Council Committee of the Whole Meeting Packet Document

CITY OF DOVER, DELAWARE COUNCIL COMMITTEE OF THE WHOLE MEETING Tuesday, December 10, 2024 at 6:00 PM City Hall Council Chambers, 15 Loockerman Plaza, Dover, Delaware AGENDA Public comments are welcomed on any item and will be permitted at the appropriate time. When possible, please notify the City Clerk (302-736-7008 or email at cityclerk@dover.de.us) should you wish to be recognized. VIRTUAL MEETING NOTICE This meeting will be held in City Hall Council Chambers with electronic access via WebEx. Public participation information is as follows: Dial: 1-650-479-3208 Link: https://tinyurl.com/2tc78pxh Event number: 2531 051 2696 Event password: DOVER (if needed) If you are new to WebEx, get the app now at https://www.webex.com/ to be ready when the meeting starts. CALL COUNCIL COMMITTEE OF THE WHOLE MEETING TO ORDER ADOPTION OF AGENDA COUNCIL REPORTS - NOVEMBER 2024 1. First District 2. Second District 3. Third District 4. Fourth District 5. At-Large 6. Council President Anderson 1

COUNCIL COMMITTEE OF THE WHOLE MEETING - December 10, 2024 PAGE 2 LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE ADOPTION OF THE AGENDA 1. Discussion - Additional Information Regarding the State of Delaware Pension (Naomi Poole, Human Resources Director, David S. Hugg, III, City Manager, and Stephanie Tatman, State of Delaware Deputy Pension Administrator) (Committee Action Not Required) 2. Annual Review of the Investment Policy (Patricia Marney, Controller/Treasurer) (Staff Recommendation: Approve the policy with no changes) 3. Sole Vendor Purchase Approval for the HVAC System Upgrade- Dover Police Department (Chief Johnson) (Staff Recommendation: Approve the Sole Vendor Purchase from Service Unlimited, New Castle, DE.) ADJOURNMENT OF THE LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE MEETING UTILITY COMMITTEE ADOPTION OF THE AGENDA 1. Annual Engineering Consultant's Report on the Operation and Maintenance of the Electric System - Fiscal Year 2025 (Patricia Marney, Controller/Treasurer, and Paul Waddell, Electric Director) (Staff Recommendation: Acceptance of the report) ADJOURNMENT OF THE UTILITY COMMITTEE MEETING ADJOURNMENT OF THE COUNCIL COMMITTEE OF THE WHOLE THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. PURSUANT TO 29 DEL. C. §10004(e)(2), THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS, WHICH ARISE AT THE TIME OF THE MEETING 2

Item 1. Delaware Public Employees’ Retirement System County & Municipal General Pension Plan Presented by the State of Delaware Office of Pensions 3

Item 1. Purpose  Overview of presentation given on 11/6.  Items of contention.  Healthcare  Prior Service Buy-In  Election Option  Next Steps  Resolution was already approved and repealed  The resolution is subject to approval by the Board of Pension Trustees, and is an irrevocable election per 29 Del. C. Ch. 55A, §5555 4

Item 1. Pension Contributions  Member Contributions  3% contribution deducted after first $6,000 of earnings each calendar year  Employer Contributions  FY 2025 – 5.70% 5

Item 1. Retirement Eligibility – Unreduced Service Pension  30 years of pension credited service at any age  Age 60 with at least 15 years of pension credited service  Age 62 with at least 5 consecutive years of pension credited service 6

Item 1. Retirement Eligibility – Reduced Service Pension  Age 55 with at least 15 years of pension credited service  Reduced 0.4% for each month under Age 60 7

Item 1. Retirement Eligibility – Vested Pension  Must have 5 consecutive years of pension credited service  Pension is effective first of the month following 62nd birthday 8

Item 1. Unified Pension May combine service in the following Pension Plans with service in the C/M General Pension Plan provided you are not collecting a pension from them  State Employees’  New State Police  County & Municipal Police/Firefighters 9

Item 1. Unified Pension  To retire and collect a pension immediately, the employee must qualify (with or without unification) in the plan they are actively employed.  If the employee qualifies to retire immediately from their active plan, they may also qualify to retire immediately from their prior plan through unification.  If after calculating unified time, they do not meet eligibility requirements for an immediate retirement, the prior plan will be vested until eligible to collect. 10

Item 1. Unified Pension Example  Age 60  State Employees’ Pension Plan: 5 years of prior service  General: 10 years of active service  Eligible to collect pension benefit from the General Plan due to having 15 years of unified service at age 60.  Original hire date in the State Employees’ Plan would determine eligibility to collect immediately or vest.  Pension benefit is calculated using the time accrued exclusively in each plan. 11

Item 1. Employee Buy-In Options  Cannot be purchased until employee has met retirement eligibility  Approved medical leaves of absence  Sabbatical leave of absence*  Can be used to establish eligibility  Actuarial (Ex: Military, Prior Service with the City of Dover)** * Buy-in options must be approved and/or verified by the Office of Pensions prior to retirement ** 5-year limitation 12

Item 1. Employer Buy-In Options  Prior to submitting a resolution, the City of Dover can request a prior service cost to purchase employees previous years of service with the City.  You will submit employee salary and demographics to our office. 3 increments can be requested (Ex:1 year prior service, 5 year prior service, all prior service).  No limitation on the amount of prior service that can be purchased.  Any prior service purchased will help the employee meet eligibility. 13

Item 1. Health, Dental, and Vision Insurance • Eligible to participate in the group health, dental and vision insurance plans offered by the State of Delaware. • Pay the total cost (Pensioner and State Share) of the health insurance. • A member eligible for a vested pension in another plan OR receiving a pension in another plan may be eligible for a portion of the State Share paid by the State. • The City of Dover can maintain their own healthcare plan. 14

Item 1. Current Rates - Medical 15

Item 1. Current Rates – Dental and Vision 16

Item 1. Questions? 17

Item 2. CITY OF DOVER, DELAWARE ACTION FORM PROCEEDING: Council Committee of the Whole (Leg & Fin) DEPARTMENT OF ORIGIN: Finance office SUBMITTED ON: December 4, 2024 PREPARED BY: Patricia Marney, Controller, Treasurer REVIEWED BY: SUBJECT: City of Dover’s Investment Policy TIMETABLE: Review and Approval. RELATED PROJECT: EXHIBITS Exhibit – Investment Policy STAFF RECOMMENDATION: Approve policy with no changes. BACKGROUND AND ANALYSIS: Recommended approval and continuance of existing Investment Policy, last updated November 14, 2023. Change Tracking – See Page(s) 11 and 12 1. Original approval by City Council - November 14, 1988 2. Revised policy approved by City Council - March 7, 2005 3. City Council Approved with No Changes – April 14, 2008 4. Revised policy approved by City Council – July 25, 2011 5. Revised policy approved by City Council – August 12, 2013. 6. Revised policy approved by City Council – September 8, 2014 7. Revised policy approved by City Council – October 10, 2016 8. Revised policy approved by City Council – October 23, 2017 9. City Council Approved with No Changes – December 10, 2018 10. Revised policy approved by City Council – December 9, 2019 LEGEND (Cont.) 11. City Council Approved with No Changes – October 12, 2020 12. City Council Approved with No Changes – October 25, 2021 13. No documented changes in 2022 14. Revised policy approved by City Council – November 14, 2023 15. Presented to City Council for approval – December 9, 2024 18

Item 2. City of Dover, DE Investment Policy Statement Dated November 14xx, 2023 19

Item 2. 1.0 Governing Authority It is the policy of the City of Dover to invest public funds under its control in a manner that will provide the highest investment return consistent with the maximum safety of principal, while meeting cash flow needs of the City. The investment program shall conform to all state and local statutes governing the investment of public funds. 2.0 Scope This Investment Policy Statement (the “Policy”) applies to all financial assets of the City of Dover for which the City retains direct or indirect daily control. Funds for which the City has retained outside fund manager(s) shall also be governed by this Policy or, in the case of bond proceeds, related governing bond documents. 2.1 Accounts 2.1.1 Cash and Liquidity Accounts: The majority of the City’s cash balance available for investment is maintained in the cash and liquidity accounts. These accounts will be managed and invested by investment managers, selected by the City Council through competitive bid, in order to maximize the return to the City while, at the same time, providing for safety of principal and sufficient liquidity for the City to meet its cash needs. The City will manage its short-term investments to ensure sufficient liquidity and prevent their premature sale for the purpose of covering expenditures. Short-term investments should mature at face value in sufficient amounts to meet any liquidity needs. 2.1.2 Reserve Cash (Intermediate) Account: To the extent cash is not expected to be needed on short notice, the City shall invest such funds in the Reserve Cash Account. This fund shall be managed and invested by an investment manager or managers, selected by the City Council after a competitive bid, in order to maximize the return on said money to the City while providing for the safety of principal. All of the City of Dover’s funds are accounted for in its Annual Comprehensive Financial Report. Those funds to which this Policy applies include (excluding the Deferred Compensation Plan, Pension and OPEB Trusts): 2.2 Funds 2.2.1 General Fund 2.2.2 Capital Project Funds 2.2.3 Special Revenue Funds 2.2.4 Enterprise Funds 2.2.5 Internal Service Funds 2.2.6 Any new fund created by the City Council, unless specifically exempted 3.0 Objectives The primary objectives of the City of Dover’s investment activities, in order of importance shall be: Investment Policy Page 2 of 17 20

Item 2. 3.1 Safety Preservation of principal is the foremost objective of the investment program. To attain this objective, funds shall be diversified among securities of high credit quality and liquidity, so that risk of loss of principal is minimized. 3.2 Liquidity The City’s investments shall be made for such periods as to enable the City to meet all operating requirements that may be scheduled or reasonably anticipated. 3.3 Return on Investments A goal of the investment program shall be to maximize investment return within the constraints of Sections 3.1 and 3.2. 4.0 Delegation of Authority Authority to manage the City of Dover’s investment program is derived from this Policy, which is approved by City Council, and “Dover Code, PART I, Subpart A, Article II, Section 17" (attachment B) which states in part that “The Controller/Treasurer shall be the custodian of all of the City funds.” The City’s Controller/Treasurer shall: 1) Review this Policy annually and recommend changes, if any, to City Council; 2) Be charged with implementing the Policy, and may delegate authority to make investments to an investment advisor. The Controller/Treasurer shall be responsible for all investment transactions and shall establish controls to regulate the activities of the investment advisor, if any. 3) Ensure that records of the City’s investment activities are kept for three years; successful audit. 5.0 Prudence, Ethics and Conflicts of Interest Any official of the City or investment advisor/manager empowered to make investments on behalf of the City of Dover shall comply with the following: 5.1 “Prudent Person” Rule Investment decisions shall be made with the judgment and care which persons of reasonable intelligence, under circumstances prevailing at the time the investment is made, would exercise in the management of their own investments assuming that their objectives are those shown in Section 3.0 of this policy. 5.2 Ethics and Conflict of Interest The delegate authorized to make City investments shall act at all times in an ethical manner, and shall not engage in activity that could impair or be perceived to impair their ability to make impartial investment decisions. They shall disclose to the Mayor and City Council any material interests in financial institutions with which the City has financial dealings, and which may be related to the performance of the investment program. Employees and officers shall refrain from undertaking personal investment transactions with the same individual(s) with whom business is conducted on behalf of the City. Investment Policy Page 3 of 17 21

