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REGULAR CITY COUNCIL MEETING
The Regular City Council Meeting was held by video conference on August 24, 2020 at 7:30 p.m.
with Council President Hare presiding. Council members present via video or telephone were
Mr. Anderson, Mr. Sudler, Mr. Neil, Mr. Slavin, Mr. Cole, Mr. Taylor, and Mr. Lindell.
Staff members present via video or telephone were Police Chief Johnson, Ms. Peddicord,
Mrs. Mitchell, Mr. Hugg, Mr. Rodriguez, and Mrs. McDowell. Mayor Christiansen was absent.
The invocation was given by Mr. Will Grimes, followed by the Pledge of Allegiance.
ADOPTION OF AGENDA
The agenda was adopted by unanimous consent.
Mr. Neil moved for adoption of the consent agenda, seconded by Mr. Lindell and carried by
a unanimous roll call vote.
ADOPTION OF MINUTES - REGULAR COUNCIL MEETING OF JULY 27, 2020
The Minutes of the Regular Council Meeting of July 27, 2020 were unanimously approved by
motion of Mr. Neil, seconded by Mr. Lindell and bore the written approval of Mayor
Christiansen.
PRESENTATION - RESTORING CENTRAL DOVER IMPLEMENTATION PHASE II 2020
TO 2025
Ms. Karen Speakman, Executive Director; Mr. Will Grimes, Neighborhood Revitalization
Coordinator; Ms. Chanda Jackson, Community Engagement Specialist; Ms. Patricia Kelleher, Real
Estate Development Director; and Frank Datillo, Construction Manager with NCALL reviewed the
presentations “Restoring Central Dover Implementation Phase II 2020 to 2025" and “Central
Delaware Habitat for Humanity and NCALL's Housing Development Plans for South New and
Queen Streets.”
PRESENTATION - CENTRAL DELAWARE HABITAT FOR HUMANITY AND NCALL'S
HOUSING DEVELOPMENT PLANS FOR SOUTH NEW AND QUEEN STREETS
This item was presented along with the previous item.
PRESENTATION - TORNADO UPDATE
Mrs. Donna Mitchell, City Manager, provided an update on the cleanup of the storm damage.
COUNCIL COMMITTEE OF THE WHOLE REPORT - JULY 28, 2020
The Council Committee of the Whole was held by video conference on July 28, 2020
at 6:00 p.m., with Council President Hare presiding. Council members present via
video or telephone were Mr. Anderson, Mr. Sudler, Mr. Neil, Mr. Slavin, Mr. Cole,
Mr. Taylor, and Mr. Lindell. Mayor Christiansen was also present. Civilian members
present via video or telephone for their Committee meetings were Mr. Wagner and
Mr. Shelton (Safety Advisory and Transportation), Ms. Maucher (Utility), and
Mr. Contant and Mr. Shevock (Legislative, Finance, and Administration).
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 2
UTILITY COMMITTEE
The Utility Committee met with Chairman Cole presiding.
Adoption of Agenda
Mr. Neil moved for approval of the agenda, seconded by Mr. Slavin and
unanimously carried.
Annual Review and Approval of Governing Policy for Energy Commodity Risk
Management
Mrs. Donna Mitchell, City Manager, reviewed Governing Policy for Energy
Commodity Risk Management. She stated the City's Risk Management Committee
had no recommended changes to this year's policy.
Staff recommended no changes.
Mr. Slavin moved to recommend no changes, as recommended by Staff. The motion
was seconded by Mr. Sudler.
Mr. Neil stated that as they are searching for a city manager, they should let the
people who are searching for candidates know that this is an important part of what
the City of Dover does and that person is going to head the risk management for this
program.
Mr. Slavin moved to recommend no changes, as recommended by Staff. The
motion was seconded by Mr. Sudler and unanimously carried.
By consent agenda, Mr. Neil moved for approval of the Governing Policy for Energy
Commodity Risk Management, as presented (Exhibit #1). The motion was seconded by
Mr. Lindell and carried by a unanimous roll call vote.
Mr. Hare moved for adjournment of the Utility Committee meeting, seconded
by Mr. Neil and unanimously carried.
Meeting adjourned at 6:04 p.m.
SAFETY ADVISORY AND TRANSPORTATION COMMITTEE
The Safety Advisory and Transportation Committee met with Chairman Taylor
presiding.
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Adoption of Agenda
Mr. Sudler moved for approval of the agenda, seconded by Mr. Slavin and
unanimously carried.
Presentation - 15 Initiatives for Criminal Justice Reforms (Attorney General
Kathy Jennings)
Mr. Taylor disclosed that he heard this presentation during the Racial Equality and
Social Justice Collaborative meeting two weeks ago.
Attorney General Kathy Jennings provided a verbal presentation of 15 Initiatives for
Criminal Justice Reforms. Attorney General Jennings provided the following
information regarding changes they have made internal:
• They believe it is vitally important for their prosecutors to divert as many
people as they can safely into treatment and away from prison.
• They have been working with law enforcement agencies throughout the State
to provide assistance with law enforcement assisted diversion programs that
at times divert someone from even having an arrest when they can be sent for
treatment and they are willing to do so, or when the cause of their conduct is
mental illness that can be treated safely.
• They have, as a matter of policy in their office, de-emphasized low-level drug
crimes that have long been an entry point in the system for nonviolent
offenders to go into prison, disproportionately impacting black people.
• They are no longer seeking warrants because someone is unable to pay a fine
or a fee.
• They have dramatically reduced the number of times a prosecutor seeks
habitual offender status for nonviolent crimes and those have been reduced
by 90% in the first year of her administration.
Attorney General Jennings stated that more work is necessary for all of them to have
faith in the fairness of their justice system. She stated even though they were able to
pass tremendous legislation the past session, including expungement of criminal
records that enabled people who had criminal records to get jobs. She was happy to
say that law passed in the Senate unanimously and in the House almost unanimously.
It was a job’s bill and it is already working to enable people to expunge minor
records so that they can get a job and support their families.
Attorney General Jennings stated that they have also worked on the sentencing
system, which has not been changed since 1991. They need a sentencing system that
relies on real data that looks at the racial impact of sentences in the state and the
disparities that do not ignore race, but is conscious of the effects of race in the
criminal justice system. Attorney General Jennings stated that they are fighting to
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 4
reform policing in Delaware, and that it is not a pro-police or anti-police issue. She
noted that it is important to them to make sure that they are reforming a system to
build community trust between police, law enforcement, and the people that they
serve.
Attorney General Jennings stated they have proposed, in collaboration with many
police chiefs and community members that they have talked to over the past several
months, a series of reforms that frankly, they just make common sense. They have
investigated what other jurisdictions have done and how those reforms are working
elsewhere. She stated that they believe that they need the following done in
Delaware:
• A stronger use of force standard in Delaware. The use of force standard by
law is entirely subjective and there is not an objective overlay. They have
proposed that it be an objective reasonableness test, the way it is in so many
other jurisdictions in our country.
• They believe there should be a law in Delaware that makes it criminal to
violate someone's civil rights under federal law.
• They also believe that disciplinary proceedings should be more transparent
and more publicly available.
