessments involved interviews, observations, and review of fiscal year 2010 expenditures and fiscal year 2011 budgets. In addition, an analysis of the balances of the Improvement and Extension Fund, as well as other funds benefiting the Electric Division was performed. Burns & McDonnell also reviewed the adequacy of the revenues provided by the current retail rates in relation to the requirements of the Resolution. Finally, a high-level assessment of the City’s insurance coverage related to the Electric Division was completed. Based on these reviews and assessments, it is the opinion of Burns & McDonnell that the Electric System is being operated and maintained, including replacements and upgrades, as appropriate, in a manner that is consistent with current electric utility practices. In addition, the current retail rates have provided sufficient revenues to satisfy the debt service coverage requirement in the Resolution. Further, it is the opinion of Burns & McDonnell that the balances in the various reserve funds maintained by the City for the Electric Division are sufficient for their intended purposes. 9400 Ward Parkway • Kansas City, MO 64114-3319 Tel: 816 333-9400 • Fax: 816 333-3690 • www.burnsmcd.com

Ms. Donna Mitchell, City of Dover December 27, 2010 Page 2 We appreciate the cooperation and assistance provided by the City and the Electric Division staff in the preparation of this report. We will be happy to discuss the report with you at your convenience. Sincerely, BURNS & McDONNELL Ted J. Kelly Project Manager Business & Technology Services TJK

2010 Engineering Consultant’s Report Table of Contents TABLE OF CONTENTS Page No. EXECUTIVE SUMMARY Introduction ........................................................................................................................ ES-1 Electric System Overview and Assessment ....................................................................... ES-1 Financial Assessment ......................................................................................................... ES-4 Conclusions ........................................................................................................................ ES-6 PART I - INTRODUCTION Purpose of Report .............................................................................................................. I-1 Organization....................................................................................................................... I-2 PART II – ELECTRIC SYSTEM OVERVIEW AND ASSESSMENT Electric System Overview.................................................................................................. II-1 Production Plant ........................................................................................................... II-1 Transmission and Distribution Plant ............................................................................ II-3 General Plant ................................................................................................................ II-4 Electric System Assessment............................................................................................... II-4 Electric Generating Stations ......................................................................................... II-4 Description of Generating Stations ......................................................................... II-4 Management and Organization................................................................................ II-5 Major Equipment Operation and Maintenance ....................................................... II-6 Condition Assessment ............................................................................................. II-7 Transmission and Distribution Systems ....................................................................... II-10 Safety ....................................................................................................................... II-10 System Reliability ................................................................................................... II-10 Power Quality .......................................................................................................... II-11 Operations and Maintenance ................................................................................... II-12 Design Standards and Specifications....................................................................... II-12 Transmission and Distribution Improvements......................................................... II-12 System Tour ............................................................................................................ II-14 Conclusions .................................................................................................................. II-14 PART III – FINANCIAL ASSESSMENT Financial Results ................................................................................................................ III-1 Required Revenue Level............................................................................................... III-1 Electric Rates ................................................................................................................ III-2 Operating Results.......................................................................................................... III-2 Adequacy of Electric Rates .......................................................................................... III-7 Status of Revenue Bonds ................................................................................................... III-8 Insurance ............................................................................................................................ III-9 Operating and Reserve Funds ............................................................................................ III-12 PART IV – CONCLUSIONS City of Dover, Delaware TOC-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Table of Contents LIST OF TABLES Table No. Page No. II-1 Year-End Plant in Service Fiscal Years 2008 – 2010 ................................................... II-2 II-2 Fiscal Year 2011 Planned Capital Expenditures........................................................... II-3 II-3 Fiscal Year 2010 Operating Statistics ........................................................................... II-6 III-1 Annual Sales and Customers ........................................................................................ III-3 III-2 Annual Revenues and Sales Ratios............................................................................... III-4 III-3 Net Revenue Margins and Unaccounted For Energy ................................................... III-5 III-4 Comparative Statement of Revenues, Expenses, and Changes in Unreserved Retained Earnings ......................................................................................................... III-6 III-5 Debt Service Coverage Calculation .............................................................................. III-7 III-6 Debt Service Schedule of Electric Revenue Bonds ...................................................... III-8 III-7 Schedule of Insurance Coverage in Effect .................................................................... III-10 III-8 Reserve Fund Activity and Balances ............................................................................ III-14 LIST OF FIGURES Figure No. Page No. I-1 Organization ................................................................................................................. I-3 I-2 Administration .............................................................................................................. I-3 I-3 Electric Engineering ..................................................................................................... I-3 I-4 Electric Transmission & Distribution ........................................................................... I-4 ***** City of Dover, Delaware TOC-2 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

EXECUTIVE SUMMARY

2010 Engineering Consultant’s Report Executive Summary EXECUTIVE SUMMARY INTRODUCTION This Engineering Consultant’s Report has been prepared in compliance with the requirements of the City of Dover, Delaware Resolution Authorizing and Securing Electric Revenue Bonds, adopted December 23, 1985 (Resolution). Burns & McDonnell has been retained as Engineering Consultant by the City of Dover, Delaware (City) for this purpose. The Resolution requires that the Engineering Consultant complete the following: “The City covenants that it will cause the Engineering Consultants employed under the provisions of Section 705 of this Resolution . . . to make an inspection of the Electric System at least once each fiscal year and . . . to submit to the City Manager a report setting forth (a) their findings whether the properties of the Electric System have been maintained in good repair, working order and condition and whether they have been operated efficiently and economically and (b) their recommendation as to (i) the proper maintenance, repair and condition of the Electric System during the ensuing fiscal year and a estimate of the appropriations which should be made for such purposes, (ii) the insurance to be carried under the provisions of Article VII of this Resolution, (iii) the amount that should be deposited during the ensuing fiscal year to the credit of the Improvement and Extension Fund for the purposes set forth in Section 510 of this Article, (iv) the extensions, improvements, renewals and replacements which should be made during the ensuing fiscal year, and (v) any necessary or advisable revisions of the electric rates.” This is the eighth annual Engineering Consultant’s Report prepared for the City by Burns & McDonnell. ELECTRIC SYSTEM OVERVIEW AND ASSESSMENT The Electric System owned by the City primarily consists of production plant, transmission plant, distribution plant, and general plant facilities. City of Dover, Delaware ES-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Executive Summary The City owns two power plants, the McKee Run Generating Station (McKee Run) and the VanSant Generating Station (VanSant). McKee Run consists of three steam turbine generating units with a total combined capacity of 136 megawatts (MW). VanSant is a 39 MW simple-cycle combustion turbine unit. Effective May 4, 2006, the City entered into a five-year Energy Management Agreement with PACE Global Asset Management (PACE), LLC of Fairfax, Virginia to assist the City with its energy procurement, energy sale, purchase of fuels, establishment and management of risk policies, the development and management of hedging protocols and related energy procurement challenges. Effective July 1, 2006, North American Energy Services (NAES) began operating the plants. The Engineering Consultant’s observations regarding the generating stations and units are described in the Electric System Overview and Assessment section of this report. The Electric Division served approximately 23,195 customers, over 19,785 of which were residential customers as of the end of FY 2010. The distribution facilities include 217.27 miles of overhead lines and 261.66 miles of underground lines connected through fifteen different substations. The Engineering Consultant’s observations regarding the transmission and distribution systems are described in the Electric System Overview and Assessment section of this report. Four of the Electric Division customers take service off of the 69 kV transmission system. These customers include the Dover Air Force Base, Kraft, Proctor & Gamble, and NRG Energy Center (NRG). NRG is an exempt wholesale generator that sells power that must be transmitted through the City’s transmission system to third party purchasers. When the NRG plant is not operational, the Electric Division provides power for the plant site. The Electric Division has one contract for providing transmission service through the Electric System. As previously stated, the Electric Division provides transmission service to NRG for the output of its 16-MW electric generator. General plant facilities consist primarily of Electric Division administrative and operations facilities and pollution control related equipment on McKee Run and VanSant. Other types of general plant include office furniture and equipment, transportation and power-operated equipment, and communication equipment. City of Dover, Delaware ES-2 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Executive Summary The various systems and components of the generating stations reviewed by the Engineering Consultant are listed below: Management and Organization • Safety • Training Major Equipment Condition and Improvements • Steam turbines/generators • Boilers and auxiliaries • Station cooling water systems • Fuel handling systems • Water treatment systems • Station electrical systems • Station control systems • General facilities Based on statements and information provided, as well as the observations and reviews performed, it is the Engineering Consultant’s opinion that the City’s power generation facilities are being operated and maintained consistent with accepted electric utility practice in the United States. In general, the performance, operation, maintenance, staff, planning, and training aspects for the McKee Run and VanSant were found to be above average. Specifically, the generation facilities have demonstrated a high level of availability despite the dispatching of the units primarily for peak demand. The Engineering Consultant’s observations regarding the generating stations and units are described in the Electric System Overview and Assessment section of this report. The following list includes areas of the transmission and distribution system that were considered and reviewed. • System reliability • Power quality • Operations and maintenance • Design standards and specifications • Transmission and distribution improvements City of Dover, Delaware ES-3 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Executive Summary It is the Engineering Consultant’s opinion that the design, construction, operation, and maintenance of the City’s electric transmission and distribution system and the associated facilities are consistent with current generally accepted electric utility standards. The Engineering Consultant’s observations regarding the transmission and distribution systems are described in the Electric System Overview and Assessment section of this report. FINANCIAL ASSESSMENT The level of revenues required from the retail electric rates for the Electric Division were determined through the analysis of the financial results and net income or net margins for FY 2010. The Resolution requires that the Electric Division maintain a debt service coverage ratio of 1.25. Following is an excerpt from Section 502(c) of the Resolution. “(c) The total amount of the Revenues of the Electric System during the preceding fiscal year shall have been not less than the total of the following: (1) The Current Expenses of the Electric System during the current fiscal years shown by the Annual Budget . . . for such fiscal year, and (2) One hundred twenty-five percent (125%) of the maximum amount of the Principal and Interest Requirements for any fiscal year thereafter on account of all bonds then Outstanding under the provisions of this Resolution.” Customers of the Electric Division of the City were charged for the electric service they received based on the City’s rate schedules and contracts that were in place in FY 2010. A comprehensive cost-of-service and rate design study was completed in 2006 and subsequent rate analyses were completed in 2007 and 2008 to examine revenue requirements and revenue generation. Specifically, the 2006 rate study was conducted to address increased costs associated with a new power supply contract that became effective on July 1, 2006. The rate study recommended combining a number of rate classes and implementing rate increases on July 1, 2006. The 2006 rate study also recommended an additional increase be implemented on January 1, 2007 to cover increased costs associated with operating the generating station. The 2007 and 2008 rate analyses re-examined Electric Division revenues and expenses and recognized additional revisions to power supply costs. As a result of these analyses, additional rate increases were implemented on July 1, 2007, and July 1, 2008. The July 2008 rate adjustments established the rate schedules utilized by the Electric Division today. City of Dover, Delaware ES-4 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Executive Summary Total energy sales decreased from 719.9 million kWh in FY 2009 to 708.5 million kWh in FY 2010; a total decrease of about 1.59 percent. Total revenue from sales to electric customers in FY 2010 was approximately $98.1 million, representing a decrease of $1.5 million from the FY 2009 rate revenue of approximately $99.6 million. In FY 2010, the average revenue per kWh for residential customers was 15.12 cents and the system-wide average price was 13.84 cents per kWh. The Electric Division’s largest cost in providing electric service to its customers is the wholesale cost of power, purchased from the Pennsylvania New Jersey Maryland Interconnection (PJM) marketplace by its Energy Manager, PACE. From FY 2009 to FY 2010, the cost of power decreased from $74.9 million to $72.8 million. Net income increased from $2.9 million in FY 2010 to $3.3 million in FY 2010. The increase in FY 2010 was due in large part an overall decrease in the power supply expense, and transmission and distribution cost. The Resolution requires that annual revenues of the Electric Division be no less than the total current expenses plus 125 percent of the greatest remaining annual debt service. The Electric Division achieved debt service coverage ratios for FY 2008, FY 2009, and FY 2010 of 5.76, 2.88, and 4.24 respectively; therefore, the revenues generated by the current electric rates have been sufficient to meet the applicable covenant of the Resolution. The City maintains a comprehensive insurance program to insure against varying types of liabilities, as well as significant losses related to various Electric Division properties. It is the opinion of Burns & McDonnell as Engineering Consultant, and not as insurance counselor, the insurance in full force and affect appears to satisfy the requirements of Section 706 of the Resolution. The City has established several funds and reserves to ensure that moneys are available for specific purposes when they are needed. Following is a list of these funds: • Electric Revenue Fund • Electric Improvement and Extension Fund • Interest and Sinking Fund (Reserve Account) • Depreciation Reserve Fund • Future Capacity Fund • Insurance Stabilization Fund City of Dover, Delaware ES-5 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Executive Summary • Contingency Reserve Fund • Electric Rate Revenue Fund The Engineering Consultant reviewed the last five funds listed above and found that the balances in those funds as of June 30, 2010, were consistent with the required or target balances. CONCLUSIONS Based on the reviews and assessments completed, it is the opinion of Burns & McDonnell that: 1. The City’s power generation facilities are being operated and maintained consistent with accepted electric utility practice in the United States. 2. The design, construction, operation, and maintenance of the City’s electric transmission and distribution system and the associated facilities are consistent with current generally accepted electric utility standards. 3. The Electric Division capital projects included in the City’s Capital Investment Plan and the FY 2010 Operating Budget are necessary and should provide improved reliability and power quality for the Electric System. 4. The balances as of June 30, 2010, for the various reserve funds maintained by the City for the Electric Division, appear to be sufficient for their defined purposes. 5. The insurance coverage in full force and effect as maintained by the City related to the various assets of the Electric Division appears to satisfy the requirements of Section 706 of the Resolution. 6. The electric revenues generated by the City’s current retail rates are more than sufficient to fulfill the debt service coverage requirement (125 percent of current expenses) defined in Section 502(c) of the Resolution. ***** City of Dover, Delaware ES-6 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