Item 2. 6.0 Authorized Institutions and Dealers All broker/dealers that desire to become qualified for investment transactions with the City shall meet the following: 1. Primary dealers and regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule) 2. Capital of at least $25,000,000 or capital of $5,000,000 for firms incorporated in the State of Delaware 3. Registered as a dealer under the Securities Exchange Act of 1934 4. Member of the Financial Industry Regulatory Authority (FINRA) 5. Registered to sell securities in the State of Delaware 6. Engaged in the business of effecting transactions in U.S. government, federal agency, and corporate securities for at least five (5) consecutive years To the extent the City utilizes the services of an outside Investment Advisor, it shall be the responsibility of the Investment Advisor to maintain an approved list of brokers. 7.0 Safekeeping and Custody To ensure that securities are deposited in an eligible financial institution prior to the release of funds, all trades of marketable securities will be executed by delivery vs. payment (“DVP”). Further, all securities will be held by an independent third-party custodian, in the name of the City, and evidenced by safekeeping receipts in the City’s name. The custodian shall provide daily confirmation of held securities as well as a monthly transactions and holdings report. 8.0 Authorized Investments and Trading of Securities The Controller/Treasurer or authorized delegate may invest only in the types of securities listed below. The maximum stated maturity of any security shall be limited to 10 years at settlement, unless otherwise stated. The maximum average maturity of the portfolio shall be seven years. For asset backed and Agency mortgage backed securities, the maximum maturity shall be defined as the weighted average life (“WAL”). WAL is a convention that estimates the expected weighted amount of time, in years, for the principal amount of an issue to be fully paid. For Agency mortgage backed securities, WAL shall be limited to 10 years, measured at the settlement date, provided by Bloomberg Financial Markets. For asset backed securities, the average life must not exceed two years, except for such securities that are subject to periodic reset of coupon or interest rate - - these may have an average life not to exceed three years. 8.1 United States Government Securities Marketable securities issued by the U.S. Government and supported by the full faith and credit of the U. S. Treasury either by statue or an opinion of the attorney general of the United States. The maximum maturity shall be limited to 10 years. Up to 100% of the portfolio may be invested in this sector. 8.2 Government Agency Securities Debt securities issued by government-sponsored enterprises (“GSE”), federal agencies, federal financing banks, and instrumentalities of the U.S. Government. Investment Policy Page 4 of 17 22

Item 2. The maximum maturity shall be limited to 10 years. Up to 50% of the portfolio may be invested in this sector, with a maximum of 20% in any one issuer. 8.3 Certificates of Deposit and Time Deposits 8.3.1 Domestic Institutions: Issued or endorsed by a domestic bank, or a savings and loan association, organized and supervised under the laws of the United States and denominated in U.S. dollars; provided, however, that deposits are fully insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). If not insured by the FDIC: ➢ The banking institution must have assets of not less than $5 billion; and ➢ Issuers must have a short-term rating in the highest category by Standard & Poor’s, Moody’s, or Fitch and a long-term rating of at least the “A” category by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. The maximum maturity of any investment in this sector shall be limited to 10 years at trade settlement. This sector shall not exceed 50% of the total portfolio. No single issuer shall exceed 5% of the City’s portfolio. 8.3.2 Delaware-Domiciled Institutions: Issued by or endorsed by any bank or savings association domiciled in the State of Delaware and organized and supervised under federal or State of Delaware banking laws which does not meet the requirements of Section 8.3.1 hereto; provided, however, that: ➢ For each of the latest two years, the bank or association has had a return on total average assets of 0.50% or greater and an average capital ratio (defined as total equity capital to total assets) of at least 1 to 20, or the instrument is secured as set forth in Section 9, “Collateralization of City Deposits,” hereto; and ➢ Not more than the lesser of $10 million or 25% of an issuer’s total equity capital, may be invested in any one issuer. (Investments due to mature in one business day may be excluded from the computation of this percentage.) ➢ The Board expressly affirms that, consistent with these guidelines, Delaware banks and savings associations should be considered as a source of investment. ➢ The maximum stated maturity of any investment in this sector shall be limited to 10 years at time of purchase. This sector shall not exceed 20% of the total portfolio. No single issuer shall exceed 5% of the City’s portfolio. 8.4 Corporate Debt Instruments Such instruments include commercial paper bankers’ acceptances, and non- convertible senior debt securities (bonds and debentures). 8.4.1 Corporate securities must be denominated/issued in US dollars. Many foreign corporations issue debt/securities in the US market, in US dollars. Investment Policy Page 5 of 17 23

Item 2. 8.4.2 No single issuer shall exceed 5% of the City’s portfolio. 8.4.3 Commercial Paper shall be limited to a final maturity of 270 days. This sector shall not exceed 25% of the total portfolio. Issuers shall be rated in the highest short-term category by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. 8.4.4. Bankers’ Acceptances shall be limited to a final maturity of 365 days. This sector shall not exceed 25% of the City’s Portfolio. Issuers shall be rated in the highest short-term rating by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. 8.4.5 Corporate bonds and debentures shall be limited to a final maturity of 10 years. This sector shall not exceed 50% of the total portfolio. Issuers shall hold a long-term rating of at least the “A” category by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. 8.5 Repurchase Agreements The underlying collateral shall consist of U.S. government and/or GSE securities provided, however, that: 8.5.1 All repurchase agreements must be governed by a written master repurchase agreement; 8.5.2 Agreements will be entered into only with respect to underlying securities in which the investment manager may otherwise invest as described above, and only with a recognized U.S. Government/broker or a bank which meets the requirements set out under paragraph Section 8.3.1 or 8.3.2 above; 8.5.3 In the case of repurchase collateral held in book-entry form in the Federal Reserve System, all deliveries of securities must be made, for the transfer thereof, through the Federal Reserve book-entry system to the account designated by the investment manager for such purpose. Securities held in certificated form must be delivered to the investment manager or a custodian as directed by the investment manager. 8.5.4 Any collateral employed under this paragraph shall be counted towards the applicable maximum limits set forth within these guidelines for such type of investment, and such collateral shall be valued at market at not less than 103 percent of the maturity value of the agreement and marked-to-the-market as requested by the investment manager. 8.5.5 Repurchase agreements shall be limited to a maximum maturity of 90 days from date of purchase. This sector shall not exceed 50% of the total portfolio. No single issuer shall exceed 25% of the City’s portfolio. 8.6 Registered Investment Companies (Money Market Funds) No single fund shall exceed 25% of the City’s portfolio. Money market funds shall be rated AAA by Standard & Poor’s. A current prospectus must be obtained before investing in any money market fund, and current holdings reports must be maintained at least each month. 8.7 Mortgage-Backed Securities Mortgage-backed securities issued by the following: Government National Investment Policy Page 6 of 17 24

Item 2. Mortgage Association (GNMA), Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Association (FHLMC). This sector, combined with the asset backed security sector, shall not exceed 10% of the total portfolio. 8.8 Asset Backed Securities These investments include auto loan receivables, credit card receivables, home equity loans, and manufactured housing loans. These can be fixed or floating rate and must be rated in the highest long-term category by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. Average life of the security should not exceed two years from the date of settlement. This sector, combined with the mortgage-backed security sector, shall not exceed 10% of the City’s portfolio. No single issuer shall exceed 5% of the City’s portfolio. 8.9 Municipal Obligations Taxable and tax-exempt securities issued by state and local governments and public authorities in the United States. The maximum stated maturity of any investment in this sector shall be limited to 10 years at time of purchase. This sector shall not exceed 20% of the City’s portfolio. No single issuer shall exceed 5% of the City’s portfolio. Issuers shall be rated in at least the “A” category by Standard & Poor’s, Moody’s, or Fitch by at least two NRSROs. Additionally, Issuers in the short term market (under one year) shall be rated at a minimum of “mig-1”, “f1” or “sp-1” for Moody’s, Fitch and Standard &Poor’s by at least two NRSROs. 8.10 State of Delaware Investments Pool 8.10.1 Delaware Local Government Investment Pool (DELGIP) -The investment in this pool is permitted in relation to the City's cash flow and the guidelines set forth by the State of Delaware. The investment in this pool will not exceed 25% of the total funds available and will be monitored by the City's Finance Department on a monthly basis. 8.10.2 Delaware Local Government Retirement Investment Pool (DELRIP) The investment in this pool is permitted in relation to the City's Post-Retirement Benefits Fund. The investment in this pool will not exceed 25% of the total funds available and will be monitored by the City's Finance Department on a monthly basis. 8.11 Trading Securities The Controller/Treasurer is hereby authorized to sell securities prior to their stated maturity date in the following circumstances: 1. A security with declining credit may be sold prior to its maturity to minimize loss of principal; 2. A security swap may be executed if it would improve the quality, yield, or target duration of the portfolio; 3. Securities may be sold to provide needed liquidity. 8.12 Internal Control on such transactions 8.12.1 An investment report will be provided to the City on a quarterly basis. 8.12.2 All investment reporting documents will be provided to the independent auditors. 8.12.3 Investment records will be kept by the City for three (3) years; successful Investment Policy Page 7 of 17 25

Item 2. audit. 8.12.4 The trading shall not involve any hedge, derivatives and/or borrowing funds for trading purposes. Investment Policy Page 8 of 17 26

Item 2. A summary of permitted investments is below: Investment Sector Issuer Maturity Credit Quality Type Limit Limit Limit Minimum United States Government 100% 100% 10 Years N/A Securities Government Agency 50% 20% 10 Years N/A Securities Mortgage-Backed Securities N/A 10 Year WAL N/A Combined 10% limit Highest long-term rating by Fitch, Asset Backed Securities 5% 2 Year WAL Moody's or S&P by at least two NRSROs Long-term rating of at least “A” by S&P, Moody’s, or Fitch For issuers in short Municipal Obligations 20% 5% 10 Years term market, rating of at least “mig-1”, “ f1” or “sp-1” for Moody’s, Fitch and S&P FDIC-Insured Deposits 25% 5% 10 Years N/A Highest short-term rating by Fitch, Moody's or S&P. Certificates of Deposit and Long-term rating of at Time Deposits (not insured 50% 5% 10 Years least “A” by S&P, by FDIC) Moody’s, or Fitch, rated by at least two NRSROs Delaware-Domiciled 20% 5% 10 Years N/A Institutions Highest short-term rating by Fitch, Commercial Paper 25% 5% 270 Days Moody's or S&P by at least two NRSROs Highest short-term rating by Fitch, Bankers’ Acceptances 25% 5% 365 Days Moody's or S&P by at least two NRSROs Long-term rating of at Corporate Bonds and least “A” by S&P, 50% 5% 10 Years Debentures Moody’s, or Fitch by at least two NRSROs Repurchase Agreements 50% 25% 90 days N/A Registered Investment Companies (Money Market 100% 25% N/A AAAm by S&P Funds) Delaware Local Government 25% N/A N/A N/A Investment Pool Investment Policy Page 9 of 17 27

Item 2. Delaware Local Government 25% N/A N/A N/A Retirement Investment Pool 9.0 Collateralization of City Deposits If the City deposits funds in any financial institution, those funds will be subject to the following collateralization requirements. The financial institution shall: 9.1 Collateralize the City’s daily ledger balance(s) if, for any quarter during the most recent eight quarters the bank has not met both of the following two criteria: ➢ Return on total average assets of 0.50 percent or greater. ➢ Average capital ratio (total equity to total assets) of 5.00 percent or greater. 9.2 If either criterion in paragraph 9.1 is not satisfied collateral must be pledged and shall consist of one or more of the following securities: ➢ U.S. Government securities ➢ U.S. Government agency securities ➢ Federal Home Loan Board letters of credit ➢ State of Delaware securities ➢ Mortgage backed securities as referenced in Section 8.7 ➢ Securities of a political subdivision of the State of Delaware with a Moody’s rating of “A” or better 9.3 Ensure that the securities pledged as collateral (except for Federal Home Loan Board letters of credit) have a market value equal to or greater than 102 percent of the ledger balance(s) in the account(s) marked to market each day. 9.4 Ensure that securities pledged as collateral are housed at the Federal Reserve Bank or a mutually agreed upon third party depository. (The trust department of the winning vendor will not be acceptable.) 9.5 Provide reports on a monthly basis to the City Finance Department detailing the collateral pledged. 9.6 Provide a Call Report (Consolidated Report of Condition and Income, FFIEC 031) on a quarterly basis to the City Finance Department. 10.0 Policy Considerations If securities owned by the City are downgraded by either Standard & Poor’s, Fitch or Moody’s to a level below the quality required by this Policy, it shall be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If a security is downgraded two grades below the level required by the Policy, the security shall be sold immediately. If a security is downgraded one grade below the level required by this Policy and matures Investment Policy Page 10 of 17 28