• Mandatory, universal, use of body-worn cameras. It is so helpful because it
shows the good work that a police officer does when that officer is engaged
with a citizen and it also shows the behavior of the citizen. It makes
everybody aware that they have to behave professionally at all times and it
creates a transparent, reviewable record of what actually happened. They are
looking for ways to get funding from their congressional delegation and
working in partnership with them to see if they can get body-worn cameras
on every police officer in this state.
• Banning knee holds and choke holds have been done by the Legislature.
• Mandatory participation in the currently voluntary do-not-hire list. There is
a national database that agencies can look at to see if an officer should not be
hired by another jurisdiction.
Attorney General Jennings commended Governor John Carney who, through an
executive order, affected a lot of the progress, including a ban on choke holds,
prohibiting the release of juvenile mug shots, participation in a national use-of-force
database, and implementation of better training. She stated that these are really
important steps the Governor has taken, but they need to make them permanent and
an executive order is not permanent. Attorney General Jennings stated that they are
very hopeful that the legislature and others will work with them to make these things
happen.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 5
Responding to Mr. Sudler, Attorney General Jennings stated that body cameras were
high on the priority list. She stated that some of the changes are legislative and they
have their own priorities, but she thought body-worn cameras were pretty much
number one.
Mr. Sudler asked what the estimated cost would be for the City of Dover’s
population and size to sustain the program, not to get the mechanisms. He stated he
heard that the body camera mechanisms are not that expensive, but to sustain the
database program and to install it was. Responding, Attorney General Jennings stated
that the Council of Police Chiefs, of which Chief Johnson is a member, are doing a
survey and are working with them to get a dollar figure for body-worn cameras in all
police departments, to have the necessary storage, and the necessary resources to staff
it. She noted what they found at New Castle County Police that it was the storage of
the data that cost the most money. She stated they have two officers who are devoted
to handling that data because it has to be transferred to the Attorney General's office,
witnesses have to be de-identified under law, and victims certainly have to be
de-identified. She stated that it is a laborious process that requires additional staffing
and that they will share that as soon as they have those dollar figures finalized.
Responding to Mr. Anderson, Attorney General Jennings stated they are currently
pursuing information on federal and other grants on such devices. She noted that they
are working with the congressional delegation, Representative Lisa Blunt-Rochester,
Senator Chris Coons, and Senator Tom Carper, to see if there is federal money
available specifically to fill the void right now. She stated that one of the ways that
they can build public trust is to disclose the footage when it would further the cause
of justice to do so because part of what she has seen is that when the public does not
know what happened they think the worst. Attorney General Jennings stated that it
is really important when they write their reports, after they examine the use of force
by police, most importantly in a shooting, that they disclose the body-worn cameras
and other footage that will show actually what happened, so they intend to start doing
that as well.
Responding to Mr. Anderson, Attorney General Jennings stated if it does not result
in a criminal case there are varying sorts of time periods and record retention
requirements in the state. She stated if it does not result in a criminal case, then
frankly, it does not need to be stored unless the police department needs it for
training purposes or for other reasons. Attorney General Jennings stated when it
results in a criminal case, even if it is a misdemeanor, it has to be stored at least until
the statute of limitations is over or all appeals are exhausted. She stated they have
worked that out with other police agencies and that work could be replicated.
Mr. Anderson, regarding a Civilian Review Board statewide, asked if there were any
examples where it has been a value added and if it has worked anywhere, instead of
creating another layer of bureaucracy. Responding, Attorney General Jennings stated
that they do not want another layer of bureaucracy. She stated that it has worked and
she can get two examples from other jurisdictions where it does work. Attorney
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 6
General Jennings noted that it works most especially when the civilians are trained,
have a good sense of the role of the police officer and the reality of the job, and when
there is true oversight.
Mr. Shelton asked who develops the policy for body-worn cameras and if that was
something done through the Attorney General's office or if that was in each
individual jurisdiction. Responding, Attorney General Jennings stated they have
spent a year developing a statewide body-worn camera policy in conjunction with the
Police Chiefs Council. She stated they do have a statewide body-worn camera policy
and that there are certain things they have been able to do on a statewide basis.
Attorney General Jennings stated that does not preclude a police agency from having
a different policy because the state Police Chiefs Council adopts a policy, it is not
required to be followed, unless it is part of the state law.
Presentation - Racial Equality and Social Justice Collaborative
Ms. Michelle Taylor, President and Chief Executive Officer, United Way of
Delaware, reviewed the presentation titled, "The Racial Equity & Social Justice
Collaborative," located in the packet.
Responding to Mr. Slavin, Ms. Taylor stated there were a couple of actions she
would like to see the City Council take that would support the initiatives of the
program. She stated one was partnering with the collaborative and supporting the
efforts overall. She noted that means whatever place and space that they have the
most passion about or that connects more to the agenda that they are trying to be able
to achieve. Ms. Taylor stated that two, for consideration, there is an opportunity for
them to partner around the equity challenge that is coming up and helping to promote
it. She stated to partner just means that they are agreeing to promote it, they have to
participate individually, as they do the work, but that they also want to partner with
them. She stated that there is an opportunity for them to be able to leverage the
leaders that are a part of this initiative and the work to mutually try to achieve some
of the goals that they are seeking to do. Ms. Taylor stated that this is not a one-way
agenda, they want to be able to build a stronger, greater, Dover community. She
noted that Council members have Intel and some grassroots information and so
making sure that they are staying in step and that they are communicating and that
they could set, maybe even some shared aspirations together, would be what they
would like to achieve.
Mr. Anderson asked where the economic empowerment sits in this. Responding,
Ms. Taylor stated one of their subcommittees is under wealth creation. She stated that
under wealth creation, it is the whole issue of workforces, livable wages, financial
empowerment, affordable housing. Ms. Taylor noted that right now their biggest
concern is once the eviction moratoriums will be lifted and that group is concerned
about the impact that might have on people in the community and disproportionately
on a specific group of people across the state.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 7
Responding to Mr. Anderson, Ms. Taylor stated that the displacement would affect
public safety and issues of crime pretty significantly. She noted that she is on a
statewide panel where they are projecting that a little more than 30,000 people could
be impacted by evictions. She stated they are saying it would not be that many
because the court system is not structured to take all of them, but there is a significant
amount and they have identified those that are behind in their rent. Ms. Taylor stated
it impacts both safety and the family structure as a whole. She noted that they think
about stabilizing kids, all of those things they are identifying are directly or indirectly
impacted by families being disruptive in housing and the impact that it will have on
homelessness within communities as well.
Presentation - Dover Downs NASCAR Event - Plans for Staging with or without
Fans
The presenter requested that this item be deferred.
Update on Body Cameras
Chief Johnson, Dover Police Department, provided an update on body cameras. He
stated they were working to freshen up the dollars and cents estimates as to what a
body-worn camera program would look like if they had to fund it locally. Chief
Johnson noted the following information:
1. He was able to get some information from the vendor that they use now for
their in-car cameras. The last time they looked at them, their technology had
a lot of challenges in performance that even though they were the vendor for
in-car cameras, there was not a whole lot of quality points that they needed
as a vendor.
2. They are still waiting for Axon to get back to them. They are a very popular
brand that is used across the nation. He suspects they are in high demand
right now to turn around information on these things, considering conditions
nationally.
3. Motorola was another vendor that they had not considered before, but the
team brought them in for a look last week and they got their numbers midday
today.