PART I - INTRODUCTION

2010 Engineering Consultant’s Report Part I – Introduction PART I INTRODUCTION The City of Dover, Delaware (City) operates a municipally-owned electric utility system that serves approximately 23,195 customers within the City and surrounding areas. The service area of the electric utility is located in central Delaware; with the City itself located approximately 70 miles south of Philadelphia, Pennsylvania. PURPOSE OF REPORT This report has been prepared in compliance with the requirements of the City of Dover Electric Bond Resolution (Resolution) adopted December 23, 2005. Burns & McDonnell has been retained by the City as the Engineering Consultant defined in Section 705 of the Resolution, as follows. “The City covenants that it will, for the purpose of performing and carrying out the duties imposed on the Engineering Consultants under the provisions of this Resolution, employ an independent engineer or engineering firm or corporation having a nationwide and favorable repute for skill and experience in such work.” The required scope of this report is described in Section 504 of the Resolution, as follows. “The City covenants that it will cause the Engineering Consultants employed under the provisions of Section 705 of this Resolution . . . to make an inspection of the Electric System at least once each fiscal year and . . . to submit to the City Manager a report setting forth (a) their findings whether the properties of the Electric System have been maintained in good repair, working order and condition and whether they have been operated efficiently and economically and (b) their recommendation as to (i) the proper maintenance, repair and condition of the Electric System during the ensuing fiscal year and a estimate of the appropriations which should be made for such purposes, (ii) the insurance to be carried under the provisions of Article VII of this Resolution, (iii) the amount that should be deposited during the ensuing fiscal year to the credit of the Improvement and Extension Fund for the purposes set forth in Section 510 of this Article, City of Dover, Delaware I-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part I – Introduction (iv) the extensions, improvements, renewals and replacements which should be made during the ensuing fiscal year, and (v) any necessary or advisable revisions of the electric rates.” ORGANIZATION The Public Utilities Director is responsible for the overall management of the Public Utilities Department. The Public Utilities Director oversees the day-to-day operations of the Electric, Water, and Wastewater Divisions and manages the Division’s staff. The Director also provides oversight of the Power Plant budget and monitors the contracts with PACE Global Asset Management (PACE), the energy coordinator; and North American Energy Services (NAES), the power generation operator/manager. The Electric Division is organized into three separate operating sections. Descriptions of the current Electric Division sections are provided below. Administration Section – The Administration Section provides the overall administration of the Electric Division’s Engineering and Transmission & Distribution Sections. This section performs all planning and budgeting, monitors all construction projects, administers all power supply and generating station operations agreements, and coordinates with customer service and public relations for the Electric Division. Electric Engineering Section - This Section provides design, specifications, construction management, and project inspection for all capital investment projects of the Electric Division. This section also develops and maintains maps, plans, and specifications, as well as engineering standards for construction and maintenance of the Electric System. Lastly, it is responsible for the operation of a 24/7 system operations control center, referred to as System Operations. Transmission & Distribution Section – The Transmission & Distribution Section constructs, operates, and maintains the overhead and underground Electric Systems and fiber optic communication facilities. This section installs and maintains all electric metering, as well as street and security lighting. This section also investigates and resolves customers’ power problems and oversees the work of tree trimming contractors. Figures I-1 through I-4 provide organizational charts illustrating the staffing hierarchies of the various sections in the Electric Division. The number of individuals in each position was indicated as appropriate. Electric Division staff totaled 44 at the time the FY 2011 budget was issued. City of Dover, Delaware I-2 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part I – Introduction Figure I-1 City Manager Public Utilities Director Electric Transmission Administration Electric Engineering & Distribution Figure I-2 Administration Dept. Budget and Staff Supervisor Administrative Assistant Account Clerk II Figure I-3 Electric Engineering Engineering Services Manager Engineering Crew Leader (1) Substation Crew Leader (1) Systems Operations Crew Leader (1) Engineering Fieldworker (2) Relayman (3) Electric System Operators (4) Electrical Engineer (1) Draftsman (1) Substation Foreman (1) City of Dover, Delaware I-3 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part I – Introduction Figure I-4 Electric Transmission & Distribution T & D Supervisor Senior Lineman (3) Electric Meter Tech Crew Leader (1) Journeyman Lineman (9) Electric Meter Tech II (1) Lineman 2nd Class (5) Lineman 3rd Class (2) Groundworker (2) Stores Coordinator I (1) The subsequent sections of this report provide a discussion of the required reviews and inspections conducted pursuant to Section 504 of the Resolution. Part II describes the assessment of the Electric System and its condition. Part III presents the financial results for the Electric Division, including an analysis of the adequacy of revenues provided by the electric rates. Part IV summarizes the conclusions of Burns & McDonnell regarding the operation and maintenance of the Dover Electric System. In the preparation of this report, Burns & McDonnell reviewed and analyzed maintenance records, audited financial statements, and other data provided by the City. Burns & McDonnell has relied on the information provided without independent verification, and cannot guarantee its accuracy or completeness. In addition, Burns & McDonnell has used the information provided to make certain assumptions with respect to conditions that may exist in the future. While Burns & McDonnell believes the assumptions made are reasonable for the purposes of this report, it makes no representation that the conditions assumed will occur. ***** City of Dover, Delaware I-4 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