Item 2. within 6 months, the security may be held to maturity. The Controller/Treasurer may determine to sell the security if it is determined that there is a probability of default prior to maturity. If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the Controller/Treasurer. 11.0 Internal Controls The Controller/Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse. The Controller/Treasurer shall also establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following: ➢ Control of collusion ➢ Separation of transaction authority from accounting and recordkeeping ➢ Custodial safekeeping ➢ Prohibition of physical delivery securities ➢ Clear, written delegation of authority to subordinate staff members ➢ Written confirmation of transactions for investments and wire transfers 12.0 Performance Standards The City of Dover’s investment decisions shall be made with the objective of obtaining a rate of return commensurate with the investment risk constraints and the cash flow needs. On a quarterly basis, the Controller/Treasurer shall compare the City’s portfolio against the Merrill Lynch 0-5 Year U.S. Treasury Index, in terms of time-weighted total return and average duration for the period under review. 13.0 Reporting At the end of each fiscal year, the Controller/Treasurer will include in the Annual Comprehensive Financial report the following: ➢ Listing of individual securities held as of last day of reporting period, grouped by sector ➢ Par, market, and amortized cost values of each security ➢ Coupon, current yield, and final stated maturity date of each security 14.0 Investment Policy Adoption The City of Dover’s investment policy will be adopted by the City Council after review and recommendation of the Legislative and Finance Committee. The policy will be reviewed at least once every year by the Legislative and Finance Committee, which is charged with considering the existing policy and any recommendations to modify the policy. Any modifications to the policy must be approved by the City Council. LEGEND 1. Original approval by City Council - November 14, 1988 2. Revised policy approved by City Council - March 7, 2005 3. City Council Approved with No Changes – April 14, 2008 4. Revised policy approved by City Council – July 25, 2011 Investment Policy Page 11 of 17 29

Item 2. 5. Revised policy approved by City Council – August 12, 2013. 6. Revised policy approved by City Council – September 8, 2014 7. Revised policy approved by City Council – October 10, 2016 8. Revised policy approved by City Council – October 23, 2017 9. City Council Approved with No Changes – December 10, 2018 10. Revised policy approved by City Council – December 9, 2019 LEGEND (Cont.) 11. City Council Approved with No Changes – October 12, 2020 12. City Council Approved with No Changes – October 25, 2021 13. No documented changes in 2022 14. Revised policy approved by City Council – November 14, 2023 15. Presented to City Council for approval – December 9, 2024 Investment Policy Page 12 of 17 30

Item 2. ATTACHMENT A GLOSSARY AGENCIES: Federal agency securities, otherwise known as “Government Sponsored Enterprises.” CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large denomination CD's are typically negotiable. BANKERS ACCEPTANCE: A short-term credit investment which is created by a non- financial firm and whose payment is guaranteed by a bank. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs. Maturities typically range from one (1) to 270 days. ANNUAL COMPREHENSIVE FINANCIAL REPORT ( ACFR): The official annual report for the City of Dover. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. CORPORATE BONDS: A debt security issued by a corporation based in the United States of America. Such bonds usually have a par value of $1,000, have a term maturity, and are traded on a major exchange. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns, in an attempt to limit risk. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. Investment Policy Page 13 of 17 31

Item 2. FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-a-vis member commercial banks. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FMHM mortgages. The term "passthroughs" is often used to describe Ginnie Mae's. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumable be purchased or sold. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MORTGAGE-BACKED SECURITIES (MBS): An investment instrument that represents ownership of, and is backed by, an individual interest in a pool of mortgages such as those issued by Ginnie Mae or Freddie Mac. Principal and interest from the individual mortgages is used to pay principal and interest on the MBS. MUNICIPAL NOTES AND BONDS: Securities issued by a state, city, or local government to finance operations or special projects. NATIONALLY RECOGNIZED STATISTICAL RATINGS ORGANIZATION (NRSRO): A credit rating agency that provides an assessment of the creditworthiness of a firm or financial instrument(s) that is registered and approved by the Securities and Exchange Commission (SEC) Investment Policy Page 14 of 17 32

Item 2. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state--the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: A measure of worth, either at security or aggregate portfolio level, over a period of time. There are many return conventions, including but not limited to yield to maturity at cost, yield to maturity at market, yield to worst, time weighted total return, dollar weighted total return. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money, that is, increasing bank reserves. REVERSE REPURCHASE AGREEMENT: The purchase of a security by a dealer with the agreement to sell it back to the seller at a fixed price at a later date. Typically used by owners of securities to finance short-term needs without having to liquidate the security. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. TIME DEPOSITS: A savings account or CD held for a fixed term or with the understanding that the customer can withdraw only by giving advanced notice. TREASURY BILLS: A short-term (less than one year) non-interest bearing discount security issued by the U.S. Treasury department to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than 10 years. TREASURY NOTES: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1: also called net capital rule and net capital ratio. Investment Policy Page 15 of 17 33

Item 2. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. VARIABLE RATE MASTER DEMAND NOTES: A floating rate security with initial maturities and indexed rates chosen by the investor. The interest rate is adjusted periodically, usually off a standard such as that prevailing on a Treasury Bill or the prime interest rate. YIELD: The rate of annual income return on an investment, expressed as a percentage. INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. Investment Policy Page 16 of 17 34

Item 2. ATTACHMENT B Dover, Delaware, Code of Ordinances >> PART I - CHARTER AND RELATED LAWS PART I - CHARTER AND RELATED LAWS [1] Subpart A - CHARTER PREAMBLE [3] We the people of the City of Dover, under the constitution and laws of the state of Delaware, in order to secure the benefits of local self-government and to provide for an honest and accountable council-manager government, do hereby adopt this charter and confer upon the city the following powers, subject to the following restrictions, and prescribed by the following procedures and governmental structure. By this action, we secure the benefits of home rule and affirm the values of representative democracy, professional management, strong political leadership, citizen participation, and regional cooperation. ARTICLE I. - POWERS OF THE CITY ARTICLE II. - MAYOR AND COUNCIL Sec. 17. - Controller/treasurer. At the annual meeting the council shall elect a controller/treasurer to hold office until the next annual meeting of the council, or until his/her successor has been duly chosen and qualified, but subject to removal at any time by the council. The controller/treasurer shall be the custodian of all the city funds and shall deposit them in a banking institution designated by the council. (Amd. of 7-12-2005 (S.B. 126); Amd. of 7-8-2009 (S.B. 165, § 15)) Investment Policy Page 17 of 17 35

Item 3. CITY OF DOVER, DELAWARE ACTION FORM PROCEEDING: City Council DEPARTMENT OF ORIGIN: Police SUBMITTED ON: November 26, 2024 PREPARED BY: Captain Roswell, Administration Division Commander REVIEWED BY: SUBJECT: FY25 CIP Budget – Addition to Existing HVAC System for Future Growth Area TIMETABLE: Purchase to be initiated with Sole Vendor within five (5) days of approval RELATED PROJECT: VirTra Law Enforcement Training Simulator REFERENCE: N/A EXPENDITURE REQUIRED: $249,850.00 AMOUNT BUDGETED: $193,100.00 FUNDING SOURCE (Bond Bill, Grant In Aid): FY25 CIP Budget page 68 (5/28/2024 FY25 Draft) STAFF RECOMMENDATION: Approve the Sole Vendor Purchase from Service Unlimited, New Castle, DE. BACKGROUND AND ANALYSIS: The Dover Municipal Police Academy was reestablished in August 2020 to train police recruits. At that time, COVID conditions led to insufficient space available in the Delaware State Police (DSP) Academy to train new municipal officers. Dover PD was notified of the situation in early July and suddenly had no options for the candidates who had accepted conditional offers of employment. The DSP “Live-in” Academy had been Dover’s training source for close to 30 years. To resolve the staffing crisis present at the time, and salvage the quality candidates who had committed to us, Dover exercised its option under Delaware law to deliver basic training. In preparation for the first session of the Dover Police Academy, slated for October 5, 2020, the unfinished section of the 2nd floor of the Police Station was modified to provide a physical activity training area and classroom accommodations. Eight (8) Dover recruit officers were a part of Class #1 and all of them graduated to serve the city. Staffing problems continued into FY21 as turnover rates were unusually high, leaving the department with eight vacancies that still needed to be filled. The staffing deficit included five new officers that were approved on a COPS Hiring Program grant that were earmarked for full-time community policing efforts. In total, 16 Dover Police Officers were needed to be hired and trained to achieve our authorized strength of 106. The continuation of pandemic conditions, chronic vacancies, and the realization that having a functioning academy was delivering additional organizational benefits, all combined to keep us in the basic training business. 36

Item 3. To this day, the Dover Municipal Police Academy continues to be successful and popular with other law enforcement agencies, especially those located in Kent and Sussex Counties. The Dover Municipal Academy is oriented to municipal agencies and rooted in community policing concepts. One of the persistent problems since the very first academy class has been the lack of available climate-controlled training space. The academy training facility on the second floor is not heated nor air conditioned, so the space is unusable during extremely cold or hot months of the year. This has forced an over-reliance of the public assembly room and other “borrowed spaces” to get things done. Being mindful of city budget challenges, in the fall of 2022, the Chief of Police began discussions with State legislators regarding police training needs and the environmental problems in the academy space. A tour was arranged and during that visit submissions for police projects that could be funded through the State Bond Bill were encouraged after the officials saw the need and recognized that the investment would benefit all of Delaware. Leading into FY 24, the first effort at receiving Bond Bill money was unsuccessful. An estimate for the proposed system had been obtained from Service Unlimited, the current contractor that services the Police Station systems that totaled $175,552.00. Since the cost was obtained in October 2022, 10% inflation was added to the number and included on the submission for FY 25. This, of course, was the year we were successful obtaining the funding for this project. On a related note, this project is directly related to the VirTra Law Enforcement Training Simulator recently outlined to Council. The simulator is intended to be placed in the second floor Academy area. The simulator will be used for academy training, in-service training for the police department and skills training for surrounding law enforcement agencies. State dollars connected to Grant In Aid were obtained for this training system and thus provided additional justification for the Bond Bill allocation. Suitable climate-controlled space is required for the VirTra simulator to function properly. The Administrative and Training staff hosted an additional series of planning meetings to ensure that the project accounted for the incoming equipment that is somewhat climate sensitive. Representatives from VirTra and Service Unlimited worked together to slightly modify the initial plan so that a final estimate could be calculated. On August 12, 2024, Service Unlimited provided an updated proposal for the additional HVAC system for the second floor expansion area totaling $223,470.00. This cost includes three years of maintenance and wiring installation by a licensed electrical vendor. This proposal has since been additionally revised to incorporate the State of Delaware Prevailing Wages regulation totaling $249,850.00. The planning staff was not aware of this requirement until very recently so the budget variance will be funded through an adjustment to the plans for the Grant In Aid allocation. Sole Vendor Justification: After careful consideration and evaluation, we are providing the following reasons why a decision to Sole Source Service Unlimited for the expansion of our current HVAC system is in the best interest of the City. In addition to the pre-planning already accomplished, including an assessment of the impact of the VirTra system, staying with our current vendor is the most advantageous course of action for the following reasons: 1. Familiarity with Existing System: Service Unlimited, Inc. installed our current HVAC system and is intimately familiar with its design, configuration, and operational nuances. This deep understanding will significantly benefit the expansion process, ensuring seamless integration with our existing setup and minimizing the risk of compatibility issues. 37