Chief Johnson stated, depending on the vendor, how they structure their fee schedule,
and what services they choose, the price tag is going to be somewhere between
$300,000 and $400,000 over an initial roll-in program period, which is probably
between three and five years. He noted that this clearly could be a little bit different
depending on which side best fits their needs. The bigger cost has to do with devices,
hardware, and storage considerations, but there is also a staffing piece.
Chief Johnson stated he felt 1.5 full-time employees should be dedicated to the
program and then another individual to do other things for them, whether they
combine a position or they create a part-time position to cover for the individual that
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 8
is full-time when they are off or when volume demand is high for video files. He
noted that the Human Resources aspect was going to be just as expensive going
forward as the devices and the hardware.
Mayor Christiansen stated that he wished Council would endorse them moving
forward and looking at an independent venture and they can iron out the details at a
later date, but they also look to the state to see if they can facilitate them, not just
them, but every department across the state.
Mr. Sudler moved to recommend that Mayor Christiansen, in conjunction with Chief
Johnson, to negotiate the best deal immediately in 2020 with vendors to be reviewed
by City Council regarding the body cameras. The motion was seconded by
Mr. Anderson.
Mr. Lindell suggested that they draft a letter of support as Council and send it to their
elected delegation at the state level to start putting some pressure on the state officials
to deliver on what some of these officials have promised that they are going to do and
then proceed from there. Mayor Christiansen stated he agreed with Mr. Lindell, but
thought that they need to act on Mr. Sudler's motion because it shows in good faith
that the Mayor and Council, and Chief of Police are committed into looking into
having a plan in place just in case folks that made promises in the middle of the
storm do not forget them in calm water. Mayor Christiansen stated they do not have
to commit any money and they need to follow through on Mr. Lindell's suggestion
that they see out their local legislators and ask them to force the powers that be to act
on the promises that they made on the East side of Legislative Hall.
Mr. Lindell stated they could go this route, but asked what happens once they get the
data back. He asked if they are still going to be in the same position and are they
going to spend the money at that time, while they are working with the state to try to
get such funding as well. Mr. Lindell expressed his concerns, due to item #3 -
Review and Approval of Federal COPS Grant on the Legislative, Finance, and
Administration Committee.
Mr. Anderson stated he agreed that they need to send a letter or do a resolution of
support and request that the state and, he would add their federal delegation, worked
in not only provide grant money, but if they move forward, it is going to be phased
in over several years.
Mr. Anderson stated that Mayor Christiansen's proposal is correct that they should
agree to move forward as Mr. Sudler's motion stated so that they can get all the
information they need. They are not going to spend money right away, with that in
order to even apply for the grants, they have to have the information. Mr. Anderson
noted that if the state and federal monies do not look like they are coming, they
cannot wait on them.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 9
Responding to Mr. Wagner, Chief Johnson stated he was not sure if the programs
were available on a lease basis. Chief Johnson stated one of the programs talks about
replacement devices as technology upgrades, which kind of is like a lease as long as
you are paying for the licensing and the software agreements, and you buy the
updates and things of that nature. He stated that other proposals do not specifically
discuss that and that the hard part about leasing body worn cameras are they are out
in the field and their price per unit is relatively inexpensive. Chief Johnson noted that
it is not typically the kind of asset that would fit neatly into a leasing program
because of its service life, but he will look for that specifically and see if he can get
a better answer. Mr. Wagner stated the lifespan of that camera could be covered in
a lease contract, but you have software changes, you have to deal with what it looks
like to him is they buy it, they are going to deliver to their door and it is the
responsibility of the department and City to maintain it.
Mr. Sudler stated the motion does not commit them to making a decision as soon as
they bring back a proposal, as was stated earlier, they may decide that none of that
works at that time, but at least they will have something in front of them, some raw
data that they can show their constituents and also that they can review as a whole.
Chief Johnson noted that the proposal that they actually made last month when he
spoke to Mayor Christiansen and Mr. Donna Mitchell, City Manager, that it was for
civilian staff to manage this program, it was not going to be a police officer position,
but he did ask that the position be rated and built around the idea of someone that has
law enforcement sophistication in their background.
Mr. Sudler moved to recommend that Mayor Christiansen, in conjunction with
Chief Johnson, negotiate the best deal immediately in 2020 with vendors to be
reviewed by City Council regarding the body cameras. The motion was
seconded by Mr. Anderson and unanimously carried.
By consent agenda, Mr. Neil moved for approval of the Committee’s recommendation,
seconded by Mr. Lindell and carried by a unanimous roll call vote.
Mr. Neil moved for adjournment of the Safety Advisory and Transportation
Committee meeting, seconded by Mr. Anderson and unanimously carried.
Meeting adjourned at 7:47 p.m.
LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee met with Chairman Lindell
presiding.
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Adoption of Agenda
Mr. Neil moved for approval of the agenda, seconded by Mr. Taylor and
unanimously carried.
Discussion - New Property Value Notifications
Mr. Lindell stated they had a citizen concern regarding the issue of new property
value notifications.
Mr. Taylor stated that recently, property value notifications were issued, he believed
in January and there was a pocket in South Dover that did not receive those
notifications. He stated his neighbor brought it to his attention.
Mr. David Lees, 1014 Westview Terrace, expressed his concerns regarding not
having received the notification of property assessment changes and the lack of
uniformity to the property assessment increases. Mr. Lees suggested that there needs
to be some kind of way to prevent these ridiculously high increases in assessments
that are out of touch with cost of living for that same time period.
Responding to Mr. Anderson, Ms. Cheryl Bundek, Tax Assessor, stated that other
than Mr. Lees, they did not have any other complaints. She noted that the letters are
generated by owner names and done to save on postage so they can combine multiple
properties if an owner owns more than one, so they are not done by street order.
Ms. Bundek stated the problem is not with the City at that point, but believed that it
would probably be a postal carrier issue, because they did not print them in that
order. She noted that to have a whole street of Westview Terrace not get their
notification, the only way that could happen is if she went back through and put them
all back into a street order. Responding to Mr. Lees' concern about mortgage
companies receiving the notification, Ms. Bundek stated that was not correct, they
only go to property owners and they mailed them out in February. The notification
was done on the Council agenda of January 27th, there was a PowerPoint
presentation given by Tyler Technologies, and that is when they said that the property
notifications would be going out within a couple of weeks.
Responding to Mr. Anderson regarding a possible solution, Ms. Bundek stated that
due to what the procedures and the policies are with the assessment office after
April 30th, they are not able to appeal until the following year. She stated that she
believed that was in place because of budget concerns on what could happen if an
appeal is granted at the board level, so that would be up to Council on whether or not
they would want to allow appeals to happen. Ms. Bundek suggested, because getting
the board together is hard enough once a year, is maybe to allow those people who
did not receive their bill to actually appeal next April and have it go retro, that is up
to the board. She stated if they put that in their motion that they would like anything
to be retroactive to the previous year that would be up to the board. That is not up to
the City of Dover Assessor's Office.
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Responding to Ms. Innus Parker's regarding long-term disability and reductions for
disability on City taxes to receive social security, Ms. Bundek stated disability was
done through an ad hoc committee years ago and they started the disability exemption
or reduction. She stated did not remember exactly why, but believed it was because
if they were not Social Security Disability, that they were not able to work, therefore
that would give them a reduction because with the senior citizens’ reduction as well,
they give a reduction based on income. Ms. Bundek stated they do not do that with
disability. It is if a person is disabled with the Social Security Administration, it does
not matter what their income is, they automatically get it. They have to send a letter
in every year from Social Security, which is something that was done through an ad
hoc committee of Council.