PART II – ELECTRIC SYSTEM OVERVIEW AND ASSESSMENT

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment PART II ELECTRIC SYSTEM OVERVIEW AND ASSESSMENT ELECTRIC SYSTEM OVERVIEW The Electric System owned by the City of Dover, Delaware (City), primarily consists of production plant, transmission plant, distribution plant, and general plant facilities, and construction work in progress. Table II-1 displays the year-end balances of the various plant components for FY 2008 through FY 2010. Table II-2 itemizes the specific capital investment plan projects and anticipated expenditures for FY 2010, as well as projections for other components included in the FY 2011 budget. In FY 2010, the Electric System experienced an increase in the annual system peak demand and a decrease in annual energy sales from the previous year. The Electric System experienced its peak demand on August 20, 2009, when demand reached 158.8 MW. For the year, approximately 708.5 GWh of energy were sold, a decrease of 1.59 percent from the preceding year. The Electric Division projects energy sales to increase in FY 2011 to 715.6 GWh, or 0.79 percent. The Electric Division expects annual sales to remain relatively constant through FY 2014. Production Plant The City owns two power stations, the McKee Run Generating Station (McKee Run) and the VanSant Generating Station (VanSant). McKee Run consists of three steam turbine generating units with a total combined capacity of 136 megawatts (MW). VanSant is a 39-MW simple-cycle combustion turbine unit. Effective May 4, 2006, the City entered into a five-year Energy Management Agreement with PACE Global Asset Management (PACE), LLC of Fairfax, Virginia to assist the City with its energy procurement, energy sale, purchase of fuels, establishment and management of risk policies, the development and management of hedging protocols and related energy procurement challenges. On July 1, 2006, North American Energy Services (NAES) began operating the plants. The Engineering Consultant’s observations regarding the generating stations and units are described in the Electric System Assessment section in Part II of this report. City of Dover, Delaware II-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment Table II-1 YEAR-END PLANT IN SERVICE City of Dover Electric Division FY 2008 FY 2009 FY 2010 Production Land and land rights $ 1,488,385 $ 1,488,385 $ 1,676,757 Boiler plant equipment 15,259,321 15,080,326 17,286,157 Turbogenerator units 20,398,643 20,240,351 20,240,351 Accessory electric equipment 4,491,314 4,491,314 4,491,314 Miscellaneous steam plant equipment 18,115,691 18,891,708 18,891,708 Miscellaneous other plant equipment 791,284 791,284 791,284 Subtotal Production $ 60,544,637 $ 60,983,367 $ 63,377,570 Transmission Station equipment $ 11,539,897 $ 12,958,157 $ 16,140,158 Overhead conductors and devices 7,479,154 7,601,104 7,611,436 Underground conductors and devices 3,407,314 3,947,267 4,382,349 Subtotal Transmission $ 22,426,365 $ 24,506,528 $ 28,133,943 Distribution Station equipment $ 11,456,697 $ 12,874,957 $ 16,056,958 Overhead conductors and devices 5,071,954 4,979,444 4,979,444 Underground conductors and devices 11,953,611 12,390,822 13,659,020 Line transformers 9,180,936 9,314,890 9,449,543 Meters 3,598,458 2,509,971 2,509,971 Street lighting and signal systems 1,614,997 1,360,915 1,397,830 Subtotal Distribution $ 42,876,654 $ 43,431,000 $ 48,052,767 General Plant Structures and improvements $ 14,824,400 $ 14,824,400 $ 14,845,600 Office furniture and equipment 478,828 533,543 544,308 Transportation equipment 662,873 654,610 604,428 Power operated equipment 20,000 20,000 20,000 Communication equipment 1,088,079 1,038,839 1,038,839 Miscellaneous equipment 4,657,721 4,617,702 4,823,951 Subtotal General Plant $ 21,731,902 $ 21,689,095 $ 21,877,127 Total Plant in Service $ 147,579,559 $ 150,609,990 $ 161,441,407 Construction Work in Progress $ 9,343,878 $ 17,272,519 $ 12,772,088 Total Plant $ 156,923,440 $ 167,882,509 $ 174,213,495 City of Dover, Delaware II-2 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment Table II-2 FISCAL YEAR 2011 PLANNED CAPITAL EXPENDITURES City of Dover Electric Division Capital Investment Planned Projects FY 2011 Electric Engineering Projects: 69 kV Feeders 3 and 4 $ 4,242 Buchanan Acres 53,648 Distribution System Upgrades 400,000 Replacement of 69kv Breakers & Design 100,000 Lighting Project and Rehabilitation 100,000 Governors Avenue Rebuild 250,000 Mid City Substation 1,087 Walker Road Distribution Upgrades 350,511 Substation PT & CT Replacement Program 256,218 Vehicles, Trucks, & Equipment 253,787 Subtotal Electric Engineering Division $ 1,769,493 Electric Transmission & Distribution Projects: New Developments - UG Transformers $ 700,000 Vehicles, Trucks, & Equipment 39,000 Subtotal Electric Transmission Division $ 739,000 Electric Generation Projects: Units 1 & 2 Life Extension $ 276,000 McKee Run Unit 3 Fire Protection System 50,000 Department of Energy Grant - Photovoltaic panels 65,065 Mc Kee Run Stack Repairs - Units 1, 2 & 3 25,000 VanSant CT Mark IV Upgrades 202,363 McKee Run Driveway Repaving 154,244 McKee Run Unit 3 Auxiliary System Components 188,000 McKee Run Unit 3 Turbine Outage 348,000 McKee Run Unit1 & 2 Cooling Tower Life Extension 218,730 McKee Run Unit 3 Cooling Tower Life Extension 353,338 Vehicles, Trucks, & Equipment 71,000 Subtotal Electric Generation Division $ 1,951,740 Total Planned Capital Investment Projects $ 4,460,233 Transmission and Distribution Plant The service area includes 217.27 miles of overhead lines and 261.66 miles of underground lines. Four Electric Division customers take service off of the 69-kV transmission system. These customers include the Dover Air Force Base, Kraft, Proctor & Gamble, and NRG Energy Center (NRG). NRG is an exempt wholesale generator that sells power that must be transmitted through the City’s transmission system to City of Dover, Delaware II-3 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment third party purchasers. When the NRG plant is not operating the Electric Division provides power for the plant site. The Electric Division has two contracts for providing transmission service through the Electric System. As previously stated, the Electric Division provides transmission service to NRG for the output of its 16- MW electric generator. The Electric Division also has a point-to-point contract for the output of an NRG Combustion Turbine which ties directly to the Kent Substation and is not part of the Dover transmission system. General Plant The general plant category consists primarily of Electric Division administrative and operations facilities, and pollution control related equipment at McKee Run and VanSant. The agreement with NAES stipulates NAES manage the operation and maintenance of the facilities and the City funds all replacements and upgrades required to maintain the capability of the two generating stations. The City is also responsible for the costs of compliance with new regulations promulgated. Other types of items included in the general plant category include office furniture and equipment, computer-related equipment, transportation and power-operated equipment, and communication equipment. Burns & McDonnell did not specifically assess the items in the general plant category for this report. ELECTRIC SYSTEM ASSESSMENT Burns & McDonnell, the Engineering Consultant to the City, made observations and conducted assessments of the Electric System assets in support of the development of this annual Engineering Consultant’s Report. The findings of Burns & McDonnell from the review of the City’s Electric System are documented herein. Electric Generating Stations On June 8, 2010, Mr. Ted Kelly of Burns & McDonnell met with representatives of NAES to discuss the condition of the McKee Run and VanSant generating stations. Mr. Kenneth Beard, the Plant O&M Manager, coordinated the visit. Description of Generating Stations: McKee Run consists of three units. Units 1 and 2 were originally coal-fired units, which began operations in 1961 and 1962, respectively. In 1972, these units were converted to burn No. 6 fuel oil. Units 1 and 2 each have rated capacities of 17 MW. Unit 3 began City of Dover, Delaware II-4 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment operations in 1975 and was designed to fire No. 6 fuel oil and natural gas. Unit 3 has a rated capacity of 102 MW. In FY 2008, the City began work to convert all three units at McKee Run to burn No. 2 fuel oil in order to reduce pollution from the plant. To date, the necessary upgrades and new equipment had been installed allowing each of the units to burn both natural gas and No. 2 fuel oil. VanSant consists of a simple cycle combustion turbine with a rated capacity of 39 MW in the summer and 40 MW in the winter. This unit commenced operation in 1991. VanSant remains unmanned, except when it is dispatched into service. On the occasions when the unit is dispatched, personnel from McKee Run are transferred to VanSant to startup and operate the unit. Management and Organization: Station management is very well organized and knowledgeable, and takes a logical approach to the operation and maintenance of the generation facilities. Mr. Vince Scire serves as the Plant Manager. The management/leadership team consists of nine members including Mr. Scire. The Administrative & Employee Health and Safety Manager, Administrative Specialist, Material Management Coordinator, and O&M Manager, all report directly to Mr. Scire. The O&M Manager oversees a Maintenance Supervisor, and four Operations teams. Each operations team consists of the supervisor and four operators working 12-hour rotating shifts. The maintenance team consists of a supervisor and six employees working 10-hour shifts. The operations and maintenance personnel are all union employees. The relationship between the union and management was reported to be excellent. McKee Run is currently at a staff level of 30 employees, with 31 approved positions. “Safety First” is an overall theme and attitude of the Electric Division. Near-miss incidents are documented, reviewed, and corrective follow-up actions are taken as required. An employee-run safety committee is actively in place. This committee conducts monthly safety meetings, completes safety equipment inspections, and defines and implements tasks to improve safety in all areas. Safety is reportedly the first topic discussed at all meetings. Employees participated in creating an indoctrination video emphasizing safety that is shown to all visitors when entering the Station. Training: The required annual OSHA compliance training is completed and documented for each employee. A formal two-day employee orientation program is required for all new employees. This orientation covers a multitude of subjects from employee benefits to a review of the various Station operating manuals. City of Dover, Delaware II-5 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment For operator training, the Employee Development and Qualification Program (EDQP) has been established. EDQP is a formal program for training operators to progressively advance to positions with additional responsibilities. In addition to the above programs, cross training of various disciplines also occurs. An example of cross training would be an electrician training with instrumentation and control. Plant staff receive environmental and safety training online via the GPi Learning website. The training includes tutorials and exams to ensure comprehension of the subject matter. Plant manuals, meetings, etc. offer additional safety training. Major Equipment Operation and Maintenance: In general, the generation facilities appear to have been properly operated and maintained, and in good condition as evidenced by the high availability of the units. The generation facilities are dispatched sparingly and operate primarily as peaking units. As such, the individual units incur a relatively large number of starts per year and low annual capacity factor. Table II-3 summarizes the major FY 2010 operating statistics. Table II-3 FISCAL YEAR 2010 OPERATING STATISTICS City of Dover Electric Division Rated Net Net Heat Unit Capacity - Production - Net Capacity Rate Number of Number MW MWh Factor Btu/kWh Starts VanSant [1] 39 542.9 0.20% 14,329 12 McKee Run Unit 1 17 193.3 0.26% 15,473 1 Unit 2 17 195.1 0.26% 12,383 1 Unit 3 102 3,584.8 0.62% 12,865 7 Total 175 4,516.1 0.29% 21 Equivalent Equivalent Unit Operating Service Forced Availability Number Hours Factor Outage Rate Factor VanSant 22.3 0.25% 0.00% 84.20% McKee Run Unit 1 32.5 0.37% 0.00% 89.66% Unit 2 30.4 0.35% 0.00% 89.66% Unit 3 62.4 0.71% 0.00% 76.80% Total 147.6 1.68% [1] VanSant is rated at 40 MW in the winter and 39 MW in the summer [2] Net Capacity Factor = Net MWh Production / (Total Available Hours * Rated MW Capacity) Total Available Hours = 365 days, 24 hours/day [3] Service Factor = Operating Hours / Total Available Hours City of Dover, Delaware II-6 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment The large amount of time that units are not operating allows for maintenance and repair of the units. As a result, the FY 2010 overall equivalent availability factor for the generation facilities averaged 85.08 percent. Low net capacity factors are partially offset by Pennsylvania New Jersey Maryland Interconnection (PJM) capacity credits. In FY 2010, approximately $12.1 million of PJM capacity credits helped cover the fixed operating and maintenance costs of the Electric System. PJM capacity credits are expected to continue to provide similar benefits in FY 2011 and beyond. Electronic Management System: Maintenance activities are organized, planned, and managed using MAXIMO®, a computer-based management system. All three major categories of maintenance activities (corrective, preventative, and predictive) are electronically managed by MAXIMO®. For corrective maintenance activities, any station operator or mechanic can enter a work order into the system at any terminal on the Station local area network (LAN). A supervisor reviews the request, turns it into a work order, and assigns a priority according to a predetermined categorization. The work order is then assigned to an operator or maintenance technician for completion. This system is also used to manage and track preventative maintenance activities that follow a schedule. Changing filters, turning on and off heat tracing are examples of preventative maintenance. Predictive maintenance activities practiced include oil analyses, vibration testing, and infrared surveys. Portable vibration testing equipment is used at the Stations to improve the frequency of and capabilities to trouble- shoot rotating equipment. The technology allows personnel to identify problems and take corrective actions before equipment failure occurs. Condition Assessment: The following is a summary of the condition assessment of McKee Run major equipment and VanSant as presented by the NAES staff. Burns & McDonnell made no internal assessments of equipment during the facility tour. Steam Turbines/Generators: The steam turbines and generators for VanSant and McKee Run Units 1 and 2 were reported to be in satisfactory condition with no major problems. McKee Run Unit 3 turning gear engagement problems were reported in the summer 2010 outage report. Plant staff developed a list of parts needed to complete the appropriate repairs. Plans were made to replace both mating clutch ends during the spring 2010 outage. No other major repairs or replacements were required for the turbine/generators in FY 2010. City of Dover, Delaware II-7 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment Boilers and Auxiliaries: Boiler inspections are conducted every year on each of the boilers. Each fiscal year, the inspections on each boiler typically include the inspection and cleaning of the major boiler components, including the mud and steam drums, the forced draft and induced draft fans, the windbox, condenser water box, condenser tubes, hotwell, air preheater components, and safety valves. In FY 2010, McKee Run Unit 1 experienced a tube failure and excursion and consequently was shut down. The City hired a contractor to supplied replacement parts and repaired the tube by replacing a tube section. After an internal inspection, plant staff made the decision to replace six additional tubes in Unit 1. The City subsequently hired inspectors to examine the repaired unit and provide recommendations additional repairs and inspections. These maintenance recommendations will be in practice upon future outages. In 2010 the McKee Run Units 1 and 2 steam drums were also inspected. It was reported that the surfaces inside the Unit 1 steam drum had improved from the prior year while Unit 2 has experienced some rusting. A few recommendations were given and are being actively followed. Station Cooling Water Systems: The Station has split cooling water systems with one system serving Unit 1 and Unit 2 and a separate system serving Unit 3. The cooling water systems are reported to be sufficiently sized and in satisfactory condition, with no major issues reported at the time of this report. Fuel Handling Systems: Natural gas comes into the station in a 4-inch diameter pipeline for Unit 1 and Unit 2 and in a 10-inch diameter pipeline for Unit 3. No. 2 fuel oil is delivered to the station and unloaded into tanks. Forwarding pumps deliver the fuel oil to each of the units. Water Treatment/Steam Purity: Quality control parameters for boiler feed-water, internal boiler water, cooling tower water, and steam purity are checked at a minimum of twice per day when systems are operating. Results are recorded and graphically compared to control limits. Adjustments are then made as required. Boiler feed water is treated city water (well water from City) using a regenerative ion resin demineralizer system, along with deaeration for oxygen control. Boilers 1 and 2 use a coordinated phosphate control for boiler internal purity control and Boiler 3 uses a balanced trisodium phosphate and disodium phosphate within a narrow pH range. A deep-bored water well was installed to provide water in addition to the city supplied water. City water has a high chlorine level which may exceed the Station permitted limits. By combining city water with the well water, the chlorine levels can be maintained at the permitted limits. Water for cooling tower makeup is also obtained from City water. The primary City of Dover, Delaware II-8 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment control parameter is silica concentration. Blow down is adjusted as required to maintain control. No major issues were reported at the time of this report. Steam purity is not continuously monitored. Samples are taken twice daily and tested for pH, conductivity, and silica. There have not been any problems with steam purity. Annual inspections of the boiler drums and separation internals have verified that these systems are intact and operating properly. The station has not experienced any internal corrosion related failures, steam path deposits, or excessive condenser fouling. NALCO provides water treatment consulting services and chemicals. A representative visits the station once per week to review test data and check chemical usage rates. No major issues were reported at the time of this report. Station Electrical Systems: Overall, station electrical systems and transformers are considered to be in satisfactory condition. A condition assessment of the generation facilities’ transformers was conducted in August FY 2010. Oil inspections and analyses were made. Transformer inspections were generally positive; however, it was recommended that plant personnel consider treatment to remove moister and particles from a Unit 1 bus yard transformer to prevent reducing the dielectric. Aside from this recommendation, the inspector recommended that normal operation continue for all the transformers at the plant. Oil sampling is now completed twice per year. Station Control Systems: Unit 1 and Unit 2 controls are electro-pneumatic and Unit 3 controls are a distributed control system (DCS). In general, the station control systems are considered to be in satisfactory condition. The Unit 1 and Unit 2 control systems are outdated but perform satisfactorily. All relays have recently been inspected at both McKee Run and VanSant for NERC, PJM and MAAC compliance. The EHC system will be modified in the future to become a primary/primary system. No major issues were reported at the time of this report. General Facilities: No major projects or improvements were completed to the General Facilities in FY 2010 other than routine maintenance and repairs. In general, the station facilities appeared clean and well maintained during the site visit. In FY 2010, fire protection system upgrades were completed at McKee Run per the City’s insurance company’s recommendations. The insurance company toured the plant and identified/recommended a need to install a manually operated foam deluge system to protect bearings in the event of a fire. City of Dover, Delaware II-9 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment A solar was installed on the turbine roof in FY 2010. The 10-kW structure was installed to reduce the need for energy and emissions from traditional generation sources, and ultimately contribute to the reduction of the plants’ carbon footprint. VanSant Generating Station: In general, the unit is operated infrequently, but is well maintained. Although the station is only manned when operating, an operator performs a twice daily walk through with a checklist of items to review and the results are logged. Planned outages were conducted at VanSant during FY 2010 for the annual overhaul and inspection. In FY 2010, the computer system and hazardous waste upgrades were made at VanSant. Due to the inadequacies of the old OEM system, the City completed an upgrade of the control system to Mark IV. A natural gas condensate container to reduce hazardous waste amounts and costs was also installed. No other major repairs or upgrades were made at VanSant in FY 2010. Transmission and Distribution Systems On June 8, 2010, Mr. Ted Kelly visited the City to collect information and to observe the City transmission and distribution system, as operated and maintained by the Electric Division. Mr. Steve Enss, the Engineering Services & System Operations Superintendent, provided information related to the transmission and distribution system. Mr. Enss also led a tour of the electric transmission and distribution system. The Electric Division distributes power to its customers by a network of transmission lines, distribution substations, and distribution lines. The transmission lines are rated at 69 kV and are connected to 15 distribution substations located throughout the service area. The distribution substations reduce the power from transmission voltages to the primary distribution voltages of 12 kV to facilitate distribution of electric power to customers. In FY 2008, the last of the 22 kV and 4 kV lines were converted to 69 kV and 12 kV to make the system uniform. Safety: Ronald Lunt, the Public Utilities Director for the City, reported to Burns & McDonnell that there were no reportable injuries or lost workdays in FY 2010. System Reliability: The Electric Division provides for reliability of its distribution system by configuring a majority of its distribution circuits in primary open loop arrangements, improving existing City of Dover, Delaware II-10 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment circuits, and installing adequate substation transformer capacity. Normal transformer and line loading are limited to provide sufficient margin to convey firm power requirements during an emergency or a switching operation, or for maintenance. Power Quality: The Electric Division does not have any significant power quality problems. The overall power factor for the Electric System decreased from approximately 99.24 percent in FY 2009 to 98.72 percent in FY 2010. Power transformers equipped with load tap changers regulate bus voltages at the distribution substations. Distribution transformers are equipped with no-load taps to make voltage adjustments. There are capacitors and voltage regulators on the Electric System that control voltage and vars on the portion of the system furthest away from the current source and generation. The system operators monitor the power factor closely and turn on capacitors or adjust the generation to compensate for low power factors. Operations and Maintenance: The Electric Division has a SCADA system that is monitored continuously for any problems that may arise in the Electric System. The main control room has two system operator desks and a large screen where system operating information is displayed. System operators can monitor the Electric System operation, such as voltage levels, current flows, etc. and make necessary adjustments as problems arise. The systems operators have received some PJM training but are not required to be certified as Delmarva is the controlling agency. Loading on substation transformers used for an emergency, a switching operation, or maintenance is limited to 120 percent of the rated capacity, followed by a 12-hour cool-down period. The Electric Division has nine line crews to work on the system. Four crews are responsible for overhead lines, four crews are responsible for underground lines, and one crew is responsible for maintenance. The primary responsibilities of the eight line crews are installation of new service connections and construction of new lines. The Trouble crew maintains the street lights, repairs underground services and is the first responder to outages. Tree trimming is now contracted out and is no longer performed by the Electrical Division; however, their performance is monitored by the Line Crew Superintendent. The Substation/Relay Maintenance Division is responsible for operation and maintenance of the substations and associated equipment. They perform visual inspections of substations, associated equipment, trip counter checks, battery systems checks, and annual transformer oil tests. City of Dover, Delaware II-11 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment The City contracts with an outside firm to inspect and chemically treat each wood pole in the Electric System every ten years. This is accomplished by awarding a five year contract to spread out the expenses. The City also has a contract with an environmental consultant to check each substation for oil leaks and to provide instruction on cleaning up in the event of an oil spill. Design Standards and Specifications: The Electric Division designs the transmission and distribution circuits and some substation upgrades in conformance with national safety standards. Other substation and transmission design is contracted out to Pike Electric, Inc. The underground distribution design utilizes road or alley front access construction. This design means the electrical equipment, such as transformers and underground cable, are installed beside the road instead of behind houses or buildings. The advantage of front access construction is the accessibility for maintenance and repairs to cable and electric equipment. The underground cables are installed in PVC pipe for added protection and for easy cable replacement. The Electric Division installs jacketed, concentric cable that is rated at 15 kV, with 133 percent Ethylene Propylene Rubber (EPR) insulation. The standard overhead distribution design utilizes a flat construction using a single cross-arm and insulators on 45-foot class 2 poles. Typically all electrical equipment locations have ground rods installed with measured readings of 25 ohms or less. The substation design is generally a low-profile rigid bus design. The circuit breakers are SF6 gas-filled and the relays are microprocessor based with SCADA control and monitoring. Transmission and Distribution Improvements: The following describes completed, on- going, and planned improvements to the City’s Electric System: Completed: • St. Jones Substation Upgrades • Crossgates Substation Upgrades • Mid City Substation Upgrades • Pollution Remediation Project • Fire Detection Alarm System Installation • Computerized Maintenance System Upgrade • Control System Upgrade City of Dover, Delaware II-12 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment • Single Phase Meter Replacement • Cyclone Separator Removal • Security System for Admin Bldg and Cartanza SS On-Going: • 69 kV Feeders 3 & 4 • Lighting Project & Rehabilitation • Buchanan Acres Distribution Upgrades • Transmission Line Maintenance • Governor’s Avenue Rebuild • Distribution Capacitors Maintenance • Substation PT & CT Replacement Program • Distribution System Upgrades • Underground Transformer Upgrades • VanSant CT Mark IV Upgrades Planned: • McKee Run Yard Rebuild • Horsepond Road Substation Reliability Upgrade • Distribution Feeder Replacement • Frazier Substation Reliability Upgrade • Outage Management & Automatic Voice Response • Horsepond SS to Cartanza 69 kV Rebuild • 69 kV Substation Switch Replacement • General Scott Switchgear • VanSant Overhaul and Inspection • McKee Run Stack Repairs • McKee Run High Energy Piping Inspections • McKee Run Boiler Systems • McKee Run Demineralizer Replacement • McKee Run Hot Water Boilers • McKee Run Auxiliary System Components • McKee Run Turbine Outage • McKee Run Life Extension • McKee Run Water Line Replacement • VanSant Component Replacements City of Dover, Delaware II-13 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part II – Electric System Overview and Assessment System Tour: The tour of the Electric System included drive-by observations of a sample of the transmission circuits, distribution circuits, and substations. The Electric System was in good condition and appeared to be well maintained. The Cartanza Substation is a 230/69 kV substation, which serves as a tie with Delmarva. Delmarva maintains the 230 kV side of the station, while the City of Dover maintains the 69 kV side. Cartanza currently has four 69 kV lines leaving the station. The four circuits leave the station on two diverse pole lines, each holding a double circuit, until the circuits split down the line. This configuration allows for two separate loops for the entire 69 kV system to minimize total system failure should one common pole be critically damaged. Most of the fifteen substations were observed during the tour. Several of the major projects visited during the tour included the St. Jones Substation project, the 69 kV Feeders 3 and 4 projects, the Horsepond 600 Transformer project, the Lebanon Transformer Replacement project, and the Mayfair Substation Rebuild project. Overall, the substations appeared to be well maintained. Some older structures have corrosion on the steel, but much of this steel will be replaced by planned or ongoing projects and upgrades. There was little to no vegetation visible and the yards appeared to be well maintained. During the tour the 69 kV lines were observed and all appeared to be in good condition. Conclusions Based on statements and information provided, as well as the observations and reviews performed, it is the opinion of Burns & McDonnell that the City’s power generation facilities are being operated and maintained consistent with accepted electric utility practice in the United States. In general, the performance, operation, maintenance, staff, planning, and training aspects for the McKee Run and VanSant stations were found to be above average. Specifically, the generation facilities have demonstrated a high level of availability despite the dispatching of the units primarily for peak demand. In addition, it is the opinion of Burns & McDonnell that the design, construction, operation and maintenance of the City’s electric transmission and distribution system and the associated facilities are consistent with current generally accepted electric utility standards. The City and the Electric Division are proactive in preventative maintenance and expansion of the Electric System before problems arise. ***** City of Dover, Delaware II-14 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