Item 3. 2. Proven Track Record: We have been highly satisfied with the performance and reliability of the HVAC system installed by Service Unlimited, Inc. Their consistent quality of work and responsiveness to service needs have established a strong track record. Retaining them for the expansion will help maintain continuity and uphold the standards we have come to expect. 3. Efficiency and Cost-Effectiveness: Engaging a new installer would entail additional time and costs associated with project ramp-up, including system analysis, design revisions, and troubleshooting. Given that Service Unlimited, Inc. already possesses detailed knowledge of our systems, they can provide a more efficient and cost-effective expansion solution. 4. Warranty and Support Considerations: Our existing HVAC system's warranty and support agreements are with Service Unlimited, Inc. Continuing with the same installer ensures that any new components or modifications remain covered under the same terms, providing comprehensive support and reducing potential complications. It will also eliminate a potential scenario where competing vendors have the ability to call out the other’s equipment and service should a difficult to diagnose problem occur. 5. Established Relationship: We have developed a strong working relationship with Service Unlimited, Inc., characterized by their professionalism and understanding of our specific needs. This established rapport facilitates smoother communication and project execution, contributing to a more successful expansion process. In light of these factors, we believe that continuing our collaboration with Service Unlimited, Inc. for the expansion of our HVAC system will yield the best outcomes for our organization. We respectfully request your approval to proceed with this decision. Thank you in advance for your kind consideration. 38

Item 1. CITY OF DOVER, DELAWARE FISCAL YEAR 2023 ENGINEERING CONSULTANT’S REPORT OPERATION AND MAINTENANCE OF THE ELECTRIC SYSTEM FISCAL YEAR 2023 PROJECT NO. 170226 12/4/2024 39

Item 1. November 21, 2024 Mr. David Hugg City Manager City of Dover 5 East Reed Street Weyandt Hall, Suite 300 Dover, DE 19901 Re: Engineering Consultant’s Report Dear Mr. Hugg: 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 presents this Annual Engineering Consultant’s Report on the Operation and Maintenance of the Electric System for the fiscal year (FY) ended June 30, 2023. 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 initially reported in the City’s annual financial statements and accounting records. Additional information was 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 FY 2023 expenditures and FY 2024 budgets. In addition, an analysis of the balances of the Improvement and Extension Fund as well as other funds supporting the Electric Division was performed. Burns & McDonnell also reviewed the adequacy of revenues provided by 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. 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 Adam Young Craig Brown Director Senior Project Manager 40

Item 1. CONTENTS 1.0 Executive Summary .............................................................................................. 1-1 1.1 Introduction ............................................................................................... 1-1 1.2 Electric System Overview and Assessment ................................................. 1-1 1.2.1 General Plant ................................................................................. 1-2 1.2.2 Production Plant ............................................................................ 1-2 1.2.3 Transmission and Distribution Plant ................................................ 1-2 1.3 Financial Overview and Assessment ........................................................... 1-3 1.4 Conclusions .............................................................................................. 1-4 2.0 Introduction ........................................................................................................... 2-1 2.1 Purpose of Report ...................................................................................... 2-1 2.2 Organization .............................................................................................. 2-1 3.0 Electric System Overview and Assessment ....................................................... 3-1 3.1 Electric System Overview ........................................................................... 3-1 3.1.1 Production Plant ............................................................................ 3-1 3.1.2 Transmission and Distribution Plant ................................................ 3-2 3.1.3 General Plant ................................................................................. 3-2 3.1.4 Capital Improvements .................................................................... 3-2 3.2 Production Plant Assessment..................................................................... 3-3 3.2.1 Production Plant Operations ........................................................... 3-4 3.2.1.1 Management and Organization ......................................... 3-4 3.2.1.2 Major Equipment Operations and Maintenance ................. 3-4 3.2.1.3 Production O&M Management System .............................. 3-5 3.2.1.4 Safety............................................................................... 3-5 3.2.1.5 Training ............................................................................ 3-6 3.2.2 VanSant Condition Assessment ...................................................... 3-6 3.2.3 Production Plant Conclusion .......................................................... 3-7 3.3 Transmission and Distribution Plant Assessment ........................................ 3-7 3.3.1 Transmission and Distribution Plant Operations .............................. 3-7 3.3.1.1 Operations and Maintenance ............................................ 3-7 3.3.1.2 Design Standards and Specifications ................................ 3-8 3.3.1.3 System Reliability ............................................................. 3-9 3.3.1.4 Power Quality ..................................................................3-10 3.3.1.5 Safety..............................................................................3-10 3.3.1.6 Capital Improvements .....................................................3-10 3.3.2 Transmission and Distribution Plant Condition Assessment............3-11 3.3.3 Transmission and Distribution Plant Conclusion ............................3-12 41

Item 1. 4.0 Financial Overview and Assessment .................................................................. 4-1 4.1 Required Revenue ...................................................................................... 4-1 4.2 Electric Rates ............................................................................................ 4-1 4.3 Operating Results ...................................................................................... 4-2 4.3.1 Adequacy of Electric Rates ............................................................. 4-6 4.4 Status of Revenue Bonds............................................................................ 4-7 4.5 Insurance .................................................................................................. 4-7 4.6 Operating and Reserve Accounts ................................................................ 4-8 4.6.1 Electric Revenue Fund .................................................................... 4-9 4.6.1.1 Insurance Reserve Account .............................................. 4-9 4.6.1.2 Contingency Reserve Account .......................................... 4-9 4.6.1.3 Electric Rate Stabilization Account .................................... 4-9 4.6.1.4 Interest and Sinking Account............................................4-10 4.6.2 Electric Improvement and Extension Fund......................................4-10 4.6.2.1 Depreciation Reserve Account .........................................4-10 4.6.2.2 Future Capacity Reserve Account ....................................4-10 5.0 Conclusions .......................................................................................................... 5-1 FIGURES Figure 2-1: Electric Division Overall Structure .......................................................... 2-2 Figure 2-2: Administration Section ........................................................................... 2-3 Figure 2-3: Engineering Services & System Operations Section ................................. 2-3 Figure 2-4: Electric Transmission & Distribution Section ........................................... 2-4 TABLES Table 3-1: Year-End Plant in Service........................................................................ 3-1 Table 3-2: Fiscal Year 2023 Executed Capital Expenditures ..................................... 3-3 Table 3-3: FY 2023 Generating Plant Operating Statistics......................................... 3-5 Table 3-4: System Reliability Statistics .................................................................... 3-9 Table 3-5: Major Electric System Capital Projects ..................................................3-11 Table 4-1: Annual Sales and Customer Accounts .................................................... 4-2 Table 4-2: Annual Revenues and Sales Ratios ......................................................... 4-3 42

Item 1. Table 4-3: Revenue Margins and Unaccounted for Energy ........................................ 4-4 Table 4-4: Comparative Statement of Revenues, Expense, and Changes in Unreserved Retained Earnings ................................................................ 4-5 Table 4-5: Debt Service Coverage ........................................................................... 4-6 Table 4-6: Debt Service Schedule of Electric Revenue Bonds ................................... 4-7 Table 4-7: Schedule of Insurance Coverage in Effect ............................................... 4-8 Table 4-8: Reserve Account Activity and Balances ..................................................4-11 43

FY 2023 Engineering Consultant’s ReportFiscal Year 2023 Engineering Consultant’s Report List of Abbreviations Item 1. List of Abbreviations Abbreviation Term/Phrase/Name Act Securities Exchange Act of 1934 ASAI Average Service Availability Index Burns & Burns & McDonnell Engineering Company, Inc. McDonnell CAIDI Customer Average Interruption Duration Index City City of Dover, Delaware DCS Distributed Control System EDQP Employee Development and Qualification Program EIA U.S. Energy Information Administration FY Fiscal Year GE General Electric GIS Geographic Information System GSU Generator step-up transformer GWh gigawatt-hour I&E Fund Electric Improvement & Extension Fund kV kilovolt kW kilowatt kWh kilowatt-hour LAN Local Area Network McKee Run McKee Run Generating Station MW megawatt MWh megawatt-hour NAES North American Energy Services Corporation NERC North American Electric Reliability Corporation Ohm standard unit of electrical resistance PJM Pennsylvania New Jersey Maryland Interconnection Fiscal Year 2023 Engineering Consultant’s Report on the Report Operation and Maintenance of the Electric System Resolution Authorizing and Securing Electric Revenue Bonds, Resolution adopted December 23, 1985 SAIDI System Average Interruption Duration Index SAIFI System Average Interruption Frequency Index SCADA Supervisory Control And Data Acquisition VanSant VanSant Generating Station CITY OF DOVER, DELAWARE 44

FY 2023 Engineering Consultant’s ReportFiscal Year 2023 Engineering Consultant’s Report List of Abbreviations Item 1. TEA The Energy Authority, Inc. CITY OF DOVER, DELAWARE 45

FY 2023 Engineering Consultant’s ReportFiscal Year 2023 Engineering Consultant’s Report Statements of Limitations Item 1. Statement of Limitations In preparation of the Annual Engineering Consultant’s Report on the Operation and Maintenance of the Electric System for the fiscal year (FY) ended June 30, 2023 (the Report), Burns & McDonnell relied upon information provided by the City of Dover, Delaware (the City). The information included various analyses, computer-generated information and reports, audited financial reports, and other financial and statistical information, as well as other documents such as operating budgets and current retail electric rate schedules. While Burns & McDonnell has no reason to believe that the information provided, and upon which Burns & McDonnell has relied, is inaccurate or incomplete in any material respect, Burns & McDonnell has not independently verified such information 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 the Report, it makes no representation that the conditions assumed will occur. Burns & McDonnell is not acting as a “municipal advisor” for the City of Dover, Delaware within the meaning of Section 15B of the Securities Exchange Act of 1934, as amended (the “Act”) and does not owe a fiduciary duty to the City pursuant to the Act with respect to the information and material contained in this Study and our communications. CITY OF DOVER, DELAWARE 46

FY 2023 Engineering Consultant’s Report Executive Summary Item 1. 1.0 Executive Summary 1.1 Introduction The FY 2023 Engineering Consultant’s Report on the Operation and Maintenance of the Electric System (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 was retained as the Engineering Consultant by the City of Dover, Delaware (City) to complete an inspection of the Electric System and prepare a report on its findings. 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 an 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.” 1.2 Electric System Overview and Assessment The City of Dover Electric Division served a monthly average of 24,893 accounts in FY 2023, approximately 21,402 of which were residential customers. Five Electric Division customers take service from the 69-kV transmission system. These customers include the Dover Air Force Base, Kraft, Proctor & Gamble, White Oak Solar and DCO Energy. DCO Energy is an exempt wholesale generator that sells power that must be transmitted through the City’s transmission system to third-party purchasers. When the plant is not operational, the Electric Division provides power for the plant site. 1-1 CITY OF DOVER, DELAWARE 47

FY 2023 Engineering Consultant’s Report Executive Summary Item 1. 1.2.1 General Plant General plant facilities consist primarily of Electric Division administrative and operations facilities near the retired McKee Run Generating Station (McKee Run) and VanSant Generating Station (VanSant). McKee Run was retired during FY 2021. Other types of general plant include office furniture and equipment, transportation and power-operated equipment, and communication equipment. The City has an Energy Management Agreement with The Energy Authority, Inc. (TEA) to assist the City with its energy procurement, energy sale, purchase of fuels, establishment and management of risk policies, and the development and management of hedging protocols and related energy procurement challenges. TEA is a public power-owned, non-profit corporation that serves as an energy manager. As a national portfolio management company, TEA evaluates challenges, manages risks, and executes solutions for client systems. 1.2.2 Production Plant The City owns one active generating plant, the VanSant Generating Station (VanSant). VanSant is a 42 MW simple-cycle combustion turbine unit. NAES Corporation operates VanSant. The agreement between the City and NAES Corporation has been in effect since July 1, 2006. McKee Run was retired in FY 2021 and is in the process of being decommissioned. The various systems and components of the generating plants reviewed by the Engineering Consultant are listed below: Major Equipment • Fuel handling systems • Station electrical systems • Station control systems • General facilities Management and Organization • Safety • Training • Staffing Based on statements and information provided by the City and NAES, as well as the observations and reviews performed, it is the Engineering Consultant’s opinion that the City’s power generation facility is being operated and maintained consistent with generally accepted electric utility practice in the United States. In general, the performance, operation, maintenance, staff, planning, and training aspects for VanSant were found to be average. 1.2.3 Transmission and Distribution Plant The transmission and distribution network includes 168.60 miles of overhead transmission and distribution lines and 314.22 miles of underground transmission and distribution lines. Five Electric Division customers take primary service from the 69-kV transmission system. The following list includes areas of the transmission and distribution system that were considered and discussed. • System reliability • Power quality • Operations and maintenance • Design standards and specifications 1-2 CITY OF DOVER, DELAWARE 48