Mr. Hare suggested bringing it back in September to discuss it and maybe put it in
something where they can appeal it in the next round. He noted that if they win their
appeal then it is retroactive.
Mr. Neil stated if the City has not contacted the postal authorities, they should, to at
least make them aware that there was a problem.
Proposed Extension of Lodging Tax Deadline
Mrs. Donna Mitchell, City Manager, stated the lodging tax was passed a year ago,
and was not sure if hoteliers had forgotten, but they did not seem to be prepared for
it when the notices went out last week or so. She noted that she heard from one of
them and they asked if they could get an extension and noted that they would not be
able to go back and collect on people that had used the hotel from the beginning of
July up to the time he would have gotten the notice, or get his systems implemented
in order to handle this.
Ms. Lori Peddicord, Controller/Treasurer, stated she did receive an email from a
hotelier that manages four different ones within the City of Dover. She noted the
hotelier stated she did imply that it took some time to get it set up with her franchise
office, but she did take the proper steps to do that prior to the July one deadline or
implementation date. Ms. Peddicord stated the hotelier made reference that it is not
something that is easily turned on and turned off. Ms. Peddicord noted that she would
be a little leery to say or to suggest having some of them send it and have other ones
get an extension.
Mr. Neil moved to recommend collecting the lodging tax as scheduled without
penalties if not paid by September 1st. The motion was seconded by
Mr. Anderson and unanimously carried.
By consent agenda, Mr. Neil moved for approval of the Committee’s recommendation,
seconded by Mr. Lindell and carried by a unanimous roll call vote.
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Review and Approval of Federal COPS Grant
Chief Johnson, Dover Police Department, reviewed the background and analysis
regarding the Federal COPS Grant.
Responding to Committee members' questions regarding the Federal COPS Grant,
Chief Johnson provided the following information:
• They have to pick five individuals and they actually have to have names on
the grant compliance paperwork of who they hired so the federal authorities
can audit their experience from on boarding through to completing their
fourth year. Once they get to the end of the four years, the options open up
again, that if there is dissatisfaction, they can make change.
• The federal government does not offer grant funding to supplant existing
positions. They offer grant funding to help expand the authorized strength of
the agency, whether it is policing, fire service or what have you, under the
umbrella of public safety grants in the federal system.
• If they were audited, they would have to demonstrate the real numbers of
online employees that they had and how many open positions that they had,
and it is in publication that they have an authorized strength of 101. They
would have to go and do the additional positions over 101. They would not
be able to tap into this grant program to subsidize any of the eight individuals
he hopes to identify over the next four to seven weeks for either the fall or the
March Academy classes.
• They have four lieutenants on the force and are authorized 101 sworn
officers. They have eight vacancies, which takes them back to 93 and four
tired individuals all in various stages of either Academy or on boarding right
now.
• He did not think anybody was eligible for a competitive rank until, very least,
their eighth year.
• Regarding diversity, they have had active conversation over the last two -
three months also regarding their efforts at recruiting, which is why they are
trying to get farther out, also in reference to persons of colors and minority
representation on the senior staff, while it was not a primary reason why they
moved to make the third captaincy and backfill the Lieutenant and Sergeants
positions behind that was to expand the opportunity for any number of the
current officers that they have that represent minority communities at the rank
of Master Corporal and Sergeant, which are on the threshold of making
Lieutenant. It is a competitive process. He is trying to create a pathway where
there is expanded opportunity to accelerate the process and getting more
diverse representation at the higher ranks.
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• There is a myriad of factors that go into the selection of lieutenants and
captains. That is not a testing process. That is a work performance and
interview process and the buck stops with him. He is trying to create a
pathway where there is expanded opportunity to accelerate the process that
you described, getting more diverse representation at the higher ranks. I just
have to do it in a way that I think I've alluded to before that has a legitimacy
internally, as well as it does externally.
• They have had less than three females on the force that have had a least eight
years.
• The deadline for accepting is the second Friday in August. They have already
applied for an extension for that acceptance window with the federal
government, which he believes was granted. With COVID, there have been
issues related to municipal administrations and governments being able to
actually have meetings to consider the issue, so it is not an unusual request
apparently this time around for an extension. I believe we were granted that
extension through the end of August. So I believe we're going to be able to
wait until the next scheduled meeting if needs be to get to the point of
approval, but it wasn't a time line I set. It's a federal standard.
• He has more than eight finalists right now that are up to the point of the
interview with the Chief in their selection process for the hiring cycle that we
started back in April, May. We're advertising for that right now and we're
searching for candidates for that for right now.
• Without this grant, to achieve their goal with community policing that's going
to probably require peeling resources away from other operational units to
make sure that we have enough officers doing primary community policing
work.
• When looking at that dynamic of the ratio of officers to citizens, there are so
many variables that makes up the sense of a community. Then the police
department that is charged with supporting safety and law enforcement, it
comes down to when they see a community that it might have half the
number of officers per citizen working for them.
• Right now Dover is in a really good position where they are probably making
great decisions, as long as they have the resources to keep them going. They
are able to investigate the kinds of things that concerned folks, particularly
the quality of life stuff, where they are able to follow through and provide
services, but in departments where there are fewer officers per citizen, they
probably do not see as much of that.
• Through casual conversations, probably below 10% of the police department
lives within City limits.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 14
• He understands the value of being officers living in the community that does
have a lot of upsides, the challenge typically is found in recruiting, usually
not too difficult to get an officer on the younger side and who doesn't have a
spouse to do a relocation and move into accept a position.
• There is a small monetary incentive for living in Dover.
Mr. Slavin stated he would not make a motion at this point and that he would simply
have the item brought forward for the August 24, 2020 Regular Council meeting. He
stated that they all kind of understood what the discussion was, and he was sure some
of it will be repeated as they have more and better information, but he did not want
to delay the process of bringing it forward to Council.
Responding to Mr. Lindell, Mr. Slavin clarified that he was saying to bring it to
Council without a recommendation. Mr. Slavin noted that they do not need a formal
motion to not make a recommendation and that they can just close the Committee
hearing and have it on the record.
Mr. Lindell stated he had no issues bringing the discussion to an end to continue that
at the next City Council meeting.
During the Council meeting, Mr. Slavin advised that he had three primary concerns: the midyear
budget request; the issue related to the Academy and being able to get new recruits certified and on
the street; and a rising concern in the community that more is not necessarily better but new ways
of policing the community are better. Mr. Slavin stated that Chief Johnson would like to place a
much stronger emphasis on community policing.
Mr. Slavin moved to approve the grant proposal for the five additional requested positions and direct
that the funding and the positions are appropriated by Council to a budget unit within the police
department which is dedicated to community policing. The motion was seconded by Mr. Neil.
Mr. Lindell stated that he was confident with Chief Johnson's plan for initiating the community
policing program and that he supported the motion to make it a specific item in the budget devoting
the positions to community policing. He advised that he still had a concern about midyear budget
items.
Mr. Lindell moved to amend the motion to stated that all future items, after the budget is
approved, must be brought back as a budget amendment. The motion was seconded by
Mr. Slavin and unanimously carried.