PART III – FINANCIAL ASSESSMENT

2010 Engineering Consultant’s Report Part III – Financial Assessment PART III FINANCIAL ASSESSMENT The financial results of the City of Dover, Delaware (City) Electric System for the fiscal year (FY) ended June 30, 2010, were generated through the management and operation of the Electric System by the Electric Division. A review of the financial results was provided below. FINANCIAL RESULTS The total revenue of the Electric Division during FY 2010 included revenue from charges for electric service, as well as miscellaneous revenues from items such as rents, penalties, reconnection fees, and emission credits. On the Comparative Statement of Revenues, Expenses, and Changes in Unreserved Retained Earnings table, revenues were compared to the Electric Division’s costs of providing services to its customers to determine whether the financial requirements of the Electric Division were met. Required Revenue Level The level of revenues required from the retail electric rates for the Electric Division were determined through the analysis of the financial results and net income or net margins for the most recent fiscal year. The City of Dover, Delaware Resolution Authorizing and Securing Electric Revenue Bonds, adopted December 23, 1985 requires that the Electric Division maintain a debt service coverage ratio of 1.25. The following is an excerpt from Section 502(c) of the resolution. “(c) The total amount of the Revenues of the Electric System during the preceding fiscal year shall have been not less than the total of the following: (1) The Current Expenses of the Electric System during the current fiscal years shown by the Annual Budget . . . for such fiscal year, and (2) One hundred twenty-five percent (125%) of the maximum amount of the Principal and Interest Requirements for any fiscal year thereafter on account of all bonds then Outstanding under the provisions of this Resolution. The City further covenants that, from time to time and as often as it shall appear necessary, it will adjust the electric rates as may be necessary or proper so that the revenues of the Electric System in each fiscal year will not be less than the total of the amounts set forth in subdivision (c) of this section.” City of Dover, Delaware III-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Electric Rates Customers of the Electric Division of the City are charged for the electric service based on rate schedules, tariffs, or contracts that reflect the costs to the Electric Division of providing that service. For purposes of setting electric rates, customers with similar load and service characteristics should be placed in the same rate classification. A comprehensive cost-of-service and rate design study was completed in 2006 and subsequent rate analyses were completed in 2007 and 2008 to examine revenue requirements and revenue generation. Specifically, the 2006 rate study was conducted to address increased costs associated with a new power supply contract that became effective on July 1, 2006. The rate study recommended combining a number of rate classes and implementing rate increases on July 1, 2006. The 2006 rate study also recommended an additional increase be implemented on January 1, 2007 to cover increased costs associated with operating the generating station. The 2007 and 2008 rate analyses re-examined Electric Division revenues and expenses and recognized additional revisions to power supply costs. As a result of these analyses, additional rate increases were implemented on July 1, 2007, and July 1, 2008. The July 2008 rate adjustments established the rate schedules utilized by the Electric Division today. • Residential • Transmission • Small Commercial (1 Phase, 3 Phase, & 1 • Outdoor Development Lighting Phase Heating) • Private Outdoor Lighting • Medium Commercial (1 Phase & 3 Phase) • Water Pump • Large Commercial (3 Phase with Reactive • Water Pump 2 Metering) • Supplemental for NRG • Primary Operating Results Table III-1 presents a summary of the energy sales, the number of customers, and the average kilowatt- hour (kWh) energy per customer of the Electric Division for FY 2008 through FY 2010. Total energy sales decreased from 719.9 GWh in FY 2009 to 708.5 GWh in FY 2010, a decrease of 1.59 percent. Table III-2 presents revenues from sales, revenue per kWh ratios, and average revenue per customer ratios for each revenue classification. Total revenue from sales to electric customers in FY 2010 was approximately $98.1 million, representing a decrease of $1.6 million, or -1.57 percent from FY 2009. City of Dover, Delaware III-2 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Table III-1 ANNUAL SALES AND CUSTOMERS City of Dover Electric Division [1] FY 2008 FY 2009 FY 2010 Energy Sales (kWh) Residential 192,508,201 195,185,587 193,911,702 Commercial 255,809,667 248,757,087 237,608,938 Primary 157,439,535 156,096,547 148,381,527 Transmission 125,266,662 119,910,158 128,628,155 Total Energy Sales 731,024,065 719,949,379 708,530,322 Average Number of Customers (bills) Residential 19,137 19,685 19,785 Commercial 3,664 3,497 3,370 Primary 37 37 36 Transmission 4 4 4 Total Customers 22,842 23,223 23,195 Energy Per Customer Residential 10,059 9,915 9,801 Commercial 69,819 71,131 70,507 Primary 4,255,123 4,209,345 4,102,715 Transmission 31,316,666 30,615,359 32,157,039 Average Energy Per Customer 32,003 31,001 30,546 [1] From monthly electric billing summaries by revenue class. In FY 2010, the average rate revenue per kWh for residential customers was 15.12 cents and the total average rate revenue was 13.84 cents per kWh. The July 2009, through June 2010 national average retail rates, as published by the US Energy Information Administration (EIA), were 11.51 and 9.80 cents per kWh, respectively.1 For a state-wide comparison, the EIA calculated the Delaware July 2009, through June 2010 average retail electricity prices to be 14.09 cents per kWh for residential customers and 12.00 cents per kWh across all sectors.2 1 “Average Retail Price of Electricity to Ultimate Customers: Total by End-Use Sector," 15 Nov. 2010, US Energy Information Administration, 02 Dec. 2010 < http://www.eia.doe.gov/cneaf/electricity/epm/table5_3.html>. 2 “Current and Historical Monthly Retail Sales, Revenues and Average Revenue per Kilowatt-hour by State and by Sector (Form EIA-826)," 15 Nov. 2010, US Energy Information Administration, 02 Dec. 2010 <http://www.eia.doe.gov/cneaf/electricity/epm/table5_3.html>. City of Dover, Delaware III-3 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Table III-2 ANNUAL REVENUES AND SALES RATIOS City of Dover Electric Division FY 2008 FY 2009 FY 2010 Revenue Residential $ 27,063,840 $ 29,553,954 $ 29,320,410 Commercial 35,073,419 37,547,855 36,856,716 Primary 19,183,512 18,988,842 18,025,548 Transmission 12,716,441 13,551,839 13,878,764 Total Revenue $ 94,037,212 $ 99,642,490 $ 98,081,438 Revenue/kWh Residential $ 0.1406 $ 0.1514 $ 0.1512 Commercial 0.1371 0.1509 0.1551 Primary 0.1218 0.1216 0.1215 Transmission 0.1015 0.1130 0.1079 Total Revenue/kWh $ 0.1286 $ 0.1384 $ 0.1384 Revenue Per Customer Residential $ 1,414 $ 1,501 $ 1,482 Commercial 9,573 10,737 10,935 Primary 518,473 512,059 498,402 Transmission 3,179,110 3,460,044 3,469,691 Average Revenue Per Customer $ 4,117 $ 4,291 $ 4,227 The Electric Division’s largest cost in providing electric service to its customers in FY 2010 was the wholesale cost of power. The Electric Division purchased power from the Pennsylvania New Jersey Maryland Interconnection (PJM) marketplace through its Energy Manager, PACE Global Energy Services (PACE). From FY 2009 to FY 2010, the net cost of non-generated power decreased from $67.6 million to $66.8 million. The significance of power supply cost to the Electric Division is illustrated in Table III-3. The top portion of the table shows net operating revenue as the difference between total revenues generated by the rates and the cost of power supply.3 The ratios of power supply cost to sales revenues were calculated for FY 3 For the purposes of this Engineering Consultant’s Report, the phrase “Power Supply” refers to the sum of the costs of power purchased and power generated. This includes plant costs and the cost of fuel. Power Supply also includes any expenses in the CIP Fund that are not capital expenses. The phrase “Purchased Power” refers only to the cost of power purchased from the market and other directly associated costs. City of Dover, Delaware III-4 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment 2008 through FY 2010. As illustrated, the Electric Division’s power supply cost as a percentage of rate revenue decreased from approximately 75.2 percent in FY 2009 to 74.2 percent in FY 2010. Table III-3 NET REVENUE MARGINS AND UNACCOUNTED FOR ENERGY City of Dover Electric Division FY 2008 FY 2009 FY 2010 Net Revenue Margins ($) Sales Revenues $ 94,037,212 $ 99,642,490 $ 98,081,438 Power Supply 68,831,697 74,928,897 72,751,381 Net Revenue Margin $ 25,205,515 $ 24,713,593 $ 25,330,057 Net Revenue Ratio 73.2% 75.2% 74.2% Unaccounted for Energy (kWh) Purchased Power 782,081,000 751,171,000 751,250,000 Energy Sales 731,024,065 719,949,379 708,530,322 Unaccounted for Energy (Losses) 51,056,935 31,221,621 42,719,678 Percentage 6.5% 4.2% 5.7% Table III-3 also illustrates the ratio of the amount of energy purchased and delivered to the electric system to total energy sales. This relationship identifies the level of unaccounted for energy in the Electric System. This unaccounted for energy may include energy that was unmetered, metered inaccurately, stolen, lost, PJM transmission line losses, local system line/transformer losses, etc. The bottom portion of Table III-3 presents these comparisons for the Electric Division for FY 2008 through FY 2010. As shown, the percentage ratio of the unaccounted for energy to the total energy purchased for FY 2010 was 5.7 percent. This number is up from 4.2 percent in FY 2009. Table III-4 presents a re-creation of the City’s Statement of Revenues, Expenses, and Changes in Unreserved Retained Earnings for the Electric Revenue Fund for FY 2008 through FY 2010. Net income increased from FY 2009, totaling $3.3 million in FY 2010. A number of factors contributed to the increase, namely an overall decrease in power supply cost. The City experienced an increase in operating income of $2.4 million over the previous year. This coupled with the following reductions generated the $3.3 million of positive income. A large decrease attributed to reducing employee benefit funding occurred due to not funding OPEB in 2010 along with decreases in labor attributed to furloughs and power supply costs. Effective May 4, 2006, the City entered into a five-year Energy Management Agreement with PACE of Fairfax, Virginia to assist the City with its energy procurement and sales, the purchase of fuels, City of Dover, Delaware III-5 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment establishment and management of risk policies, development and management of hedging protocols and related energy procurement tasks. On July 1, 2006, the City entered into an agreement with NAES of Issaquah, Washington for generation asset management. The City bears all market risks, credit risks, and liability under these contracts. Table III-4 COMPARATIVE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN UNRESERVED RETAINED EARNINGS City of Dover Electric Division FY 2008 FY 2009 FY 2010 Operating Revenues: Charges for Electric Service $ 94,037,212 $ 99,642,490 $ 98,081,438 Miscellaneous Services/Incomes 2,821,578 1,778,492 2,197,035 Total Operating Revenues $ 96,858,790 $ 101,420,982 $ 100,278,473 Operating Expenses: General Administration $ 4,660,334 $ 4,084,382 $ 5,742,714 Power Supply 68,831,697 74,928,897 72,751,381 Transmission/Distribution 4,064,713 4,032,931 3,072,816 Engineering 1,589,584 2,393,416 1,319,394 Metering 309,805 285,118 301,416 System Operations 518,871 559,743 496,195 Utility Tax 1,650,838 1,738,059 1,922,645 Depreciation 3,918,804 3,898,475 4,106,804 Retiree Health Care 506,518 1,830,903 531,843 Total Operating Expenses $ 86,051,164 $ 93,751,924 $ 90,245,208 Net Operating Income $ 10,807,626 $ 7,669,058 $ 10,033,265 Non-operating Revenues (Expenses) Interest Earned Operating Fund $ 496,201 $ 141,310 $ 37,850 Reserved Funds 1,500,064 1,041,655 865,878 Net Increase in Fair Value of Investments 197,389 239,624 (168,775) Interest and Fiscal Charges (797,104) (726,448) (648,581) Bond Discount Amortized (104,304) (113,206) (113,206) Gain/(Loss) on Sale of Assets (1,489,476) 115,638 17,984 Total Non-operating Revenues(Expenses) $ (197,230) $ 698,573 $ (8,850) Net Income Before Operating Transfers $ 10,610,396 $ 8,367,631 $ 10,024,415 Operating Transfers - In - 1,332,350 - Operating Transfers - Out (6,601,269) (6,758,100) (6,758,100) Total Net Operating Transfers $ (6,601,269) $ (5,425,750) $ (6,758,100) Net Income $ 4,009,127 $ 2,941,881 $ 3,266,315 City of Dover, Delaware III-6 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Adequacy of Electric Rates The City’s Bond Resolution requires annual revenues of the Electric Division be no less than the total current expenses plus 125 percent of the greatest remaining annual debt service. “Current expenses”, as defined in the Resolution, includes all expenses necessary to maintain and repair the Electric System, all administrative expenses, and engineering, legal or other consultant fees. Transfers to reserve accounts and special purpose funds, and allowances for depreciation are specifically excluded from “current expenses.” In order to determine if the City and the Electric Division have met this requirement, the net income shown in Table III-4 was adjusted to include the interest on bonds, depreciation expense, and other non- cash income and expenses. Table III-5 presents the adjustments to net income and the determination of the revenues available for debt service for FY 2008 though FY 2010. As Table III-5 illustrates, the City and the Electric Division maintained a debt service coverage ratio each year that exceeded the required 125 percent plus current expenses. Therefore, the revenues generated by the current electric rates have been sufficient to meet the applicable covenants of the Resolution. Table III-5 DEBT SERVICE COVERAGE CALCULATION City of Dover Electric Division FY 2008 FY 2009 FY 2010 Net Income $ 4,009,127 $ 2,941,881 $ 3,266,315 Plus Excluded Expenses: Operating Transfers - In $ - $ (1,332,350) $ - Operating Transfers - Out 6,601,269 6,758,100 6,758,100 Depreciation 3,918,804 3,898,475 4,106,804 Interest and Fiscal Charges 797,104 726,448 648,581 Bond Discount Amortized 104,304 