FY 2023 Engineering Consultant’s Report Executive Summary Item 1. • Transmission and distribution improvements 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. 1.3 Financial Overview and 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 2023. The Resolution requires that the Electric Division maintain a debt service coverage ratio of 1.25. Customers of the Electric Division of the City were charged for the electric service received based on the City’s rate schedules and contracts that were in place in FY 2023. Total energy sales decreased from 734 GWh in FY 2022 to 717 GWh in FY 2023. Total revenue from sales to electric customers in FY 2023 was $76.5 million, representing a decrease of approximately $951,000 from FY 2022. In FY 2023, the average revenue per kWh for residential customers was 13.04 cents and the system- wide average price was 10.67 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 PJM marketplace through its energy manager, TEA. From FY 2022 to FY 2023, the cost of power increased from $50.3 million to $62.4 million. Change in Net Position was a loss of $4.7 million in FY 2022 and increased to $5.1 million in FY 2023. The net income increase in FY 2023 was primarily attributed to an increase in power cost adjustment credits and an increase in the fair value of investments in FY 2023. 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: The Current Expenses of the Electric System during the current fiscal years shown by the Annual Budget . . . for such fiscal year, and 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 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 2021 and FY 2022 of 21.55 and 13.85, respectively. However, the Electric Division’s FY 2023 debt service coverage ratio of 0.80 did not achieve the minimum threshold. Therefore, the revenues generated by the current electric rates are not sufficient to meet the applicable covenant of the Resolution. The failure to meet the required coverage ratio was the result of rapidly esclating wholeale power supply cost driven by record breaking natural gas prices. The City used non-operating funds to balance the overage, but the funds are not included in the calculation of debt service coverage. The City maintains a comprehensive insurance program to cover varying types of liabilities, as well as significant losses related to various Electric Division properties. It is the opinion of Burns & McDonnell as 1-3 CITY OF DOVER, DELAWARE 49

FY 2023 Engineering Consultant’s Report Executive Summary Item 1. Engineering Consultant, and not as insurance counselor, the insurance in full force and effect appears to satisfy the requirements of Section 706 of the Resolution. The City established the Electric Revenue Fund and the Electric Improvement & Extension (I&E) Fund to make money available for specific purposes when they are needed. The following is a list of these funds’ respective cash accounts: Electric Revenue Fund • Insurance Reserve Account • Contingency Reserve Account • Electric Rate Stabilization Reserve Account • Interest and Sinking Account Electric Improvement and Extension Fund • Depreciation Reserve Account • Future Capacity Reserve Account The Engineering Consultant reviewed activity information on the accounts listed above and found that the balances in those accounts as of June 30, 2023, were consistent with the required or target balances. 1.4 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 associated facilities are consistent with generally accepted electric utility standards. The system has been upgraded to improve operation, reliability, and service quality to customers. 3. The Electric Division capital projects included in the City’s Capital Investment Plan and the FY 2023 Operating Budget are necessary and should provide improved reliability and power quality for the Electric System. 4. The balances as of June 30, 2023, 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 retail rates in FY 2023 were not sufficient to fulfill the debt service coverage requirement defined in Section 502(c) of the Resolution. 1-4 CITY OF DOVER, DELAWARE 50

FY 2023 Engineering Consultant’s Report Introduction Item 1. 2.0 Introduction The City of Dover, Delaware (City) operates a municipally-owned electric utility system that served 24,893 customers, excluding lighting, within the City and surrounding areas at the end of FY 2023. The 74.8 square- mile service area of the electric utility is in central Delaware; with the City itself located approximately 70 miles south of Philadelphia, Pennsylvania. 2.1 Purpose of Report This FY 2023 Annual Engineering Consultant’s Report (Report) has been prepared in compliance with the requirements adopted December 23, 1985, of the City of Dover Electric Bond Resolution (Resolution). Burns & McDonnell was 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 the 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 (vi) the proper maintenance, repair and condition of the Electric System during the ensuing fiscal year and an estimate of the appropriations which should be made for such purposes, (vii) the insurance to be carried under the provisions of Article VII of this Resolution, (viii) 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, (ix) the extensions, improvements, renewals and replacements which should be made during the ensuing fiscal year, and (x) any necessary or advisable revisions of the electric rates.” 2.2 Organization The Electric Utility Director is responsible for the overall management of the Electric Utility Division. Mr. Paul Waddell is the current Electric Director and oversees the day-to-day operations of the Electric Division and manages the Division’s staff. The Director also provides oversight of the production plant budget, monitors the contracts of the energy coordinator and the power generation operator/manager, and is responsible for 2-1 CITY OF DOVER, DELAWARE 51

FY 2023 Engineering Consultant’s Report Introduction Item 1. North American Energy Services Corporation (NAES Corporation) contracts and oversight. The Electric Division is currently organized as shown in Figure 2-1. Figure 2-1: Electric Division Overall Structure City Manager Electric Director (1) Engineering Services & Administration (2) Electric T&D (24) System Operations (16) Administration Section – Administration provides the overall management 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. Engineering Services & System Operations Section –Engineering Services 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. The other segment of this section is System Operations. This group is responsible for the operation of a 24/7 system operations control center and is comprised of the System Operators Crew Leader and the Operators. Transmission & Distribution Section – Transmission & Distribution 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 supply problems and oversees the work of tree trimming contractors. Figure 2-2, Figure 2-3, and Figure 2-4 provide organizational charts illustrating the staffing hierarchies of the various sections in the Electric Division. The number of individuals in each position is indicated as appropriate. Electric Division staff totaled 43 at the time this report was issued. 2-2 CITY OF DOVER, DELAWARE 52

FY 2023 Engineering Consultant’s Report Introduction Item 1. Figure 2-2: Administration Section Electric Director (1) Administrative Assistant (1) Account Clerk II (1) Figure 2-3: Engineering Services & System Operations Section Engineering Services & System Operations Superintendent (1) System Electrical Engineering Electric Ops. Crew Substation Fieldworker Draftsman GIS Specialist Engineer (1) Leader (1) (2) Tech Crew Crew Leader (1) Leader (1) (1) System Engineering Operators (4) Substation SCADA Fieldworker (1) Tech (2) Tech (1) 2-3 CITY OF DOVER, DELAWARE 53

FY 2023 Engineering Consultant’s Report Introduction Item 1. Figure 2-4: Electric Transmission & Distribution Section Electric Transmission & Distribution Line Crew Superintendent (1) T&D Engineering Lineman Crew Electric Meter Tech Coordinator (1) Leader 1st Crew Leader (1) Class (3) Electric Meter Tech (1) Lineman 3rd Groundworker Lineman 1st Lineman 2nd Class (5) Class (6) Class (3) (3) The subsequent sections of the Report provide a discussion of the required reviews and inspections conducted pursuant to Section 504 of the Resolution. 3.0 describes the assessment of the Electric System and its condition. 4.0 presents the financial results for the Electric Division, including an analysis of the adequacy of revenues provided by the electric rates. 5.0 summarizes the conclusions of Burns & McDonnell regarding the operation and maintenance of the Dover Electric System. 2-4 CITY OF DOVER, DELAWARE 54

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. 3.0 Electric System Overview and Assessment 3.1 Electric System Overview The City's Electric System primarily consists of a production plant, transmission plant, distribution plant, general plant facilities, and construction work in progress. Table 3-1 displays the year-end balances of the various plant components for FY 2021 through FY 2023. Table 3-1: Year-End Plant in Service FY 2021 FY 2022 FY 2023 Capital assets, not being depreciated Land $ 1,458,066 $ 1,458,066 $ 1,458,066 Construction in progress 3,504,551 2,399,672 4,975,738 Total capital assets, non-depreciable $ 4,962,617 $ 3,857,738 $ 6,433,804 Capital assets, being depreciated : Buildings $ 12,583,811 $ 13,287,398 $ 13,122,963 Vehicles and Equipment 29,024,484 31,052,654 31,492,146 Transformers, Meters, T&D & Fiber Optic 67,146,050 69,815,271 70,517,110 SS, Switch Yards, Switchgears 36,728,771 36,728,771 36,728,771 Boiler, Turbo Generators, Cap Int - VS 39,122,189 39,122,189 37,657,531 Other (Streets, EST, Swr Lines, Wells, Eng & 7,662,503 7,662,503 7,662,503 Total capital assets, being depreciated $ 192,267,808 $ 197,668,786 $ 197,181,024 Less accumulated depreciation for: Buildings $ (10,429,064) $ (10,548,832) $ (10,606,899) Vehicles and Equiptment (25,737,948) (26,092,222) (26,561,642) Transformers, Meters, T&D & Fiber Optic (40,807,716) (42,551,065) (44,286,333) SS, Switch Yards, Switchgears (17,684,502) (18,651,854) (19,615,636) Boiler, Turbo Generators, Cap Int - VS (32,817,182) (33,208,122) (32,788,948) Other (Streets, EST, Swr Lines, Wells, Eng & (6,670,212) (6,782,825) (6,895,437) Total accumulated depreciation $ (134,146,624) $ (137,834,920) $ (140,754,895) Total capital assets, being depreciated, net 58,121,184 59,833,866 56,426,129 Total capital assets, net $ 63,083,801 $ 63,691,604 $ 62,859,933 In FY 2023, the Electric System experienced an increase in the annual system peak demand and a decrease in annual energy sales. The Electric System experienced its peak at 4:00 p.m. on August 9, 2022, of 161.7 MW, an increase of approximately 0.9 percent from the previous fiscal year. The Electric Division energy sales in FY 2023 were 717.0 GWh, which is a 2.4 percent decrease in energy sales from FY 2022. The Electric Division expects annual energy sales to remain at current levels for the near term. 3.1.1 Production Plant The City owns two plants, the McKee Run and VanSant generating stations. McKee Run was retired in May 2021. VanSant is a 42-MW simple-cycle combustion turbine unit. NAES Corporation operates VanSant. The agreement between the City and NAES Corporation has been in effect since July 1, 2006 and was recently awarded to NAES in a bid process and runs through May 31, 2028. 3-1 CITY OF DOVER, DELAWARE 55

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. The City has an Energy Management Agreement with The Energy Authority, Inc. (TEA) to manage the sales associated with the production plants; the Electric Division’s first contract with TEA. TEA also assists the City with its energy procurement, energy sales, purchase of fuels, establishment and management of risk policies, the development and management of hedging protocols, and related energy procurement challenges. 3.1.2 Transmission and Distribution Plant The transmission and distribution network includes 482.82 miles of overhead and underground transmission and distribution lines. The Electric Division provides primary service to several customers directly from the 69-kV transmission system. These customers include the Dover Air Force Base, Kraft, Proctor & Gamble, White Oak Solar and DCO Energy. DCO Energy is an exempt wholesale generator that sells power that must be transmitted through the City’s transmission system to third-party purchasers. When the 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. The Electric Division provides transmission service to DCO Energy for the output of its 16 MW electric generator. The Electric Division also has a point-to-point contract for the output of a DCO Energy Combustion Turbine which ties directly to the Kent Substation and is not part of the Dover transmission system. 3.1.3 General Plant The general plant category consists primarily of Electric Division administrative and operations facilities, and pollution control-related equipment at VanSant. The agreement with NAES Corporation stipulates NAES Corporation manages the operation and maintenance of the facilities while the City funds all replacements and upgrades required for maintaining the capability of the generating station. 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. 3.1.4 Capital Improvements The following table describes FY 2023 completed Capital Expenditures for the system, including encumbered funds. 3-2 CITY OF DOVER, DELAWARE 56