The motion to approve the grant proposal for the five additional requested positions and to
direct that the funding and the positions are appropriated by Council to a budget unit within
the police department which is dedicated to community policing and that all future items after
the budget is approved must be brought back as a budget amendment was unanimously
carried.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 15
Mr. Lindell request that a workshop be held in the near future devoted to Public Works to ensure that
they are funding and staffing Public Works adequately.
Proposed Ordinance #2020-10 - Chapter 34 - Elections
Mr. Lindell reviewed the background information of proposed ordinance #2020-10
- Chapter 34 - Elections.
Staff recommended adoption of Proposed Ordinance #2020-10.
Mr. Neil moved to recommend adoption of Proposed Ordinance #2020-10, as
recommended by Staff. The motion was seconded by Mr. Hare and
unanimously carried.
By consent agenda, Mr. Neil moved for approval of the Committee’s recommendation,
seconded by Mr. Lindell and carried by a unanimous roll call vote. (The First Reading of the
ordinance will take place during the latter part of the meeting.)
Mr. Neil moved for adjournment of the Legislative, Finance, and
Administration Committee meeting, seconded by Mr. Hare and unanimously
carried.
Meeting adjourned at 10:02 p.m.
Mr. Neil moved for adjournment of the Council Committee of the Whole meeting.
The motion was seconded by Mr. Anderson and unanimously carried.
Meeting adjourned at 10:02 p.m.
Mr. Slavin moved for acceptance of the Council Committee of the Whole Report, seconded by
Mr. Anderson and unanimously carried.
MONTHLY REPORTS - JULY 2020
By motion of Mr. Neil, seconded by Mr. Slavin, the following monthly reports were accepted
by consent agenda:
City Assessor's Report
City Council’s Community Enhancement Fund Report
City Manager's Report
City Planner's Report
Police Chief's Report
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 16
QUARTERLY REVIEW - CAPITAL INVESTMENT PLAN (CIP) (PRELIMINARY)
(APRIL, MAY, AND JUNE)
Members were provided the Quarterly Capital Investment Plan (CIP) of June 30, 2020.
By consent agenda, Mr. Neil moved for acceptance of the Quarterly Capital Investment Plan
Report as of June 30, 2020. The motion was seconded by Mr. Lindell and carried by a
unanimous roll call vote.
EVALUATION OF PROPOSALS - GARRISON OAK BUSINESS AND TECHNOLOGY
PARK SUBSTATION DESIGN/ENGINEERING
Mr. Paul Waddell, Interim Electric Director, reviewed the background and analysis for the project.
Staff recommended awarding a contract to Aubrey Silvey Enterprises, Inc. as per the proposals
submitted in response to RFP #20-0028EL.
Mr. Neil moved for approval of Staff’s recommendation, seconded by Mr. Taylor and carried
by a unanimous roll call vote.
2020 SPECIAL FIRST DISTRICT MUNICIPAL ELECTION RESULTS
Mrs. Traci A. McDowell, City Clerk, reported the results of the 2020 Special First (1st) District
Municipal Election held on August 18, 2020, as follows:
FIRST (1ST) DISTRICT
Candidate Votes % of District % of District
Votes Voters
William T. Garfinkel 303 45.43% 3.88%
Gerald L. Rocha, Sr. 364 54.57% 4.66%
TOTAL VOTES CAST 667
TOTAL REGISTERED VOTERS 7,812
% OF DISTRICT VOTERS 8.54%
Mr. Lindell moved for approval of the Election Results as reported by the City Clerk. The
motion was seconded by Mr. Neil and unanimously carried.
2020/21 ANNUAL COMMITTEE APPOINTMENT - RECOMMENDED BY MAYOR
CHRISTIANSEN - DOVER PUBLIC LIBRARY ADVISORY COMMISSION - SCOTT W.
COLE (COUNCIL LIAISON MEMBER) (DEFERRED DURING THE ANNUAL MEETING
OF MAY 11, 2020)
Mayor Christiansen requested the reappointment of Scott W. Cole to serve as the Council Liaison
Member on the Dover Public Library Advisory Commission for a one-year term to expire May 2021.
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 17
By consent agenda, Mr. Neil moved for approval of the appointment, as recommended by
Mayor Christiansen. The motion was seconded by Mr. Lindell and carried by a unanimous
roll call vote.
FIRST READING - PROPOSED ORDINANCE #2020-10 WITH STAFF AMENDMENT #1
(SA#1)
Council President Hare reminded the public that copies of the proposed ordinance were available
at the entrance of the Council Chambers, on the City's website at www.cityofdover.com under
"Government," or by contacting the City Clerk's Office at 736-7008 or cityclerk@dover.de.us. Final
action by Council on the proposed ordinance will take place during the Council Meeting of
September 15, 2020.
In accordance with Section 1-9 of the Dover Code, Council acknowledged the First Reading of the
proposed Ordinance as read by the City Clerk, by title only, as follows:
Proposed Ordinance #2020-10 with Staff Amendment #1 (SA #1) Amending Chapter 34
- Elections, Article II - Voter Registration, Section 34-31 - Requirements
(Legislative, Finance, and Administration Committee)
CITY MANAGER'S ANNOUNCEMENTS
None.
COUNCIL MEMBERS' ANNOUNCEMENTS
Council President Hare wished Mayor Christiansen a happy birthday on September 4th.
Members of Council congratulated Gerald Rocha, Sr. on his election to City Council and noted that
they were looking forward to working with him.
Mr. Anderson announced that he would be having a coffee with the community September 9, 2020
from 3:00 p.m. to 5:00 p.m. at The House of Coffi in Dover. He invited anyone with concerns or
suggestions to meet with him.
Mr. Neil moved for adjournment, seconded by Mr. Taylor and unanimously carried.
Meeting adjourned at 8:42 p.m.
TRACI A. McDOWELL
CITY CLERK
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CITY COUNCIL MEETING OF AUGUST 24, 2020 PAGE 18
All ordinances, resolutions, motions, and orders adopted by City Council during their Regular
Meeting of August 24, 2020 are hereby approved.