113,206 113,206 Gain/(Loss) on Sale of Assets 1,489,476 (115,638) (17,984) Less Excluded Income: Net Increase in Fair Value of Investments (197,389) (239,624) 168,775 Interest Earned - Reserve Funds (1,500,064) (1,041,655) (865,878) Revenues Available for Debt Service $ 15,222,631 $ 11,708,843 $ 14,177,919 Maximum Principal and Interest in Any Year $ 2,644,620 $ 4,058,700 $ 3,347,479 Debt Service Coverage 5.76 2.88 4.24 Minimum Required Debt Service Ratio 1.25 1.25 1.25 Section 502 of the Resolution requires that the annual debt service used in evaluating the revenues is to be the maximum amount for any fiscal year thereafter. Table III-6 presents the annual totals of principal and City of Dover, Delaware III-7 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment interest amounts due on bonds currently outstanding. The calculation of the debt service coverage ratio in Table III-5 is based on the total maximum debt service expense in any fiscal year. The FY 2010 calculation was based on the total FY 2012 debt service expense of $3,347,479. STATUS OF REVENUE BONDS At the end of FY 2010, the City had two series of outstanding electric revenue bonds that were issued pursuant to the Resolution. The 2004 Electric Revenue Bonds (2004 Bonds) were issued in 2004, in the amount of $22,535,000. These bonds were issued to refund the 1990 and 1993 bonds. On July 1, 2008, the City issued $22,200,000 in Electric Revenue Bonds (2008 Bonds). The proceeds from the sale of the 2008 Bonds were used (i) to finance or reimburse the City for improvements to the City’s electric system; (ii) to fund a Debt Service Reserve Fund; and (iii) to pay the costs of issuance of the 2008 Bonds. On November 17, 2010, the City issued $8,810,000 of Electric Revenue Refunding Bonds (Series 2010). The proceeds from the sale of the Series 2010 Bonds will be used (i) to refund the Series 2004 Bonds, and (ii) to pay the costs of issuance of the Series 2010 Bonds. The non-taxable Series 2010 Bonds received an underlying rating of Aa2 by Moody’s Investors Services and an underlying rating of A+ by Fitch Ratings. Table III-6 illustrates the debt service schedule for the Series 2008 and 2010 Bonds. The principal and interest and the annual total are shown for each series of bonds. At the time of issuance of the Series 2010 Bonds, the combined outstanding principal balance for both series of bonds was $30,655,000. Table III-6 DEBT SERVICE SCHEDULE OF ELECTRIC REVENUE BONDS City of Dover Electric Division 2008 Electric Revenue Bonds 2010 Electric Revenue Refunding Bonds Total Annual Period Principal Interest Debt Service Principal Interest Debt Service Debt Service FY 2011 $ 375,000 $ 1,038,716 $ 1,413,716 $ - $ 35,017 $ 35,017 $ 1,448,733 FY 2012 390,000 1,017,679 1,407,679 1,670,000 269,800 1,939,800 3,347,479 FY 2013 410,000 996,704 1,406,704 1,700,000 236,100 1,936,100 3,342,804 FY 2014 430,000 975,704 1,405,704 1,740,000 193,000 1,933,000 3,338,704 FY 2015 450,000 953,704 1,403,704 1,810,000 130,700 1,940,700 3,344,404 FY 2016 475,000 930,579 1,405,579 1,890,000 47,250 1,937,250 3,342,829 FY 2017 695,000 901,329 1,596,329 - 1,596,329 FY 2018 730,000 865,704 1,595,704 - 1,595,704 FY 2019 765,000 831,580 1,596,580 - 1,596,580 FY 2020 800,000 798,706 1,598,706 - 1,598,706 FY21-34 16,325,000 6,227,334 22,552,334 - - - 22,552,334 Total $ 21,845,000 $ 15,537,739 $ 37,382,739 $ 8,810,000 $ 911,867 $ 9,721,867 $ 47,104,606 City of Dover, Delaware III-8 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment INSURANCE The City maintains a comprehensive insurance program to insure against varying types of liabilities and significant losses related to various Electric Division properties. Section 706 of the Resolution reads: "The City covenants that it will maintain a practical insurance program, with reasonable terms, conditions, provisions and costs, which the City Manager determines, with the approval of the Engineering Consultants, will afford adequate protection against loss, including loss of Revenues, caused by damage to or destruction of the Electric System or any part thereof and also comprehensive public liability insurance on the Electric System for bodily injury and property damage in such amounts as may be approved by the Engineering Consultants.” Table III-7 lists the insurance coverage procured by the City for the period July 1, 2010, through June 30, 2011. Burns & McDonnell has reviewed this list of insurance, and in the opinion of Burns & McDonnell, as Engineering Consultant and not as insurance counselor, the insurance in full force and affect appears to satisfy the requirements of Section 706 of the Resolution. City of Dover, Delaware III-9 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Table III-7 SCHEDULE OF INSURANCE COVERAGE IN EFFECT City of Dover Electric Division July 1, 2010 - June 30, 2011 July 1, 2009 - June 30, 2010 Coverage Deductible Coverage Deductible Property Building & Contents $136,542,391 $10,000 $136,542,391 $10,000 Flood Zones X or C 2,000,000 50,000 2,000,000 50,000 Flood Zones 100,000 50,000 Blanket Business Earnings & Expense 100,000 100,000 Electronic Data Processing 1,674,830 1,000 1,674,830 1,000 Inland Marine Contractors Equipment Replacement Cost - 90% co-insurance Scheduled Equipment - Total Value 162,500 1,000 162,500 1,000 Unscheduled Equipment 100,000 1,000 100,000 1,000 Max Any One unscheduled Item 5,000 Employee Tools Limit 112,812 250 62,500 250 Maximum any one item 18,000 General Liability Each Event 1,000,000 1,000,000 General Total Limit 3,000,000 3,000,000 Products and Completed Work Total Personal Injury 1,000,000 1,000,000 Advertising Injury 1,000,000 1,000,000 Medical Expenses Sexual Abuse Coverage 1,000,000 1,000,000 Per Occurrence Sewer Back-up 1,000,000 1,000,000 Failure to Supply Services - Water 1,000,000 1,000,000 Statutory Cap Limits of Coverage Endorsement Delaware Personal Injury 300,000 300,000 Delaware Advertising Injury 300,000 300,000 Delaware Bodily Injury & Property Damage 300,000 300,000 Automobile Liability 1,000,000 1,000,000 Personal Injury 300,000 300,000 Uninsured Motorist 1,000,000 1,000,000 Underinsured Motorist - 1,000,000 Comprehensive 500 Collision 1,000 Non-Owned Liability 1,000,000 1,000,000 Hired Auto Liability 1,000,000 1,000,000 Employees as Additional Insured Hire Auto Physical Damage 50,000 50,000 Statutory Cap Limits of Coverage Endorsement Delaware Statutory Cap Limit 300,000 300,000 Employee Benefit Plans Administration Liability Total Limit 3,000,000 3,000,000 Each Wrongful Act 1,000,000 1,000 1,000,000 1,000 Law Enforcement Liability Total Limit 3,000,000 3,000,000 Each Wrongful Act 1,000,000 5,000 1,000,000 5,000 Statutory Cap Limits of Coverage Endorsement Delaware Statutory Cap Limit 300,000 300,000 Public Entity Management Liability Total Limit 3,000,000 3,000,000 Each Wrongful Act 1,000,000 25,000 1,000,000 25,000 City of Dover, Delaware III-10 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment (Table III-7 Continued) July 1, 2010 - June 30, 2011 July 1, 2009 - June 30, 2010 Coverage Deductible Coverage Deductible Employment Practices Liability Total Limit 5,000,000 5,000,000 Each Wrongful Offense 5,000,000 25,000 5,000,000 25,000 Crime Employee Theft 500,000 500 1,000,000 500 Inside Theft of Money & Securities 25,000 500 25,000 500 Robbery or Burglary Outside Theft of Money & Securities 25,000 500 25,000 500 Forgery or Alteration 100,000 1,000 100,000 1,000 Computer Fraud 100,000 1,000 100,000 1,000 Money Order & Counterfeit Paper Currency 100,000 1,000 100,000 Boiler and Machinery (Excluding Power Plants) Coverage Limit Property Limit 10,000 Property Limit 10,000 Expediting Expenses 100,000 250,000 Hazardous Substance 250,000 250,000 Spoilage 250,000 250,000 Ammonia Contamination 250,000 Umbrellas General Total Limit 4,000,000 4,000,000 Products & Work Limit 4,000,000 4,000,000 Personal Injury 4,000,000 4,000,000 Advertising Injury 4,000,000 4,000,000 Each Event Limit 4,000,000 4,000,000 Deductible Per Event 10,000 10,000 Umbrella Underlying Policies General Liability 1,000,000 Employment Benefits 1,000,000 Auto Liability 1,000,000 Law Enforcement Liability 1,000,000 Public Entity Management 1,000,000 Excess Error & Omissions Total Limit 4,000,000 4,000,000 Public Entity Management 1,000,000 1,000,000 Employee Benefit Plans Administration Liability 1,000,000 1,000,000 Pollution Liability Policy Each Claim Limit 5,000,000 25,000 5,000,000 25,000 Aggregate Limit 10,000,000 10,000,000 Excess Worker's Comp Employer's Liability Limit 1,000,000 1,000,000 Specific Limit Statutory Statutory Aggregate Limit 1,000,000 1,000,000 Environmental Impairment Liability Retroactive Date 4/1/97 Limit - Each Claim Limit - Aggregate McKee Run & VanSant Plant Deductibles Power Plants - Property & Boiler & Machinery Limit per occurrence 100,000,000 100,000 100,000,000 100,000 Travel Accident Policy Principal Sum 100,000 100,000 Bond - Self-Insured Worker's Comp - State of DE Limit 750,000 750,000 Bond Public Officials Bond Treasurer - Limit 100,000 100,000 City Clerk - Assistant Treasurer - Limit 100,000 100,000 City of Dover, Delaware III-11 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment OPERATING AND RESERVE FUNDS The City has established several funds and reserves to ensure that moneys are available for specific purposes when they are needed. The following are descriptions of each fund and their purpose. • Electric Revenue Fund – The Electric Revenue Fund was established in Section 503 of the Resolution. All revenues are to be deposited into the Electric Revenue Fund when received. Current expenses are to be paid and other funds are to be maintained from the Electric Revenue Fund. Moneys are transferred from the Electric Revenue Fund to the Interest and Sinking Fund, Improvement and Extension Fund, the Depreciation Reserve Fund, Future Capacity Fund, and Electric Rate Stabilization Fund. • Electric Improvement and Extension Fund – The Improvement and Extension Fund was established in Section 507 of the Resolution. Funds are added to the Improvement and Extension Fund from the Electric Revenue Fund to the extent that the amount of funds available from the Electric Revenue Fund exceeds the total of the amounts required to be added to the Interest and Sinking Fund. The Improvement and Extension Fund also receives additional funding from the Depreciation Fund, the Future Capacity Fund, the Insurance Stabilization Fund, and from the State of Delaware. Section 510 of the Resolution indicates that, except for certain situations, moneys held in the Improvement and Extension Fund are to be used only for payment of costs of unusual maintenance or repairs, renewals or replacements, obtaining or replacing equipment, constructing extensions, additions, or improvements, and engineering expenses related to the foregoing activities. • Interest and Sinking Fund – The Interest and Sinking Fund was established in Section 507 of the Resolution. This fund consists of two restricted accounts: the Bond Service account and the Reserve Account. The Bond Service Account is funded with equal monthly transfers from the Electric Revenue Fund such that the balance, as of each payment date for interest or for principal and interest, will be equal to the amount of the payment due. The payments of principal and interest due on bonds are made from the Bond Service Account. The Reserve Account is funded by transfers from the Electric Revenue Fund, as necessary, to maintain a balance equal to the maximum combined principal and interest for any future fiscal year through the life of all bonds then outstanding. Moneys in the Reserve Account are used for paying interest on and principal of bonds when the balance in the Bond Service Account is insufficient for making those payments. Excess moneys in the Reserve Account are also used towards paying current interest payments. The total amount in the Restricted Accounts for the 2004 and 2008 bonds as of June 30, 2010, was $3,337,882. City of Dover, Delaware III-12 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment • Depreciation Reserve Fund – The Depreciation Reserve Fund represents moneys that have been set aside for the sole purpose of funding renewals and replacements of the Electric System as components or equipment wear out, deteriorate, or otherwise become unsuitable for the intended purpose. Transfers from the Electric Revenue Fund and investment earnings are the only sources of additional moneys for the Depreciation Reserve Fund. Transfers to the Improvement and Extension Fund are made as necessary to fund capital projects. The target appropriation for the Depreciation Reserve Fund each year is the excess of depreciation expense for the year over the amount of principal included in debt service payments made during the year. The reserve balance at the end of FY 2010 was $8,021,155. • Future Capacity Fund – The Future Capacity Fund was established to set aside and accumulate funds from the Electric Revenue Fund for use in evaluating and pursuing activities related to the Electric Division’s alternatives for power supply resources for future demand for electricity. The original target balance for this reserve was $5,000,000. The reserve balance at the end of FY 2010 was $9,023,928. • Insurance Stabilization Fund – The Insurance Stabilization Fund was established by the City to provide for the funding of insurance deductibles in the event of loss(es) covered by the City’s insurance policies then in effect. The target balance in the Insurance Stabilization Reserve is $350,000. The reserve balance at the end of FY 2010 was $396,530. • Contingency Reserve Fund – The Contingency Reserve Fund was established by the City in FY 2003 to provide for unplanned expenditures that may not be avoidable. The City’s Financial Policies require that a minimum balance be maintained in the Contingency Reserve Fund equal to 1.0 percent of the current year revenues for the Electric Revenue Fund. The FY 2010 end-of-year balance was $1,039,766, which is equal to 1.04 percent of the FY 2010 revenues for the Electric Revenue Fund. • Electric Rate Stabilization Fund – The Electric Rate Stabilization Fund was established in FY 2005 to offset the costs of the power cost adjustment to the customers of Dover. The fund’s target balance is a minimum of 3.0 percent, not to exceed 10.0 percent, of purchase power cost in any given year. Any excess of this amount will be refunded to customers by reducing the rate of the power cost adjustment. The fund’s FY 2010 end-of-year balance was $4,776,519, which was 7.15 percent of the FY 2010 purchased power cost. City of Dover, Delaware III-13 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