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. Table 3-2: Fiscal Year 2023 Executed Capital Expenditures Electric Engineering Projects ARCFM Migration To Elec Utility Net $ 110,384 Towne Point Conversion 90,758 Emergency Component Replacement 73,526 SCADA Upgrade 68,978 Admin & Substation Cameras 49,735 Transmission Line Maintenance Program 46,442 Substation Component Replacement 24,000 Admin Access Gate 13,800 New Developments - Subtotal Electric Engineering Projects $ 477,622 Electric Transmission & Distribution Projects DelDOT Kenton Road $ 1,005,407 Kent Court House 393,442 Eden Hill OKH Phase 1 380,259 Rojan Meadows Phase 1 207,018 1001N Dupont EV Charger 46,582 King Cole Wedding Venue 39,772 CT Site Repairs & Maintenance 31,974 Hertrich Chevrolet EV 31,953 Lion Of Judah 27,665 Rt 8 Wawa Tesla Charger 26,329 Frito Lay Dover 10,063 Dover Beer Garden 8,880 Verizon Tudor Tower 8,527 Lake Club EV Charger 8,145 1477 Cartanza Rd 7,089 Little Creek Lighting Upgrade 6,190 Queen Manor Apartments 5,491 837 N Dupont Hwy Chase 4,999 Ridgely Properties LLC 4,149 Subtotal Electric Transmission Division $ 2,253,933 Total Executed Capital Investment Projects $ 2,731,555 3.2 Production Plant Assessment Burns & McDonnell made observations and conducted assessments of the Electric System assets in support of the development of this annual Engineering Consultant’s Report. NAES staff responded to Burns & 3-3 CITY OF DOVER, DELAWARE 57

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. McDonnell’s data request providing much of the detail noted in this section. The findings of Burns & McDonnell from the assessment of the City’s production plant assets are documented herein. 3.2.1 Production Plant Operations VanSant consists of a simple cycle combustion turbine with a rated capacity of 42 MW. The facility normally operates at base load between 32 to 37MW. Power generated is stepped up to 69 kV from 13.8 kV via a 46 MVA GE GSU. This unit commenced operation in 1991. An inlet fogging system was installed in the spring of 2015 and capacity testing performed in June 2015 proved a 4 MW increase in unit capacity from the original 39 MW. VanSant transitioned the operating parameters from being a manned 24-hour station to a 12 hours per day, 06:00 Am – 6:00 Pm Monday- Friday, for operations and maintenance. For the remainder of the time including weekends and holidays, GRIDFORCE has control of the unit. GRIDFORCE is a power plant operation and management company out of Houston Texas. GRIDFORCE began operations May 1, 2023, after installation of remote start and shutdown capabilities. GRIDFORCE is tasked with remote starting the unit if dispatched, GRIDFORCE then proceeds to notify an on-call technician to report to the facility to take control of the unit and operate as normal. When the unit is released, the on-call technician coordinates the shutdown procedure with GRIDFORCE personnel. 3.2.1.1 Management and Organization Station management and operation has been reduced significantly with the retirement of McKee Run. At the end of FY 2022 the NAES team operating the plant had been reduced to seven positions, including Phillip Marvel as Site Manager. The remaining staff includes a Business Manager, NAES Staff Services, and four Operations staff. 3.2.1.2 Major Equipment Operations and Maintenance The generation facilities are dispatched sparingly and operate primarily as peaking units. As such, the individual units incur a low annual capacity factor. VanSant experienced forced outages in July 2022 (139 hours) and December 2022 (328 hours). The July outage was caused by the CEMS system not reading gas flow on the CEMS computer while operating the turbine. The Title V permit states that the unit must show gas flow while the unit is operating. The December outage was related to a failed potential transformer (PT). Table 3-3 summarizes the major FY 2023 operating statistics. 3-4 CITY OF DOVER, DELAWARE 58

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. Table 3-3: FY 2023 Generating Plant Operating Statistics Rated Net Net Net Heat Capacity - Production - Capacity Rate Number of Unit MW kWh Factor Btu/kWh Starts VanSant 42 1,043,728 0.27% 10,060 15 Forced Outage Operating Service Availability Unit Hours Hours Factor Factor VanSant 467.0 39.4 0.44% 86.47% The large amount of time that units are not operating allows for maintenance and repair of the units. Thus, the FY 2023 overall equivalent availability factor for the VanSant generation facility averaged 86.47 percent. Low net capacity factors are offset by PJM capacity credits and spot market energy. 3.2.1.3 Production O&M Management System Plant maintenance activities are organized, planned, and managed by the Maintenance Manager using MP2tm by CMMS Data Group, a computer-based management system. All three major categories of maintenance activities (corrective, preventative, and predictive) are electronically managed by MP2tm. 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 per a predetermined categorization. The work order is planned, parts are ordered, and then the work order is assigned to an operator or maintenance technician for completion once the material has been received. This system is also used to manage and track preventative maintenance activities that follow a schedule. Changing filters and 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. This technology allows personnel to identify problems and take corrective actions before equipment failure can occur. 3.2.1.4 Safety For FY 2023 there were no lost time accidents so the updated lost time accident rate for the City of Dover generation plant is zero. The last recordable incident at the plant was on April 16, 2015. 3-5 CITY OF DOVER, DELAWARE 59

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. 3.2.1.5 Training The required annual OSHA compliance training is completed and documented for each NAES 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. For operator training, the Employee Development and Qualification Program (EDQP) was established prior to 2002. EDQP is a formal program for training operators to progressively advance to positions with additional responsibilities. The training program is a combination of self-paced and instructor-led learning. In addition to the above programs, cross training of various disciplines also occurs. An example of cross training would be plant operators training with maintenance staff. NAES has replaced the EDQP program with the standard NAES Training Manual, it is made up of qualification levels more applicable to the specific technology operated at the City of Dover utility. NAES implemented the current training manual qualifications procedure in 2015 and all new employees are being trained per this training program. As current employees complete their existing EDQP qualification level they are shifted in to the NAES TMP Manual program. 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, and lessons learned offer additional safety training topics. The plant staff also performs safety stand downs based on industry events, lessons learned and best practices that occur in other NAES operated facilities and the industry at large. 3.2.2 VanSant Condition Assessment The following is a summary of the condition assessment of major equipment at VanSant as presented by the NAES corporation staff. Burns & McDonnell made no internal assessments of equipment for this report. The VanSant station in a GE 6b gas turbine rated at 42 megawatts (MW) with water injection for emission control. The unit also has a wet compression system. The wet compression system is used in the hot weather months to decrease the air inlet temperature, thus increasing the MW output. The water that is used for the water injection and the wet compression is demineralized water. The water is produced by using well water and it is passed through a series of three mixed tanks and one carbon filter tank. The water is tested to ensure it meets the pH and conductivity. The water flows to the outdoor storage tank. With the closing of the McKee Run facility an office trailer was installed on the site for offices for plant personnel, records, prints, metering computer and other administrative items. 3-6 CITY OF DOVER, DELAWARE 60

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. XL Insurance completes inspections of the Electric Division production facilities on an annual basis. After each inspection, the insurance provider issues a report detailing its risk reduction recommendations. Every five years, the fuel tanks are inspected for rust and corrosion for leak prevention. The last inspection was completed in March 2021. A weekly diesel start is performed at the site to improve starting reliability of the diesel starting engine. A unit full speed 30-minute no-load test is performed once a month for starting reliability improvements and training purposes, and 26 hours per year has been allocated for the testing of the unit which have little impact on the allowable operating hours (432) under the VanSant Title V diesel engine annual operation. 3.2.3 Production Plant Conclusion 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 VanSant station were found to be average. VanSant is an aging facility that is over 30 years old and VanSant’s occasional forced outages reflect its age. 3.3 Transmission and Distribution Plant Assessment On October 16, 2024, Craig Brown interviewed City staff to collect information regarding the City’s transmission and distribution system, as operated and maintained by the Electric Division. Mr. Shawn Burgett, Engineering Services & System Ops Superintendent, assisted with the system inspection and provided information related to the transmission and distribution system. 3.3.1 Transmission and Distribution Plant Operations The Electric Division distributes power to its customers through a network of transmission lines, distribution substations, and distribution lines. The transmission lines are rated at 69 kV and are connected to fourteen 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 the distribution of electric power to customers. 3.3.1.1 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 multiple large screens 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 3-7 CITY OF DOVER, DELAWARE 61

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. operators have received some PJM training but are not required to be certified as Delmarva Power 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 twelve-hour cool-down period. The Electric Division has nine line crews and two ground workers 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 trouble truck duties. The primary responsibilities of the nine-line crews are installation of new service connections and construction of new lines. The trouble crew maintains the streetlights, repairs underground and overhead services and is the first responder to outages. Tree trimming is contracted out and is no longer performed by the Electrical Division; however, performance of the contractor is monitored by the Line Crew Superintendent. The Substation/Relay Maintenance Division is responsible for operation and maintenance of the substations and associated equipment. Visual inspections of substations, associated equipment, trip counter checks and battery systems checks are performed regularly. The Substation/Relay Maintenance Division is also responsible for contractor oversight during annual transformer condition assessments including annual oil testing. The City has a contract with Miller Environmental Group to respond to substation oil spills and to provide instruction on clean up.. The City no longer contracts with an outside firm to inspect and chemically treat each wood pole in the Electric System every ten years. The City is performing its own inspections on the poles in five year increments and the poles are chemically treated when purchased. 3.3.1.2 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 designs are contracted to outside engineering firms as needed. 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 polymerized vinyl chloride 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 insulation. 3-8 CITY OF DOVER, DELAWARE 62

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. The standard overhead distribution design utilizes a flat construction with 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. 3.3.1.3 System Reliability The Electric Division provides for reliability of its distribution system by configuring most of its distribution circuits in primary open loop arrangements, improving existing circuits, and installing adequate substation transformer capacity. Normal transformer and line loading are limited to provide enough margin to convey firm power requirements during an emergency or a switching operation, or for maintenance. Table 3-4 details the annual reliability performance of the system over the last three years, for each of the four major reporting categories (System Average Interruption Duration Index (“SAIDI”), System Average Interruption Frequency Index (“SAIFI”), Customer Average Interruption Duration Index (“CAIDI”), and Average Service Availability Index (“ASAI”). The table includes national and regional municipal utility averages for reference. The Electric System has shown improving metrics in each of the last three fiscal years. In FY 2023, the system outperformed regional and national averages for system reliability and availability, reflecting its established, intentional, and proactive maintenance, planning, and construction practices. Table 3-4: System Reliability Statistics Year SAIDI SAIFI CAIDI ASAI FY 2021 354.86 0.96 369.25 99.93% FY 2022 65.62 0.59 111.12 99.99% FY 2023 36.80 0.45 80.98 99.99% National Median (1) 50.84 0.56 89.06 99.99% Regional Average (2) 95.83 0.83 112.06 99.98% Notes: 1. National Average results for "2023 Annual Reliability Benchmarking Report," American Public Power Association. 2. APPA Region 5 (DE, DC, FL, GA, MD, NC, SC, VA,WV) results for "2023 Annual Reliability Benchmarking Report," American Public Power Association. 3-9 CITY OF DOVER, DELAWARE 63