ROBIN R. CHRISTIANSEN
MAYOR
/TM
S:\AGENDAS-MINUTES-PACKETS-PRESENTATIONS-ATT&EXH\Council-Minutes\2020\08-24-2020 REGULAR CITY COUNCIL MINUTES.wpd
Exhibits
Exhibit #1 - Governing Policy for Energy Commodity Risk Management
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EXHIBIT #1
Regular Council Meeting of 08/24/2020
City of Dover, Delaware
Governing Policy
For
Energy Commodity
Risk Management
Effective: August 24, 2020
Approved by: City of Dover Council
(Last Revision September 9, 2019)
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TABLE OF CONTENTS
PURPOSE OF THE RISK MANAGEMENT POLICY ..................................................................4
A. Introduction ....................................................................................................................4
B. Scope of Policy ................................................................................................................4
C. Objectives and Risk Philosophy ...................................................................................5
D. Policy Administration....................................................................................................5
MANAGEMENT AND CONTROLS .............................................................................................6
A. Utility Committee of The City Council .......................................................................6
B. Executive Risk Management Committee ....................................................................6
1. City Manager ................................................................................................................. 8
2. Director of the Utility .................................................................................................... 8
3. Controller........................................................................................................................ 8
4. TEA Client Services Manager ...................................................................................... 9
DISCUSSION OF RISKS ...............................................................................................................9
MARKETING AND TRADING PRACTICES ............................................................................11
A. Standards of Conduct ..................................................................................................11
B. Products, Activities and Limitations .........................................................................11
C. Contract Documentation and Confirmations...........................................................12
D. Training..........................................................................................................................12
E. New Product Protocol .................................................................................................12
RISK LIMITS AND RISK MEASUREMENTS ...........................................................................13
A. Limits..............................................................................................................................13
1. Delegation Authority .................................................................................................. 13
2. Volume Limits ............................................................................................................. 13
3. Locational Limits ......................................................................................................... 13
B. Stress Testing and Back Testing .................................................................................13
C. Instances of Exceeding Risk Limits............................................................................14
CREDIT POLICY ..........................................................................................................................14
A. Measuring Credit Risk .................................................................................................14
B. Analysis and Extension of Credit Limits ..................................................................14
C. Instances of Exceeding Credit Limits ........................................................................15
REPORTING .................................................................................................................................15
A. Risk Reporting ..............................................................................................................15
B. Credit Reporting ...........................................................................................................17
C. Hedge Effectiveness Reporting ..................................................................................17
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INFORMATION TECHNOLOGY SYSTEMS ............................................................................17
POLICY DISTRIBUTION AND COUNSEL ...............................................................................18
A. Distribution Outside The City ....................................................................................18
B. Designated Counsel .....................................................................................................18
APPENDIX A – Approved Products .............................................................................................19
APPENDIX B – Approved Counterparties and Threshold Tables ................................................20
APPENDIX C – Business Risks ....................................................................................................25
APPENDIX D – Glossary ..............................................................................................................26
APPENDIX E – Swap Transaction Representative .......................................................................28
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PURPOSE OF THE RISK MANAGEMENT POLICY
A. Introduction
The City of Dover (“City”) and its customers are routinely exposed to energy price risk,
volume variability risk, basis risk and credit risk – herein referred to collectively as
energy commodity risk - in the normal conduct of serving its electric load requirements.
Volatility of energy commodity prices and volumetric uncertainty (either
supply/generation or load obligations) impose a substantial and direct risk to the City’s
financial and operating performance.
By authority of its charter, the City has responsibility for overseeing the City’s
electricity operations, including the management of its cost of serving Dover’s
customers. By agreement dated July 2, 2019 and approved by the City (the “Energy
Management Agreement”), the City has engaged The Energy Authority, Inc. (“TEA”) to
assist the City with Asset Management and Strategic Planning Services, Risk
Management Services, and Energy Management Services.
This Policy for Energy Commodity Risk Management (“Policy”) is established the
explicit understanding that the City has retained and delegated responsibilities to TEA
to provide Risk Management Services.
Additionally, the City has issued this Policy for dealing with the philosophy,
framework and delegation of responsibilities necessary to govern activities related to
Dover’s energy commodity risk management. As set forth herein, the City has
established an organizational structure, delegated responsibility and established
internal controls and procedures to ensure that all transactional and oversight activities
are conducted in compliance with this Policy and in accordance with the City’s normal
reporting, legal, financing and regulatory requirements relating to energy assets and
transactions.
B. Scope of Policy
This Policy covers all transactions entered into the by the City of Dover designed to
meet the City’s electric load requirement and the management of risk related to these
transactions.
In the event of conflict between this Policy and the EMA, the Policy shall control.
This Policy is separate and distinct from enterprise risk management policies and
procedures addressing the City’s safe operation of its generating stations and energy
infrastructure, insurance requirements, permit compliance, employee matters
regulatory compliance with laws and regulations of the State of Delaware and Federal
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Agencies such as EPA, FERC, NERC and CFTC or other potential risks to the City
beyond the purchase and sale of fuel and electric power and its ancillary products.
C. Objectives and Risk Philosophy
The objectives of the Policy are to identify energy commodity price and credit risk
exposures and give the City a framework for the quantification and management of
these exposures. The Policy will identify the reports needed to convey how the
identified risk exposures can potentially impact the City’s overall cost of providing
electricity service to its customers and report on the risk management of the
transactions associated with City’s electric load requirements.
Under the Policy, risk management activities will be conducted consistent with the
City’s overall objective of appropriate risk mitigation. There are several objectives of
the Policy which, when taken and executed together, serve to manage the City’s energy
commodity price exposures. Specifically, the Policy:
• Establishes framework for developing credit limits for counterparties and quantifies
and manages the credit exposures related to potential counterparty abrogation
• Quantifies the impact of the above exposures on City’s financial results
• Manages the impact of the above exposures in line with the City’s identified level of
risk tolerance
• Provides clear delineation of responsibilities and authority, outline a separation of
duties, and ensure reporting of risk is timely and accurate.
• Ensures that the impact of any action affecting the City’s position is consistently
quantified, monitored and authorized.
The City’s risk management activities will be conducted consistent with its overall objective of
appropriate risk mitigation and never for purposes of speculation.
D. Policy Administration
This Policy has been approved by the Executive Risk Management Committee and The
Utility Committee of the Dover City Council. The Utility Committee must approve
modifications to the Policy with the exception of the appendix information which can
be modified with the approval of the Executive Risk Management Committee.
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MANAGEMENT AND CONTROLS
This Policy articulates the management and organization of the City and TEA to serve
as a control framework outlining delegation of duties and responsibilities.
A. Utility Committee of The City Council
The Utility Committee of The City Council (The Committee) has a responsibility to
provide approval of this Policy. With this approval, The Committee also assumes
additional duties. They will understand the risks the City is and could be exposed to
due to their energy commodity risk management activities. In this role, the Committee
will have a responsibility to also understand the City’s policies and procedures, internal
controls and systems which are used to help manage the City’s energy commodity
risks.
The Committee will approve any amendments to the Policy or limits within. The
Executive Risk Management Committee will update the Committee periodically
regarding the Policy and its functions. It will be the Committee’s responsibility to:
• Discuss guidelines and strategic policies that govern the process by which the
Energy Risk Management Committee assesses and manages risks
• Review and approve any recommended changes to the risk policy at least annually
• Approve new members and alternates of the Executive Risk Management
Committee
• Acknowledge the risk inherent in transactions covered under this Policy
B. Executive Risk Management Committee
An Executive Risk Management Committee (“ERMC”) has been formed to provide
executive management oversight for the City’s energy commodity risk management
activities. The ERMC is charged with the creation, amendment and administration of
this Policy, including acquiring any approvals required by the Utility Committee, and
will ensure that all energy commodity risk management activities of the City are
performed consistent with this Policy. The ERMC will meet at least monthly to review
compliance and conduct its business as described in this Policy.
The ERMC shall be comprised of the following voting members: The City Manager, The
Director of Utility, The City’s Controller and TEA’s Client Service Manager.
The City’s ERMC will make decisions following the process outlined in this Policy.
TEA’s Client Services Manager may include representatives from other areas within
TEA in the monthly ERMC meetings who will attend in person or by conference call as
non-voting advisors. Other City employees and TEA staff may also be asked to attend
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meetings from time-to-time, as the ERMC deems necessary. The responsibilities of the
ERMC shall include:
• Establish scope and frequency for management reporting to the Utility Committee.
• No less than annually, review the City’s Energy Commodity Policies and Procedures
for correctness and completeness.