2010 Engineering Consultant’s Report Part III – Financial Assessment Table III-8 presents FY 2008 through FY 2010 year-end summaries of the activity within the funds described above, excluding the Electric Revenue Fund and the Improvement and Extension Fund. The Interest and Sinking Fund, the Insurance Stabilization Fund, the Contingency Reserve Fund, and the Electric Rate Stabilization Fund are accounts within the Electric Revenue Fund. The Depreciation Fund and the Future Capacity Fund are accounts within the Improvement and Extension Fund. Table III-8 RESERVE FUND ACTIVITY AND BALANCES City of Dover, Delaware Bond Depreciation Future Insurance Contingency Electric Rate Reserve Reserve Capacity Stabilization Reserve Stabilization Account Fund Fund Fund Fund Fund Year Ended June 30, 2008 Balance in Account on July 1 $ 1,219,333 $ 13,535,183 $ 8,958,792 $ 351,255 $ 847,032 $ 379,784 Receipts Interest Earned 257,758 616,059 498,559 19,547 47,137 61,003 Appropriations 1,780,000 2,030,679 Total Funds Available $ 3,257,091 $ 14,151,242 $ 9,457,351 $ 370,802 $ 894,169 $ 2,471,465 Disbursements Debt Service Payments Transfer to Operations (9,699,579) (1,000,000) Balance in Account on June 30 $ 3,257,091 $ 4,451,663 $ 8,457,351 $ 370,802 $ 894,169 $ 2,471,465 Year Ended June 30, 2009 Balance in Account on July 1 $ 3,257,091 $ 4,451,663 $ 8,457,351 $ 370,802 $ 894,169 $ 2,471,465 Receipts Interest Earned 252,718 338,327 306,512 14,300 34,484 95,314 Appropriations 4,041,632 5,000,000 2,085,748 Total Funds Available $ 7,551,441 $ 9,789,990 $ 8,763,863 $ 385,102 $ 928,653 $ 4,652,527 Disbursements Debt Service Payments (6,046,632) Transfer to Operations (2,000,000) Balance in Account on June 30 $ 1,504,809 $ 7,789,990 $ 8,763,863 $ 385,102 $ 928,653 $ 4,652,527 Year Ended June 30, 2010 Balance in Account on July 1 $ 1,504,809 $ 7,789,990 $ 8,763,863 $ 385,102 $ 928,653 $ 4,652,527 Receipts Interest Earned 211,615 231,165 260,065 11,428 27,613 123,992 Appropriations 4,066,610 83,500 Total Funds Available $ 5,783,034 $ 8,021,155 $ 9,023,928 $ 396,530 $ 1,039,766 $ 4,776,519 Disbursements Debt Service Payments (2,445,212) Transfer to Operations Balance in Account on June 30 $ 3,337,822 $ 8,021,155 $ 9,023,928 $ 396,530 $ 1,039,766 $ 4,776,519 ***** City of Dover, Delaware III-14 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

PART IV – CONCLUSIONS

2010 Engineering Consultant’s Report Part IV – Conclusions PART IV CONCLUSIONS In the preparation of this Engineering Consultant’s Report, Burns & McDonnell completed assessments of the electric generating stations and the transmission and distribution system of the City Electric Division. The investigations included interviews, observations, and reviews of FY 2010 expenditures and FY 2011 budgets. In addition, an analysis of the balances of the Improvement and Extension Fund and other funds benefiting the Electric Division was performed. Burns & McDonnell also reviewed the adequacy of the revenues provided by the current retail rates in relation to the requirements of the City of Dover, Delaware Resolution Authorizing and Securing Electric Revenue Bonds, adopted December 23, 1985. A high level assessment of the City’s insurance coverage related to the Electric Division was also completed. Based on these reviews and assessments, it is Burns & McDonnell’s opinion that: 1. The City’s power generation facilities are being operated and maintained consistent with accepted electric utility practice in the United States. 2. The design, construction, operation, and maintenance of the City’s electric transmission and distribution system and the associated facilities are consistent with current generally accepted electric utility standards. 3. The Electric Division capital projects included in the City’s Capital Investment Plan and the FY 2011 Operating Budget are necessary and should provide improved reliability and power quality for the Electric System. 4. The balances as of June 30, 2010 for the various reserve funds maintained by the City for the Electric Division appear to be sufficient for their defined purposes. 5. The insurance coverage in full force and affect as maintained by the City related to the various assets of the Electric Division appears to satisfy the requirements of Section 706 of the Resolution. 6. The electric revenues generated by the City’s current retail rates are more than sufficient to fulfill the debt service coverage requirement defined in Section 502(c) of the Resolution. ***** City of Dover, Delaware IV-1 Bur ns & McDonnell Engineering Company Electric Division Kansas City, Missouri

Memorandum Public Services Manager P. O. Box 475 City Hall/ The Plaza Dover, Delaware 19903-0475 Phone: (302) 736-7026 Fax: (302) 736-7177 E-mail:skoenig@dover.de.us TO: Utility Committee Members FROM: Scott D. Koenig, P.E., Public Services Manager Anthony J. DePrima, AICP, ICMA-CM, City Manager Ann Marie Townshend, AICP, Director of Planning & Community Development DATE: January 3, 2011 SUBJECT: Development Projects – Performance & Maintenance Bonding Concerns As part of a shared performance goal, the City Manager, the Public Services Manager and the Director of Planning & Community Development conducted a series of four (4) internal meetings to brainstorm various ideas regarding concerns raised about Performance & Maintenance Bonding in subdivisions, site plan compliance, ensuring the functionality of homeowners associations (HOAs), and other development project problems. These meetings were held in October, November and December of 2010. Eight (8) specific problems/concerns were identified. Each problem is listed below along with one or more suggestions to improve the area of concern. Problem #1 – Active Recreation Areas in some Subdivisions / Site Plans (Apartments) are not being completed in proportion to the lots constructed. Article 5, Section 10.6 of the Zoning Ordinance is weak and difficult to enforce. It is difficult to build the recreation areas in proportion to the lots / building permits, as specified by code; therefore, an alternative solution must be developed. Possible Solutions: 1. Require specific phasing plan for the Active Recreation Plan. 2. Require a Performance Bond / Letter Of Credit (LOC) equal to 150% of the value (or add the active recreation improvements to current infrastructure LOC). LOC is preferred over a bond as the LOC creates more leverage. Note: A Code amendment is required to accomplish this.