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. The Electric Division has several initiatives that support a continued focus on system reliability. Related to the upgrades described in Section 3.3.1.6, System Operations has plans to continue to upgrade its SCADA system to improve system operators’ ability to monitor field assets. 3.3.1.4 Power Quality The Electric Division does not have any significant power quality problems. The overall power factor for the Electric System is 99 percent. Power transformers are equipped with load tap changers that 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 power factor is closely monitored by temperature sensors and automatically adjusts to turn on capacitors or adjusts the generation to compensate for low power factors. 3.3.1.5 Safety Mr. Burgett reported to Burns & McDonnell that the Electric Division had no lost time in FY 2023. No incidents or details were provided for this report. 3.3.1.6 Capital Improvements This City publishes a 5-year Capital Investment Plan (CIP) annually as part of its annual budgeting process. The Electric System has budgeted for capital projects totaling $6.57 million in FY 2024 and $4.28 million in FY 2025. Major projects are highlighted in Table 3-5. 3-10 CITY OF DOVER, DELAWARE 64

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. Table 3-5: Major Electric System Capital Projects Project FY 2024 FY 2025 Electric Admin Reed Street HVAC Overhaul $2,000,000 Electric Engineering Garrison Oak / Sun Park Substation $2,000,000 Woodcrest Overhead to Underground $394,000 Town Point Conversion $394,000 Ann Avenue Restoration $265,000 LED Lighting Conversion $400,000 Farmview Drive Renovation $204,000 Heatherfield Renovation $269,000 Electric T&D New Developments $1,400,000 $1,400,000 Vehicle #778 Replacement $250,000 Total Electric Division Projects $6,573,400 $4,280,200 3.3.2 Transmission and Distribution Plant Condition Assessment The transmission and distribution system assessment included drive-by observations of a sample of the transmission circuits and distribution circuits. Seven of the fourteen substations listed below were visited and all substations have been visited in the last two years and discussed with Mr. Burgett. • Cartanza Substation • College Road Substation • Danner Farm Substation • Division Street Substation • Dover Downs Substation • Frazier Substation • General Scott Substation (North Street) • Horsepond Substation • Lebanon Substation • Mayfair Substation • McKee Substation • Mid-City Substation • St. Jones Substation 3-11 CITY OF DOVER, DELAWARE 65

FY 2023 Engineering Consultant’s Report Electric System Overview and Assessment Item 1. • VanSant Substation Based on visual observation and discussion with City personnel, all substations are in acceptable operating conditions. Structural cracks in concrete support infrastructure at the Cartanza substation that were noted in prior reports are budged for repair in FY 2024. The City is completing an upgrade to its SCADA system to improve data availability and communication with field assets. The full benefits of the SCADA system will not be realized until a GIS update is completed. The City has invested heavily in its undergrounding program to increase system reliability. Moving forward, the system will continue to be converted from overhead to underground distribution. 3.3.3 Transmission and Distribution Plant Conclusion 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. In completing the Annual Engineering Consultant’s Reports over the past several years, Burns & McDonnell has observed that the City has made appropriate system upgrades and improvements. The City and the Electric Division are proactive in preventative maintenance and expansion of the Electric System before problems arise. 3-12 CITY OF DOVER, DELAWARE 66

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. 4.0 Financial Overview and Assessment A review of the financial results of the Electric System for the fiscal year ended June 30, 2023, is provided herein. 4.1 Required Revenue The level of revenues required from the retail electric rates for the Electric Division was 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: (3) The Current Expenses of the Electric System during the current fiscal years shown by the Annual Budget . . . for such fiscal year, and (4) 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.” 4.2 Electric Rates Customers of the Electric Division 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 June 2023. The study covers the five-year period from FY 2024 to FY 2028. Specifically, the 2023 rate study was conducted to address the total cost of providing electric services, the allocation of the various customer classes, and design rates to safeguard the utility's financial integrity. Rate increases are planned in FY 2024 and FY 2026. 4-1 CITY OF DOVER, DELAWARE 67

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. Electric rates are approved by Council on an annual basis. The current rate classes are listed below. • Residential • Small Commercial (1 Phase, 3 Phase, 1 Phase Heating, Church, and Municipal) • Medium Commercial (1 Phase & 3 Phase) • Large Commercial (3 Phase with Reactive Metering) • Primary • Transmission • Outdoor Development Lighting • Private Outdoor Lighting 4.3 Operating Results Table 4-1 presents a summary of the annual energy sales, the average monthly number of customer accounts, and the annual average kilowatt-hour (kWh) energy per customer of the Electric Division for FY 2021 through FY 2023. Annual energy sales were 717 GWh in FY 2023, a decrease of 2.35 percent from FY 2022. Annual energy sales were 734 GWh in FY 2022, an increase of 1.1 percent from FY 2021. Table 4-1: Annual Sales and Customer Accounts FY 2021 FY 2022 FY 2023 Energy Sales (kWh) Residential 218,333,574 218,780,668 208,211,515 Commercial 210,640,171 219,868,039 219,576,527 Primary 169,711,706 169,971,932 166,804,566 Transmission 120,486,353 118,618,508 115,398,012 Outdoor Lighting [1] 7,000,000 7,000,000 7,000,000 Total Energy Sales 726,171,804 734,239,147 716,990,620 Average Number of Monthly Customers (accounts) Residential 21,161 21,109 21,402 Commercial 3,411 3,441 3,451 Primary 36 35 35 Transmission 5 5 5 Outdoor Lighting 816 816 816 Total Customers Accounts 25,429 25,406 25,709 Energy Usage Per Customer (kWh/cust./yr.) Residential 10,318 10,364 9,729 Commercial 61,753 63,897 63,627 Primary 4,714,214 4,856,341 4,765,845 Transmission 24,097,271 23,723,702 23,079,602 Outdoor Lighting 8,574 8,578 8,578 Average Usage Per Customer 28,556 28,900 27,889 [1] Estimated based on City energy analysis 4-2 CITY OF DOVER, DELAWARE 68

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. Table 4-2 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 2023 was $75.4 million, representing a decrease of $2.1 million from FY 2022. Total revenue from sales to electric customers includes utility tax revenue. In FY 2023, the average rate revenue per kWh for residential customers was 13.02 cents and the total average rate revenue was 10.52 cents per kWh. The 2023 national average retail prices of electricity to ultimate customers, as published by the US Energy Information Administration (EIA), were 16.02 and 12.65 cents per kWh for residential and customers and across all sectors, respectively.1 For a state-wide comparison, the EIA summarized the Delaware 2023 average monthly utility-level retail sales of electricity and associated revenue per kWh to be 15.35 cents per kWh for residential customers and 12.67 cents per kWh across all sectors.2 Table 4-2: Annual Revenues and Sales Ratios FY 2021 FY 2022 FY 2023 Revenue Residential $ 28,419,916 $ 28,339,602 $ 27,099,610 Commercial 22,709,710 23,610,098 23,591,762 Primary 15,022,323 14,953,003 14,416,686 Transmission 10,107,235 9,328,028 9,055,107 Outdoor Lighting 1,233,336 1,234,689 1,237,423 Total Revenue $ 77,492,520 $ 77,465,421 $ 75,400,589 Revenue/kWh Residential $ 0.1302 $ 0.1295 $ 0.1302 Commercial 0.1078 0.1074 0.1074 Primary 0.0885 0.0880 0.0864 Transmission 0.0839 0.0786 0.0785 Outdoor Lighting 0.1762 0.1764 0.1768 Total Revenue/kWh $ 0.1067 $ 0.1055 $ 0.1052 Revenue Per Customer Residential $ 1,343 $ 1,343 $ 1,266 Commercial 6,658 6,861 6,836 Primary 417,287 427,229 411,905 Transmission 2,021,447 1,865,606 1,811,021 Outdoor Lighting 1,511 1,513 1,516 Average Revenue Per Customer $ 3,047 $ 3,049 $ 2,933 1 US Energy Information Administration. Electric Power Monthly, Table 5.3. Average Price of Electricity to Ultimate Customers by End-Use Sector, 2014-May 2024. https://www.eia.gov/electricity/monthly/ 2 US Energy Information Administration. Electric Power Monthly, Table 5.6.B. Average Price of Electricity to Ultimate Customers by End-Use Sector. https://www.eia.gov/electricity/monthly/ 4-3 CITY OF DOVER, DELAWARE 69

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. The Electric Division’s largest cost in providing electric service to its customers in FY 2023 was the wholesale cost of power. The Electric Division purchased power from the PJM Interconnection marketplace through its Energy Manager, TEA. The cost of non-generated power includes energy and demand costs, power supply management expense, PJM charges and credits, generation fuels cost, and capacity charges and credits. The significance of power supply cost to the Electric Division is illustrated in Table 4-3. 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 2020 through FY 2023. Historically, power supply has been around 50 percent of sales revenue. This increased to 82.8 percent in FY 2023, which indicates rate revenue was not adjusted to recover increased power supply costs. Table 4-3: Revenue Margins and Unaccounted for Energy FY 2021 FY 2022 FY 2023 Net Revenue Margins ($) Sales Revenues $ 77,492,520 $ 77,465,421 $ 75,400,589 Power Supply 38,348,596 50,314,242 62,436,996 Net Revenue Margin $ 39,143,924 $ 27,151,179 $ 12,963,593 Power Supply Percentage 49.5% 65.0% 82.8% Unaccounted for Energy (kWh) Power Supply 753,072,000 759,203,000 739,675,000 Energy Sales 726,171,804 734,239,147 716,990,620 Unaccounted for Energy (Losses) 26,900,196 24,963,853 22,684,380 Percentage 3.6% 3.3% 3.1% Table 4-3 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 lower portion of Table 4-3 presents these comparisons for the Electric Division for FY 2020 through FY 2023. As shown, the percentage ratio of the unaccounted-for energy to the total energy purchased for FY 2023 was 3.1 percent. This is a decrease from 3.3 percent in FY 2022. 3 For the purposes of this 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. 4-4 CITY OF DOVER, DELAWARE 70

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. Table 4-4 presents a re-creation of the Electric Division’s Statement of Revenues, Expenses, and Changes in Unreserved Retained Earnings for the Electric Revenue Fund for FY 2020 through FY 2023. Net income significantly increased in FY 2023 to 5.07 million from negative $4.73 million in FY 2022. Significantly higher power supply expenses combined with a large increase in fair value of investments are the primary reasons for the change in net income between FY 2022 and FY 2023. Table 4-4: Comparative Statement of Revenues, Expense, and Changes in Unreserved Retained Earnings FY 2021 FY 2022 FY 2023 Operating Revenues: Charges for Electric Service $ 78,624,821 $ 78,616,488 $ 76,917,251 Miscellaneous Services/Incomes 1,195,995 2,165,929 1,496,946 Total Operating Revenues $ 79,820,816 $ 80,782,417 $ 78,414,197 Operating Expenses: General Administration $ 5,844,102 $ 5,075,096 $ 6,547,757 Power Supply 38,348,596 50,314,242 62,436,996 Transmission/Distribution 2,673,257 2,896,187 4,345,684 Engineering 862,571 1,017,239 1,740,886 Metering 287,273 219,794 436,312 System Operations 469,818 482,066 779,414 Utility Tax 1,137,022 1,151,067 1,516,661 Depreciation 7,189,643 3,816,555 4,059,579 Retirees Pension - - - Retiree Health Care 789,600 843,500 911,000 Total Operating Expenses $ 57,601,882 $ 65,815,746 $ 82,774,289 Net Operating Income $ 22,218,934 $ 14,966,671 $ (4,360,092) Non-operating Revenues (Expenses) Interest Earned Operating Fund $ 293,945 $ 285,956 $ 1,407,428 Reserved Funds 1,142,149 820,360 952,133 Net Increase/(Decrease) in Fair Value of Investments (1,113,314) (4,013,538) (429,709) Interest and Fiscal Charges (499,894) (451,960) (408,721) Distribution of Earnings - PCA Credit (5,007,542) (5,060,676) 16,465,539 Gain/(Loss) on Sale of Assets (480,219) (351,977) (857,745) Total Non-operating Revenues(Expenses) $ (5,664,875) $ (8,771,835) $ 17,128,925 Net Income Before Operating Transfers $ 16,554,059 $ 6,194,836 $ 12,768,833 Operating Transfers - In - 75,000 75,000 Operating Transfers - Out (10,000,000) (11,000,000) (8,000,000) Total Net Operating Transfers $ (10,000,000) $ (10,925,000) $ (7,925,000) Change in Net Position $ 6,554,059 $ (4,730,164) $ 4,843,833 4-5 CITY OF DOVER, DELAWARE 71