• Review and approve any new risk report or change to an existing risk report
provided by TEA to monitor risks outlined in this Policy.
• Understand and approve any models, methodologies, and assumptions used for
measuring risks such as volume risk, process risk, counterparty risk and commodity
risk.
• Monitor the City’s risks and ensure they are within the limits and are being
managed according to what is indicated within the City’s Policy and associated
procedures
• Understand the City’s risk management objectives and risk tolerances.
• Review and approve the risk management and trading strategy programs and
associated risk. Each program should be reviewed to ensure alignment with Policy
objectives and compliance with risk limits within this Policy.
• Periodically review any risk management program approved in light of recent
market changes, and ensure continued compliance with its established guidelines
• Review and approve new products, markets, trading counterparties and credit
limits
• Review all violations and exceptions to this Policy and report such to the
Committee.
• Approve the individuals or companies that engage in the City’s commodity
transactions and are subject to the limits within this Policy.
• Ensure that the individuals or companies authorized to transact on behalf of the City
as well as manage its risks, are appropriately trained and qualified.
• Ensure independence and segregation of duties between front, middle and back
office at TEA.
• Recommend changes to this Policy to the City’s Utility Committee for approval and
ensure the Utility Committee understands the City’s overall compliance with this
Policy and associated procedures.
• The ERMC will meet at least monthly to review risks identified and reported on by
the Policy, this meeting shall be chaired by The City Manager. Minutes of each
meeting of the ERMC shall be recorded and reflect any decisions and follow-up
action items to be performed. These minutes will be reviewed and approved by the
members of the ERMC in a timely manner.
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Each member of the ERMC has a unique role as defined below:
1. City Manager
The City Manager is independent of all commercial functions and carries the
responsibility of establishment and maintenance of risk management for the City. The
City Manager will be a voting member of the ERMC and act as a chair of the ERMC.
Other responsibilities include:
• Ensure this Policy is maintained.
• Oversee reviews of the City’s energy commodity risks, limits, risk measurement
methodologies and models, and programs and recommend changes to the ERMC.
• Ensure potential transactions and their impacts on the City’s risks and limits defined
within this Policy.
• Develop and monitor the implementation of the Policy, and oversee other risk
management processes and procedures established by this Policy or otherwise by
the ERMC.
• The City Manager shall name an Alternate to be approved by the Committee.
2. Director of the Utility
The Director of the Utility has oversight for all trading, hedging, pricing, structuring,
and market and operational risk management activities associated with the City. The
Director of the Utility will be a voting member of the ERMC. Other responsibilities
include:
• Review the effectiveness of transaction processing systems and procedures relating
to risk measurement.
• Recommend operational risk and business risk assessment guidelines.
• The Director of the Utility shall nominate an alternate to be approved by the
Committee.
3. Controller
The Controller is independent of all commercial functions and carries the oversight
responsibilities associated with the City’s accounting practices. The Controller will be a
voting member on the ERMC. Other responsibilities include:
• Perform financial accounting including accounting for hedging and derivatives
activities.
• Comply with tax rules and make appropriate tax elections.
• Record realized and unrealized gains and losses.
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• Reconcile general ledger, cash transactions and margin accounts.
• Implement tax-hedge accounting policies and other regulatory tax requirements.
• Develop and maintain documentation outlining standard procedures for conducting
business.
• Invoice counterparties and resolve billing disputes.
• Perform daily/weekly/monthly transaction checkout with counterparties.
• Develop and maintain documentation outlining standard procedures for conducting
business.
• The Controller shall nominate an alternate to be approved by the Committee.
4. TEA Client Services Manager
The TEA Client Service Manager roles and responsibilities are defined Exhibit B of the
EMA between the City and TEA. The TEA Client Service Manager will be a voting
member on the ERMC and act as chair of the ERMC in the absence of the City Manager.
Other responsibilities include:
• Monitor risk reports between ERMC meetings.
• Report to the Committee and the ERMC on the City’s adherence to all limits and
functions within this policy.
• Engage the ERMC in discussions regarding events or developments that could
expose the company to potential losses.
• Recommend to the ERMC specific risk limits consistent with the City’s risk
management objectives, risk tolerance, and risk management policy.
• Coordinate and distribute independent market fundamental analysis.
• Provide advisory support and recommendations as specified in Article 5 of the
EMA.
• Update RMC on training of TEA employees.
• TEA shall nominate an alternate to be approved by the Committee.
Alternates may vote, but only in the absence of the voting member for whom they
serve. A person may serve for an alternate for more than one official, but they can only
cast one vote. A quorum for a meeting shall be any combination of three voting
members and alternates. A simple majority of votes is necessary to approve any action
of the ERMC, but at least two voting members must approve the action. Members and
alternates may attend by electronic means and count as present for the purpose of
quorum and for a majority for a decision.
DISCUSSION OF RISKS
This Policy covers the management of all material energy market risks faced by the City. A
comprehensive list of risks that are or could be relevant to City is shown in Appendix C of the
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Policy. Among the most critical of these risks are commodity risk, counterparty risk, process
risk, volume risk, and budget risk. These risks are measured by the limit structure and controls
outlined in the Policy.
Commodity risk represents the potential adverse impacts to the value of the City’s
portfolio due to changes in the market. Commodity risk encompasses volatility risk,
forward price risk, basis risk, correlation risk and liquidity risk.
Counterparty risk represents the potential losses the City could incur due to delivery
risk and receivable risk. Delivery risk stems from a supplier or trading counterparty
that is unable or unwilling to perform on its commitments including but not limited to
delivery or receipt of commodities. Receivable Risk includes the City’s risk associated
with a counterparty’s timeliness of payment for services rendered.
Process risk represents the risks associated with process problems including, but not
limited to, inaccurate data capture, untimely trade execution or settlement problems.
Controls over process risks are embedded in the organizational structure of TEA
through the design processes and operating procedures.
Volume Risk represents the potential for unforeseen changes from projections of excess
or shortfall of capacity or energy from the actual needs. When variances are large
coupled with large costs to transact and adverse moves in market prices this risk could
be realized. In management of this risk, the City must be aware of the fact that
unexpected variations in volume are often highly correlated with price movements.
Budget Risk represents the potential to deviate outside of tolerable bounds of the City’s
budget. Deviations from budget can be caused by forecast error or unforeseeable
adverse changes in market prices.
Regulatory Risk arises from participation in regulated markets. With the Independent
System Operator (ISO) implementation of Federal Energy Regulatory Commission
(FERC) Order 741, the City faces increasing regulatory risk when participating in
wholesale energy markets. The TEA Compliance department works in conjunction
with the TEA Risk Control department to help the City manage regulatory risk.
Regulatory risk is managed by:
• Annual Compliance Training for all employees participating in regulated markets;
• Integration of the appropriate compliance culture within the Trading department
through ongoing interaction between Compliance and Trading;
• An independent monitoring and exposure measurement on transactions that could
trigger an increase in regulatory risk.
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MARKETING AND TRADING PRACTICES
A. Standards of Conduct
Individuals authorized to transact for the City shall not misrepresent, conceal or
withhold information regarding energy commodity trading and risk management
transactions to any person responsible for the accurate recording and/or reporting of
such transactions; participate in any such transaction or similar activity for the benefit
of any party other than the City; or hold or be a beneficiary of any financial interest in
any entity with which the employee is engaged in trading or other business activity
(other than ownership of an interest in a mutual fund managed by another party).