Problem #2 – Some projects are partially built and the construction or the site work has been abandoned. (Examples: Enterprise Business Park, Tall Pines, Dove View) Possible Solutions: 1. Fund a Demolition Reserve that can be sustained with monies collected from liens and be used to demolish or safely seal construction. 2. Amend Tall Grass & Weed Ordinance (Chapter 114, Article II) to allow the City to regrade or restore the property and place a lien against the property to collect the costs. 3. Amend state law for Demolition Liens to allow for the City to recover costs through sheriff’s sale. 4. A Dangerous Building (DB) declaration accelerates tax sale (for delinquent taxes). This is an administrative action that is already in place. Problem #3 – Failure of HOA to take over initial responsibilities or HOA does not form or stay formed and therefore fails to function. Common Areas are not maintained. (Example: Four Seasons) Possible Solutions: 1. Amend assessment section of the code to allow city to bill and lien individual property owners for the common areas that the City is forced to maintain. 2. Amend subdivision ordinance to require an escrow start up account so HOA is capitalized from the beginning. 3. Buyers somehow are notified and certify / acknowledge that they are required to be part of the HOA and that there are maintenance responsibilities for which the HOA is responsible. Possible venues could include requiring that information be posted conspicuously in model homes or the City could send a letter after real estate transfer tax is received. 4. Require developer to meet guideline to turn over HOA at 75% of the initial phase of the development. - City could facilitate initial HOA meeting – Notice, Public Meeting at City Hall, City representative in attendance - Ensure elected official in attendance. 5. Amend subdivision ordinance to include a specific turnover requirement. 6. Amend subdivision ordinance to require a Certified Management Agency. Problem #4 – Stormwater / Passive Open Space – Not Being Maintained Possible Solutions: 1. Amend sections of the code addressing special assessment (Chapter 94) and/or amend tall grass and weeds (Chapter 114) to allow staff to hire contractors to maintain the passive open space and/or stormwater management areas and bill the property owners (developer or individual owners) and place a lien against the property to recover costs. 2. Create a Limited Stormwater Utility  Unilateral authority to take over facilities that are not being maintaned  Start with new developments

Problem #5 – Nuisance issues such as maintenance of buildable lots with homes, partially complete homes, partially complete subdivisions, roll-off trash containers for construction debris, soil stockpiles and material storage areas are degrading the overall quality of various subdivisions (in both dedicated and undedicated subdivisions). Possible Solutions: 1. Require an upfront agreement and escrow deposit from the developer of the subdivision ($1,000 / lot) to address these issues if they arise. 2. Provide incentives to dedicate infrastructure – Bill developer for Street Light operating costs and pump station maintenance until subdivision is dedicated. Problem #6 – Sidewalk network not complete and the developer wants to dedicate the rights-of-way and infrastructure. Possible Solutions: 1. Require all sidewalk construction to be complete prior to dedication. This position would maintain the status quo. 2. Add option that developer can go to Safety Advisory & Transportation Committee with a special Letter of Credit for the uncompleted sidewalks on the streets to be dedicated. The uncompleted sidewalks are associated with lots that have not had building permits issued as of that date. Potential enhancement to this option is to require a Public Hearing with notice to all residents and/or property owners in the development. Problem #7 – Snow Removal on uncompleted and/or undedicated streets represents a serious service delivery problem for the City of Dover and residents in these areas. Possible Solutions: 1. Require a maintenance escrow to be set up by the developer that can be used for snow and ice removal. 2. Require a signed contract between the developer and a private contractor responsible for snow removal be shared with the City. Problem #8 – The City does not provide a full range of services on undedicated streets since they are considered private property. (i.e. – snow removal, street sweeping, speed enforcement) Possible Solutions: 1. Earlier dedication – city would accept dedication of uncompleted streets and follow up with completion of the infrastructure on a designated time line identified in the dedication action. 2. Require more extensive maintenance agreement with longer time period for coverage.

Based upon the above information, staff is proposing the following next steps: 1) Staff would like to receive feedback from members of the Committee and Council on the possible solutions presented above as well as other items you would like to consider to address the identified problems. 2) Prioritize the problems listed above. 3) Prepare a timeline to address the problems in priority order. 4) Hold focus group with stakeholders (HOAs, Civic Associations, Civic Leaders, the development community, KCD) 5) Develop ordinances / charter amendments / administrative changes If you have any questions, please contact me. SDK/sdk

Residential Rate Comparison Annualized at 1,000 kWh per month As of 11/23/10 June July August September October November December January February March April May Total De Co-op 122.50 122.50 122.50 122.50 112.91 112.91 112.91 112.91 112.91 112.91 112.91 112.91 1,393.28 New Castle 152.13 152.13 152.13 152.13 144.63 144.63 144.63 144.63 144.63 144.63 144.63 144.63 1,765.56 Dover 147.38 147.38 147.38 147.38 147.38 147.38 147.38 147.38 147.38 147.38 147.38 147.38 1,768.56 Milford 155.27 155.27 155.27 155.27 143.53 143.53 143.53 143.53 143.53 143.53 143.53 143.53 1,769.32 Delmarva Power 154.48 154.48 154.48 154.48 151.27 151.27 151.27 151.27 151.27 151.27 151.27 151.27 1,828.08 Lewes 156.44 156.44 156.44 156.44 152.36 152.36 152.36 152.36 152.36 152.36 152.36 152.36 1,844.64 Smyrna 158.48 158.48 158.48 158.48 152.48 152.48 152.48 152.48 152.48 152.48 152.48 152.48 1,853.76 Middletown 156.76 156.76 156.76 156.76 158.70 158.70 158.70 158.70 158.70 158.70 158.70 158.70 1,896.64 Seaford 164.45 164.45 164.45 164.45 156.05 156.05 156.05 156.05 156.05 156.05 156.05 156.05 1,906.20 Clayton 162.70 162.70 162.70 162.70 162.70 162.70 162.70 162.70 162.70 162.70 162.70 162.70 1,952.40 Newark 163.71 163.71 163.71 163.71 163.71 163.71 163.71 163.71 163.71 163.71 163.71 163.71 1,964.52 Approximate DP&L 's transmission capacity charge is based on each individual's Peak Load Contribution(PLC) to the overall transmission load. Each customer has a unique PLC that changes every January. Annualized Rates 2,500.00 2,000.00 1,500.00 1,000.00 500.00 Annualized Rates -

City of Dover Capital Investment Plan Project Tracking Report November 30, 2010 Points to Remember - * Original Project Budget = Original Total Project Budget initially included in approved annual budget. * Latest Project Budget = Revised Total Project Budget included in most recent approved annual budget or one of the following: bond resolution, revolving fund loan agreement, Council approved budget amendment, or City Manager approved amendment as per the Budget Amendment Procedure. * Current Fiscal Year - Revised Fiscal Year Budget = Current Year approved project budgets plus carry forward balances of unspent budgets in the prior fiscal year. Project Carry Forward balances will be submitted to City Council for amendment in January 2010. Can also be amended with City Manager approval per the Budget Amendment Procedure. * Water Quality, Inflow/Infiltration, Distribution Upgrades and New Development projects are budgeted as a blanket project and once individual projects are identified and estimated they are created using an allocation of the overall budgeted amount. Examples are Water Quality - Walker Road; New Developments - CVS, McDonald's, Wawa; Distribution Upgrades - Greenview; * Status and Comments provided by City Manager. * For Finance purposes projects are considered completed when placed in service and all charges have been processed. Community Water & Total Current Year Budget Funding Sources General Transportation Wastewater Electric CIP Budget Balance $ 113,156 $ - $ - $ - $ 113,156 Project Carry Forward Balances 88,083 - 953,238 850,736 2,729,628 Federal and/or State Grants 4,250,348 1,000,000 45,248 135,152 5,430,748 New Revolving Fund Loans - - 863,060 - 863,060 Carry Forward Construction Loan Balances - - 8,001,973 254,757 8,256,730 Bond Proceeds - - - 415,585 415,585 Impact Fees - - 758,821 - 758,821 Income from Sale of Assets - - - - - Parkland Reserve 36,872 - - - 36,872 Library Reserve & Contributions 3,363,732 - - 3,363,732 Transfer from Operating Funds 1,019,629 300,000 58,709 2,983,303 4,361,641 Interest Earned 10,900 - - 40,700 51,600 Total Funding Sources (Unaudited) $ 8,882,720 $ 1,300,000 $ 10,681,049 $ 4,680,233 $ 26,381,573 Page 1 of 5

City of Dover General Fund - Major CIP Projects November, 2010 TOTAL PROJECT - PAST, CURRENT & FUTURE BUDGETS CURRENT FISCAL YEAR Original Latest Project Project Current Revised Fiscal Project Project To Date Budget % Budget Fiscal Yr. Fiscal Yr. YTD % Budget Type Description Budget Budget Expenses Balance Spent Budget Budget Expenses Spent Status Comments 1 FY2009 Bid Pack A - constuction started \ Bid 2 M/G New Library Project $ 18,200,000 $ 24,679,934 $ 1,135,516 $ 23,544,418 4.6% $ 6,687,039 $ 7,630,663 $ 398,450 5.2% Started Pack B - bidding started. 3 Totals - FY09 $ 18,200,000 $ 24,679,934 $ 1,135,516 $ 23,544,418 4.6% $ 6,687,039 $ 7,630,663 $ 398,450 5.2% 4 5 FY2010 6 Pitts Center Addition 50,000 40,000 28,629 11,371 71.6% - 36,872 25,501 69.2% Complete Complete. 7 Totals - FY10 $ 50,000 $ 40,000 $ 28,629 $ 11,371 71.6% $ - $ 36,872 $ 25,501 69.2% 8 9 FY2011 10 Vehicles & Equipment $ 63,675 $ 63,675 $ 27,602 $ 36,073 43.3% $ 735,185 $ 735,185 $ 27,602 3.8% Started Vehicles being ordered. Core Law Enforcement Server 11 Replacement - 53,500 - 53,500 0.0% - 53,500 - 0.0% Started Specifications done. 12 Playground Improv Program - 15,000 - 15,000 0.0% 15,000 15,000 - 0.0% Complete BB Courts paved. 13 Skate Park - 30,000 - 30,000 0.0% 30,000 30,000 - 0.0% Not Started In discussions with equipment provider 14 Concrete Program 50,000 50,000 45,759 4,241 91.5% 50,000 50,000 45,759 91.5% Started Complete with contractor portion. 15 Transfer to CT Fund 300,000 300,000 - 300,000 0.0% 300,000 300,000 - 0.0% Started Transfer to Com Transp Fund - December 16 Downtown Security Cameras 31,500 31,500 - 31,500 0.0% 31,500 31,500 - 0.0% Started Council approval Jan 24th 17 Totals - FY11 $ 445,175 $ 543,675 $ 73,361 $ 470,314 13.5% $ 1,161,685 $ 1,215,185 $ 73,361 6.0% 18 19 Grand Totals $ 18,695,175 $ 25,263,609 $ 1,237,505 $ 24,026,104 4.9% $ 7,848,724 $ 8,882,720 $ 497,311 5.6% Legend M = Multi-year project - a project with a specific schedule to occur over multiple years. R = Recurring project - a project that begins and ends each fiscal year and is rebudgeted to start over each fiscal year. G = Grant funded project Page 2 of 5

City of Dover Community Transportation & General Fund Street Funds - Major CIP Projects November, 2010 TOTAL PROJECT - PAST, CURRENT & FUTURE BUDGETS CURRENT FISCAL YEAR Original Latest Project Project Current Revised Fiscal Project Project To Date Budget % Budget Fiscal Yr. Fiscal Yr. YTD % Budget Type Description Budget Budget Expenses Balance Spent Budget Budget Expenses Spent Status Comments 1 FY 2006 2 M Lincoln Park Center $ 400,000 $ 479,148 $ 415,223 $ 63,925 86.7% $ 121,891 $ 121,891 $ 57,966 47.6% Started Ongoing. 3 Totals $ 400,000 $ 479,148 $ 415,223 $ 63,925 86.7% $ 121,891 $ 121,891 $ 57,966 47.6% 4 5 FY 2007 6 E. Water Street Brick $ 65,000 $ 65,000 $ - $ 65,000 0.0% $ 65,000 $ 65,000 $ - 0.0% Specialty contract needed. 7 Totals $ 65,000 $ 65,000 $ - $ 65,000 0.0% $ 65,000 $ 65,000 $ - 0.0% 8 9 FY 2009 Trying to move this to Library Project if 10 Schutte Parking Lot $ 21,950 $ 21,950 $ - $ 21,950 0.0% $ 21,950 $ 21,950 $ - 0.0% State approves. 11 Turnberry Drive 40,000 40,000 3,900 36,100 9.8% 40,000 40,000 3,900 9.8% Curb work complete, paving in process. 12 Totals $ 61,950 $ 61,950 $ 3,900 $ 58,050 6.3% $ 61,950 $ 61,950 $ 3,900 6.3% 13 14 FY 2011 15 Washington Street $ 105,000 $ 105,000 $ 104,000 $ 1,000 99.0% $ 105,000 $ 105,000 $ 104,000 99.0% Complete. 16 Mitschner Road (incl. CDBG) 169,066 169,066 139,921 29,145 82.8% 169,066 169,066 139,921 82.8% In progress. 17 Delaware Ave 6,250 6,250 6,250 - 100.0% 6,250 6,250 6,250 100.0% Complete. 18 Oak Road Signage 11,875 11,875 - 11,875 0.0% 11,875 11,875 - 0.0% Just received. 19 Street & Alley Program 300,000 300,000 141,207 158,793 47.1% 300,000 300,000 141,207 47.1% In progress. 20 State Agreements not yet rec'd 458,968 458,968 - 458,968 0.0% 458,968 458,968 - 0.0% Agreements have not been received. 21 Totals $ 1,051,159 $ 1,051,159 $ 391,378 $ 659,781 37.2% $ 1,051,159 $ 1,051,159 $ 391,378 37.2% 22 23 Grand Totals $ 1,578,109 $ 1,657,257 $ 810,501 $ 846,756 48.9% $ 1,300,000 $ 1,300,000 $ 453,244 34.9% Legend M = Multi-year project - a project with a specific schedule to occur over multiple years. R = Recurring project - a project that begins and ends each fiscal year and is rebudgeted to start over each fiscal year. Page 3 of 5