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. 4.3.1 Adequacy of Electric Rates The City’s Bond Resolution requires annual revenues of the Electric Division to 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.” To determine if the City and the Electric Division have met this requirement, the net income shown in Table 4-4 was adjusted to include the interest on bonds, depreciation expense, and other non-cash income and expenses. Table 4-5 summarizes net income adjustments and the calculation of the revenues available for debt service for FY 2021 through FY 2023. Table 4-5: Debt Service Coverage FY 2021 FY 2022 FY 2023 Net Income $ 6,554,059 $ (4,730,164) $ 4,843,833 Plus Excluded Expenses: Operating Transfers - Out $ 10,000,000 $ 11,000,000 $ 8,000,000 Depreciation 7,189,643 3,816,555 4,059,579 Interest and Fiscal Charges 499,894 451,960 408,721 Gain/(Loss) on Sale of Assets 480,219 351,977 857,745 Distribution of Earnings - PCA Credit 5,007,542 5,060,676 (16,465,539) Less Excluded Income: Net Increase/(Decrease) in Fair Value of Investments 1,113,314 4,013,538 429,709 Operating Transfers - In - (75,000) (75,000) Interest Earned - Reserve Funds (1,142,149) (820,360) (952,133) Revenues Available for Debt Service $ 29,702,522 $ 19,069,182 $ 1,106,915 Maximum Principal and Interest in Any Year $ 1,378,575 $ 1,376,950 $ 1,376,950 Debt Service Coverage 21.55 13.85 0.80 Minimum Required Debt Service Ratio 1.25 1.25 1.25 As Table 4-5 illustrates, that the City and the Electric Division maintained a debt service coverage ratio in FY 2021 and FY 2022 that exceeded the required 125 percent plus current expenses, however, debt service coverage decreased significantly in FY 2023, falling below the minimum required level. Therefore, the revenues generated by the current electric rates have not been sufficient to meet the applicable covenants of the Resolution. This is a result of the $16.5 million PCA Credit being used to offset an emergency rate increase. The Distribution of Earnings is a non-operating transaction and not included in the calculation of debt service coverage. 4-6 CITY OF DOVER, DELAWARE 72

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. 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 4-6 presents the annual totals of principal and interest amounts due on bonds currently outstanding. The calculation of the debt service coverage ratio in Table 4-5 is based on the total maximum debt service expense in any fiscal year. The FY 2023 calculation was based on the total FY 2024 debt service expense of $1,376,950. 4.4 Status of Revenue Bonds Table 4-6 illustrates the debt service schedule for outstanding debt of the Electric Division. The principal and interest and the annual total are shown for the bond series. On August 22, 2018, the City of Dover closed on a $15,700,000 Refunding Bond Issue (Series 2018). The proceeds of the sale of the Bonds are to be used (i) to refund on a current refunding basis, the Series 2008 Bonds, and (ii) the costs of issuing the Bonds. Table 4-6: Debt Service Schedule of Electric Revenue Bonds Fiscal Year Principal Interest Total DS 2023 865,000 511,325 1,376,325 2024 910,000 466,950 1,376,950 2025 955,000 420,325 1,375,325 2026 1,005,000 371,325 1,376,325 2027 1,055,000 319,825 1,374,825 2028 1,110,000 265,700 1,375,700 2029 1,160,000 214,750 1,374,750 2030 1,200,000 173,550 1,373,550 2031 1,240,000 136,950 1,376,950 2032 1,275,000 99,225 1,374,225 2033 1,315,000 60,375 1,375,375 2034 1,355,000 20,325 1,375,325 2035 - - - Total $ 13,445,000 $ 3,060,625 $ 16,505,625 4.5 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, 4-7 CITY OF DOVER, DELAWARE 73

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. 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 4-7 summarizes itemized insurance coverage procured by the City for the period July 1, 2022, through June 30, 2023. 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. Table 4-7: Schedule of Insurance Coverage in Effect July 1, 2022 - Power Plants- Property & Boiler and Machinery June 30, 2023 Coverage Locations: VanSant Station Coverages: 50,000,000 Per Occurence Agreed Amount, Special Extra Expense $2,000,000 Errors & Omissions $2,000,000 Expediting Cost $1,000,000 Property in the Course of Construction $1,000,000 Earthquake $10,000,000 Flood $10,000,000 Debris Removal $2,500,000 Property in Transit $1,000,000 Demolition & Increase Cost of Construction $5,000,000 Unnamed Locations $500,000 Valuable Papers $100,000 Electronic Data Processing $1,000,000 4.6 Operating and Reserve Accounts The Electric Revenue Fund and the Electric I&E Fund are the City’s two funds devoted to the Electric Division. The funds are used to manage cash and transactions related to utility operations and capital expenditures, respectively. Each fund includes certain cash accounts established to make money available for specific purposes when they are needed. The accounts maintained within the Revenue and I&E Funds are listed herein. 4-8 CITY OF DOVER, DELAWARE 74

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. Electric Revenue Fund • Insurance Reserve Account • Contingency Reserve Account • Electric Rate Stabilization Reserve Account • Interest and Sinking Account Electric Improvement & Extension Fund • Depreciation Reserve Account • Future Capacity Reserve Account The following are descriptions of each Fund, their respective accounts, and their purposes. 4.6.1 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 accounts are to be maintained from the Electric Revenue Fund. Moneys are transferred from the Electric Revenue Fund to the Electric Rate Stabilization Reserve Account, the Interest and Sinking Account, the I&E Fund, the Depreciation Reserve Account, and the Future Capacity Reserve Account. 4.6.1.1 Insurance Reserve Account The Insurance Reserve Account was established by the City to fund insurance deductibles on the electric transmission and distribution system and the generating plants in the event of loss(es) covered by the City’s insurance policies. The reserve balance at the end of FY 2023 was $842,483. To reduce insurance premiums, the City raised the minimum reserve balance to $750,000. 4.6.1.2 Contingency Reserve Account The Contingency Reserve Account 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 Account of at least $750,000. The FY 2023 year-end balance was $959,800 which is equal to 1.3 percent of the FY 2023 revenue for the Electric Revenue Fund. 4.6.1.3 Electric Rate Stabilization Account The Electric Rate Stabilization Reserve Account was established in FY 2005 to offset the costs of the power cost adjustment to the customers of Dover. The account’s target balance is a minimum of 10.0 percent, not to exceed 20.0 percent, of purchase power cost in any given year. Any excess of this amount will be refunded to customers in future years by reducing the rate of the power cost adjustment. The account’s FY 2023 end- of-year balance was $10,179,384. The City drew down $10 million from the fund in FY 2023. We note that the FY balance remains well in excess of the target minimum of 10 percent of purchase power cost. 4-9 CITY OF DOVER, DELAWARE 75

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. 4.6.1.4 Interest and Sinking Account The Interest and Sinking Account was established in Section 507 of the Resolution. This account 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 remaining life of all outstanding bonds. 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. The total amount in the Restricted Accounts for the 2018 bonds as of June 30, 2023, was $2,548,335. 4.6.2 Electric Improvement and Extension Fund The I&E Fund was established in Section 507 of the Resolution. Funds are transferred to the I&E 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 Account. The I&E Fund also receives additional funding from the Depreciation Reserve Account, the Future Capacity Reserve Account, and from development receipts. Section 510 of the Resolution indicates that, except for certain situations, moneys held in the I&E 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. 4.6.2.1 Depreciation Reserve Account The Depreciation Reserve Account 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 Account. Transfers to the I&E Fund are made as necessary to fund capital projects. The target appropriation for the Depreciation Reserve Account 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 2023 was $21,430,749. 4.6.2.2 Future Capacity Reserve Account The Future Capacity Reserve Account 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 4-10 CITY OF DOVER, DELAWARE 76

FY 2023 Engineering Consultant’s Report Financial Overview and Assessment Item 1. power supply resources for future demand for electricity. The target balance for this reserve is $10,000,000. The reserve balance at the end of FY 2023 was $14,682,094. Table 4-8 presents FY 2021 through FY 2023 year-end summaries of the activity within the cash accounts described above. The Insurance Reserve Account, the Contingency Reserve Account, the Electric Rate Stabilization Reserve Account, and the Interest and Sinking Account are accounts within the Electric Revenue Fund. The Depreciation Reserve Account and the Future Capacity Reserve Account are accounts within the I&E Fund. Table 4-8: Reserve Account Activity and Balances Insurance Contingency Electric Rate Bond Depreciation Future Reserve Reserve Stabilization Reserve Reserve Capacity Year Ended June 30, 2021 Balance in Account on July 1 $802,443 $914,185 $22,466,753 $2,495,678 $21,380,319 $13,984,313 Receipts Interest Earned $15,521 $17,682 $434,523 $335 $413,534 $270,482 Appropriations $0 $0 ($500,000) $0 $0 $0 Total Funds Available $817,964 $931,867 $22,401,276 $2,496,013 $21,793,853 $14,254,795 Disbursements Fees ($134) ($152) ($3,746) ($15,390) ($3,565) ($2,332) Debt Service Payments Transfer to Capital Projects/Ops. Balance in Account on June 30 $817,830 $931,714 $22,397,530 $2,480,623 $21,790,288 $14,252,463 Year Ended June 30, 2022 Balance in Account on July 1 $817,830 $931,714 $22,397,530 $2,480,623 $21,790,288 $14,252,463 Receipts Interest Earned $11,145 $12,696 $305,212 $151 $296,937 $194,219 Appropriations $0 $0 ($2,800,000) $0 $0 Total Funds Available $828,974 $944,411 $19,902,742 $2,480,774 $22,087,225 $14,446,681 Disbursements Fees ($1,000,096) Debt Service Payments Transfer to Capital Projects/Ops. Balance in Account on June 30 $828,974 $944,411 $19,902,742 $2,480,774 $21,087,129 $14,446,681 Year Ended June 30, 2023 Balance in Account on July 1 $828,974 $944,411 $19,902,742 $2,480,774 $21,087,129 $14,446,681 Receipts Interest Earned $13,508 $15,389 $276,642 $67,561 $343,620 $235,412 Appropriations $0 $0 ($10,000,000) $0 $0 $0 Total Funds Available $842,483 $959,800 $10,179,384 $2,548,335 $21,430,749 $14,682,094 Disbursements Fees Debt Service Payments Transfer to Capital Projects/Ops. Balance in Account on June 30 $842,483 $959,800 $10,179,384 $2,548,335 $21,430,749 $14,682,094 4-11 CITY OF DOVER, DELAWARE 77

FY 2023 Engineering Consultant’s Report Conclusions Item 1. 5.0 Conclusions In the preparation of this Engineering Consultant’s Report, Burns & McDonnell completed assessments of the electric generating station and the transmission and distribution system of the City Electric Division. The investigations included interviews, observations, and reviews of FY 2023 expenditures and FY 2024 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 practices in the United States. 2. The design, construction, operation, and maintenance of the City's electric transmission and distribution system and associated facilities are consistent with generally accepted electric utility standards. The system has been upgraded to improve operation, reliability, and service quality to customers. 3. The Electric Division capital projects included in the City’s Capital Investment Plan and the FY 2023 Operating Budget are necessary and should provide improved reliability and power quality for the Electric System. 4. The balances as of June 30, 2023, 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 retail rates in FY 2023 were not sufficient to fulfill the debt service coverage requirement defined in Section 502(c) of the Resolution. 5-1 CITY OF DOVER, DELAWARE 78

Item 1. 79