City of Dover Water/Wastewater Improvement & Extension Fund - Major CIP Projects November, 2010 TOTAL PROJECT - PAST, CURRENT & FUTURE BUDGETS CURRENT FISCAL YEAR Original Latest Project Project % Approved Revised Fiscal % Project Project To Date Budget Budget Fiscal Yr. Fiscal Yr. YTD Budget Type Description Budget Budget Expenses Balance Spent Budget Budget Expenses Spent Status Comments 1 FY 2008 2 South Governors Ave. Water Main Upgrade $ 200,000 $ 200,000 $ 2,664 $ 197,336 1.3% $ - $ 197,336 $ - 0.0% Complete Done. 3 M 1.0 MG Elevated Water Storage Tower 4,196,600 2,590,000 10,379 2,579,621 0.4% - 193,377 3,756 1.9% Started Selecting Tank Model & Site; FY11 = Constr. 4 M Piney Point Well 398,800 665,000 57,383 607,617 8.6% - 162,525 4,908 3.0% Started DNREC permiting; FY11 = Constr. 5 M South Governors Ave. Sewer Main 300,000 291,000 13,561 277,439 4.7% - 279,244 1,805 0.6% Complete Done. 6 M/SL US 13 East Sanitary Sewer Interceptor 2,376,800 3,409,641 1,970,902 1,438,739 57.8% - 2,335,862 1,102,740 47.2% Started Functionally completed, some minor site restoration. 7 Totals - FY08 $ 7,472,200 $ 7,155,641 $ 2,054,889 $ 5,100,752 28.7% $ - $ 3,168,344 $ 1,113,210 35.1% 8 9 FY2009 10 M/SL Bayard Avenue $ 590,910 $ 590,910 $ 11,288 $ 579,622 1.9% $ - $ 584,420 $ 4,798 0.8% Started Material ordered. 11 M/SL East side N. State Street 868,707 877,596 146,957 730,639 16.7% - 847,700 117,954 13.9% Done Done. 12 M/SL Route 13 Water Main 1,058,700 1,035,898 137,256 898,642 13.2% - 967,801 13,259 1.4% Started With DelDOT. 13 R Water Quality Improvements FY09 $ 2,518,317 $ 2,504,404 $ 295,501 $ 2,208,903 11.8% $ - $ 2,399,921 $ 136,011 16.1% Started 14 15 M/SL DE State University Pumping Station Repl. $ 386,400 $ 386,400 $ 284,367 $ 102,033 73.6% - 240,324 138,652 57.7% Completed Done. 16 M/SL Fox Hall/Retreat Force Main Rerouting 133,100 139,245 238,789 (99,544) 171.5% - - 20,351 0.0% Completed Done. Overage covered by US 13 Interceptor. 17 M/SL Acorn Lane Pump Station Replace. 386,400 386,400 293,209 93,191 75.9% - 210,528 117,698 55.9% Completed Done. 18 Totals - FY09 $ 3,424,217 $ 3,416,449 $ 1,111,866 $ 2,304,583 32.5% $ - $ 2,850,773 $ 412,713 14.5% 19 20 FY2010 21 R Remote Control & Monitor Wells $ 55,000 $ 55,000 $ 23,104 $ 31,896 42.0% $ - $ 31,896 $ - 0.0% Complete Done. 22 M/SL Inflow/Infiltration Removal 1,800,000 1,799,668 1,400 1,798,268 0.1% - 1,798,447 179 0.0% Started Pre-construction inspections ongoing. 23 M Fox Hall Pump Station 427,900 52,000 25,317 26,683 48.7% 375,900 426,044 23,461 5.5% Started DNREC loan approved to Council for approval . 24 M Heatherfield Pumping Station Upgrade 220,400 40,000 26,543 13,457 66.4% 229,200 267,916 25,259 9.4% Started DNREC loan approved to Council for approval . 25 I Tar Ditch Interceptor Upgrade 518,230 518,230 7,851 510,379 1.5% - 516,781 6,402 1.2% Started Reviewing design 26 Various Pump Motor Replacements 45,248 45,248 - 45,248 0.0% - 45,248 - 0.0% Started Grant approved. Ordering begun. 27 Totals - FY10 $ 3,066,778 $ 2,510,146 $ 84,215 $ 2,425,931 3.4% $ 605,100 $ 3,086,332 $ 55,301 1.8% 28 29 FY2011 30 Misc. Distribution System Upgrade $ 60,000 $ 60,000 $ - $ 60,000 0.0% $ 60,000 $ 60,000 $ - 0.0% Started On-going as needed. 31 Wellhead Redevelopement Program 60,000 60,000 - 60,000 0.0% 60,000 60,000 - 0.0% Started Going out to bid. 32 Water Quality Improvements 500,000 500,000 - 500,000 0.0% 500,000 500,000 - 0.0% Not Started See above FY09. 33 M/SL Inflow/Infiltration Removal 500,000 500,000 - 500,000 0.0% 500,000 500,000 - 0.0% Started Will start after FY10 is done. 34 R Scada Technology Equip Upgrade 82,100 82,100 - 82,100 0.0% 82,100 82,100 - 0.0% Started Equimpment coming in. 35 Del State/Del Tech Force Main Rerouting 286,500 286,500 2,646 283,854 0.9% 286,500 286,500 2,646 0.9% Done Shifted completion to Interceptor. 36 Lepore Road Pump Station Replacement 52,000 52,000 1,579 50,421 3.0% 52,000 52,000 1,579 3.0% Started Design with Braun. 37 R Misc. Sewer System Improvements 35,000 35,000 35,152 (152) 100.4% 35,000 35,000 35,152 100.4% Started Ongoing as needed. 38 Totals - FY11 $ 1,575,600 $ 1,575,600 $ 39,377 $ 1,536,223 2.5% $ 1,575,600 $ 1,575,600 $ 39,377 2.5% 39 40 Grand Totals $ 15,538,795 $ 14,657,836 $ 3,290,348 $ 11,367,488 22.4% $ 2,180,700 $ 10,681,049 $ 1,620,601 15.2% Legend M = Multi-year project - a project with a specific schedule to occur over multiple years. R = Recurring project - a project that begins and ends each fiscal year and is rebudgeted to start over each fiscal year. SL = State Loan Project - construction phase is financed I = Impact Fee Financed Project Page 4 of 5

City of Dover Electric Improvement & Extension Fund - Major CIP Projects November, 2010 TOTAL PROJECT - PAST, CURRENT & FUTURE BUDGETS CURRENT FISCAL YEAR Original Latest Project Project % Current Revised Fiscal % Project Project To Date Budget Budget Fiscal Yr. Fiscal Yr. YTD Budget Type Description Budget Budget Expenses Balance Spent Budget Budget Expenses Spent Status Comments 1 FY 2006 2 M/B 69 KV feeders 3 and 4 $ 11,060,000 $ 8,693,782 $ 8,761,762 $ (67,980) 100.8% $ - $ 4,242 $ 4,242 100.0% Completed In service. 3 M/S Governor's Avenue Rebuild 1,268,450 2,068,260 547,247 1,521,013 26.5% - 250,000 26,786 10.7% Completed Done. 4 Totals - FY06 $ 12,328,450 $ 10,762,042 $ 9,309,008 $ 1,453,034 86.5% $ - $ 254,242 $ 31,028 12.2% 5 6 FY 2008 7 Unit 3 Turb Bearing Fire Protect Deluge $ 50,000 $ 50,000 $ 33,323 $ 16,678 66.6% $ - $ 50,000 $ 33,323 66.6% Started Completion in December. 8 Totals - FY08 $ 50,000 $ 50,000 $ 33,323 $ 16,678 66.6% $ - $ 50,000 $ 33,323 66.6% 9 10 FY2010 11 B Vansant CT Mark IV Control (Replmnt) $ 700,000 $ 610,000 $ 424,620 $ 185,380 69.6% $ - $ 202,363 $ 137,983 68.2% Completed In service. 12 B McKee Run Entrance Road 240,000 240,000 154,722 85,278 64.5% - 154,244 154,244 100.0% Completed In service. 13 Work Mgmt. System Replacement 85,000 85,000 26,577 58,423 31.3% - - 9,859 0.0% Completed Done. 14 Photovoltaic Install @ McKee Run - - 65,065 (65,065) 0.0% - 65,065 65,065 100.0% Completed In service. 15 M/B Mid City Substation 1,488,461 993,711 975,819 17,892 98.2% - 1,087 1,087 100.0% Completed In service. 16 S LED Lighting Replacement 70,087 70,087 - 70,087 0.0% - 70,087 - 0.0% Started Installing on Division Street. 17 B Crossgates 396,904 543,075 524,391 18,684 96.6% - - 1,440 0.0% Completed Done. Done. This project is over budget due to having addtiional bond 18 B Buchanan Acres 406,000 865,144 1,207,967 (342,823) 139.6% - 53,648 129,502 241.4% Completed proceeds to spend. 19 20 Totals - FY10 $ 3,386,452 $ 3,407,017 $ 3,379,162 $ 27,855 99.2% $ - $ 546,494 $ 499,180 91.3% 21 22 FY2011 23 V hi ehicles & E i quipment $ 1 8 58,200 $ 1 8 58,200 $ 20,905 $ 137,295 13.2% $ 1 8 58,200 $ 1 8 58,200 $ 20,905 13.2% Started V hi echicles being dordered. 24 Substation PT & CT Replacement 256,218 256,218 142,144 114,074 55.5% 256,218 256,218 142,144 55.5% Started Material being received. 25 Replace of 69 kV Breakers 100,000 100,000 7,220 92,780 7.2% 100,000 100,000 7,220 7.2% Started Installing started. 26 Lighting Rehabilitation 100,000 100,000 107,644 (7,644) 107.6% 100,000 100,000 107,644 107.6% Started Started Foxhall. 27 Walker Road OH Conversion 350,511 350,511 - 350,511 0.0% 350,511 350,511 - 0.0% Dropped Funds reappropriated. 28 Engineering Misc Equipment Replmnt 40,000 40,000 19,522 20,478 48.8% 40,000 40,000 19,522 48.8% Started Ongoing as needed. 29 Substation Batteries 24,500 24,500 23,489 1,011 95.9% 24,500 24,500 23,489 95.9% Started Ongoing as needed. 30 UG Transformers 120,536 120,536 60,031 60,505 49.8% 120,536 120,536 60,031 49.8% Started Ongoing as needed. 31 UG Conductors 529,464 529,464 127,764 401,700 24.1% 529,464 529,464 127,764 24.1% Started Ongoing as needed. 32 Meters 50,000 50,000 44,224 5,776 88.4% 50,000 50,000 44,224 88.4% Started Ongoing as needed. 33 Unit 3 Cooling Tower Fill 353,338 353,338 304,791 48,547 86.3% 353,338 353,338 304,791 86.3% Completed Done. 34 Units 1 & 2 Cooling Tower 218,730 218,730 63,470 155,260 29.0% 218,730 218,730 63,470 29.0% Completed Done. 35 Unit 3 Tubine Inspection 348,000 348,000 15,709 332,291 4.5% 348,000 348,000 15,709 4.5% Deferred Scoping. Funding reallocated to Unit 1 36 Unit 3 Aux System Components 113,000 113,000 - 113,000 0.0% 113,000 113,000 - 0.0% Deferred repair. 37 Plant Misc Equipment Replmnt 71,000 71,000 38,203 32,797 53.8% 71,000 71,000 38,203 53.8% Started Ongoing as needed. 38 Unit 3 Stack Repairs 25,000 25,000 - 25,000 0.0% 25,000 25,000 - 0.0% Deffered Funding reallocated Unit 1 repair. Scoping, some funding 39 Units 1 & 2 Life Extension 276,000 276,000 8,126 267,874 2.9% 276,000 276,000 8,126 2.9% Started reallocated Unit 1 repair Emergency repair; Budget 40 Unit 1 Turbine Outage - - 424,747 (424,747) 0.0% - - 424,747 0.0% Completed amendment approved in Dec. 41 Unit 3 FD & ID FAN CNRL UP 45,000 45,000 - 45,000 0.0% 45,000 45,000 - 0.0% Not Started New. 42 Unit 3 DCS Com & Software 30,000 30,000 - 30,000 0.0% 30,000 30,000 - 0.0% Not Started New. 43 Unit 2 Boiler Inspection & Repair - - - - 0.0% - 220,000 71,467 32.5% Not Started New. 44 Distribution Upgrades 400,000 400,000 134,478 265,522 33.6% 400,000 400,000 134,478 33.6% Started Ongoing as needed. 45 $ 3,609,497 $ 3,609,497 $ 1,542,466 $ 2,067,031 42.7% $ 3,609,497 $ 3,829,497 $ 1,613,933 42.1% 46 47 Grand Totals $ 19,374,399 $ 17,828,556 $ 14,263,959 $ 3,564,597 80.0% $ 3,609,497 $ 4,680,233 $ 2,177,463 46.5% Legend M = Multi-year project - a project with a specific schedule to occur over multiple years. R = Recurring project - a project that begins and ends each fiscal year and is rebudgeted to start over each fiscal year. B = Bonded Project S = State fully or partially reimbursed project Page 5 of 5