Further, no employee authorized to place or execute such transactions may engage in
trading power or energy commodities derivative instruments for his or her personal
account.
B. Products, Activities and Limitations
Pursuant to achieving the City’s core objectives for the purpose of energy commodity
risk management, the following limitations shall apply.
• Permissible instruments will be restricted to the products and instruments specified
in Appendix A – Approved Products of the Policy;
o All physical forward transactions shall be governed by the Edison Electrical
Institutive (EEI), North American Energy Standards Board (NAESB), or
similar agreements with counterparties approved by the City.
o The City reserves the right to enter into financial hedge transactions to
effectuate Policy objectives, but does not authorize TEA to enter into financial
hedge transactions on its behalf. Any such financial transactions that the City
may enter into shall be governed by ISDA agreements with counterparties as
approved by the City.
• The maturity for each permissible instrument will be restricted to the maturity limits
specified in the risk limits section of the Policy.
• Transaction volumes for each risk management transaction will be restricted to the
amounts specified in the Risk Limits section of the Policy.
• Risk management transactions will be outlined in the City of Dover Hedge Program
which will be approved by the ERMC. Risk management transactions may include
the following:
o Hedging the forward price of purchased power for delivery to the City as
needed to meet its electric load requirements.
o Hedging the forward price of natural gas and fuels as needed to generate
power to meet the City’s electric load requirements.
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o Unwinding of hedges to accommodate changes in expected load
requirements, or for economic reasons subject to explicit constraints set by the
ERMC.
C. Contract Documentation and Confirmations
No over-the-counter transaction may be executed until an EEI, NAESB, or similar
agreement has been authorized by the City, approved by the ERMC and fully executed
by the parties.
Written confirmations will be required from counterparties, as defined in the Master
Service Agreement between the City and counterparty, within one business day or such
longer time as required by the contract in question for all risk management transactions.
Contemporaneous with any commitments and prior to receipt of written confirmations,
verbal commitments shall be memorialized internally as to instrument structure,
quantity, relevant time horizon, price and any other relevant terms; such internal
documentation shall be time stamped and correlated to the ultimate written
confirmation to or from the counterparty. Both the internal documentation as well as
the written confirmation from the counterparty shall be provided to TEA’s Risk Control
Group immediately upon receipt for verification.
In the event that there is a material failure to provide timely documentation or
confirmations, then at the City Manager’s sole discretion, the offending individual’s
authorization may be suspended. Similarly, if the failure to provide timely
documentation or confirmations is due to the failure of counterparty, then at the
discretion of the City Manager, a moratorium may be imposed on transactions with that
counterparty. In such cases, the City Manager shall notify the ERMC of the issues
leading to the suspension or moratorium shall.
Nothing herein shall inhibit the City Manager from bringing control issues to the TEA’s
Client Services Manager prior to a decision on materiality or the imposition of a
suspension of trading privileges or counterparty moratorium.
D. Training
The ERMC will ensure that all City employees and/or TEA Staff that will execute
transactions on behalf of the City will have appropriate training in the markets in which
the transactions occur.
E. New Product Protocol
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As required to manage the City’s energy commodity risk the ERMC shall approve new
products provided the requirements of the New Product Approval Procedure are met.
RISK LIMITS AND RISK MEASUREMENTS
A. Limits
The limit structure is designed to quantify the types of risk in the City’s energy
commodity portfolio. The City will manage and report on its energy commodity market
risk using Delegation of Authority Limit, a Volume Limit and a Locational Limit.
1. Delegation Authority
The Utility Committee delegates authority to the Dover ERMC to approve the acquisition
of electric energy, capacity and/or transmission according to the following limits for
expenditures or terms. The ERMC may not delegate these authorities to individuals
authorized to commit Dover to financial obligations.
Position Maturity Limit Term Limit Notional Value Limit
Dover ERMC 5 years 5 years 20,000,000
TEA 1 month 1 month 1,000,000
This limit structure is not intended for use when transacting day-ahead and real time in
the PJM market.
2. Volume Limits
For no reason should a transaction be executed that exceeds the City’s electric load
requirements. If there is an adjustment to the City’s electric load requirements and the
existing transactions greater than 100% of the adjusted electric load requirements the
ERMC will review and approve the offsetting strategy deployed in sufficient proportion
to mitigate the encroachment.
3. Locational Limits
Non-Commodity Transactions must support the requirement of one of the City’s
generation units, native load or transaction locations.
B. Stress Testing and Back Testing
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The City’s positions shall be periodically stress tested and models shall be back tested.
The processes around these tests are outlined in the Stress Testing and Back Testing
Procedure.
C. Instances of Exceeding Risk Limits
Should the City or TEA enter into a transaction that causes the portfolio to exceed any
above mentioned limits the Director of the Utility shall, in addition to notifying the
ERMC, also notify the Chair of The Committee as soon as practicable and shall provide
periodic reports to the Chair on the status the transactions for as long as the City is
exceeding its limits. The ERMC will review and determine whether any liquidation or
offsetting of transactions is warranted. The incident will be documented as a Policy
Exception by the Director of the Utility.
CREDIT POLICY
Credit Risk is the risk due to the uncertainty in a counterparty’s ability to meet its
contractual obligations. The primary objective of this credit policy is to mitigate, to the
extent commercially reasonable, the credit risks associated with transactions covered in
this Policy while still allowing the City to achieve its objectives.
A. Measuring Credit Risk
The status of credit risk will be measured and reported through reports provided by
TEA.
The current credit exposure will be reported at the agreement level via a Counterparty
Credit Report provided by TEA. This information will be made available in real time to
TEA trading personnel so that it can be checked prior to executing transactions for the
City. Those responsible for risk oversight at the City and TEA will have access to this
information no less frequently than once per day. The ERMC will monitor overall
credit utilization and any credit exceptions at least monthly. When measuring the
current credit risk, netting will be applied to the exposure if the City’s contract with a
counterparty includes provisions for netting.
B. Analysis and Extension of Credit Limits
Physical and financial commodity transactions will be executed with counterparties
approved by the ERMC with credit available to support the transactions. The
creditworthiness of a counterparty will be determined by both qualitative and
quantitative factors. Factors shall include, but not limited to:
• A company’s debt credit ratings provided by the rating agencies.
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• Financial data such as an analysis of the income statement, balance sheet, and cash
flow, as well as liquidity and capital structure.
• Subjective factors such as company’s fuel diversity, overall size, risk management
policy and internal controls, geographic diversity, and market intelligence.
A credit limit is the amount of unsecured credit granted to a counterparty. Unsecured
credit exposure includes amounts owed by the counterparty, whether billed or not, and
the mark-to-market differences in value of any collateral which the counterparty has
provided the City. Any net exposure above the collateral threshold will require the
posting of collateral by a counterparty. Further information on the City’s procedure for
establishing credit is contained in the Counterparty & Credit Review Process.
Collateral thresholds, term limitations and credit exposure limits will be subject to the
maximums indicated in Appendix B, based upon the lower of the S&P and Moody’s
credit ratings.
At no time will the City incur a credit exposure with any counterparty greater than
$60,000,000.
C. Instances of Exceeding Credit Limits
The City and TEA are restricted by the credit limits approved by the ERMC. The ERMC
can suspend trading with a counterparty, if that counterparty’s credit limit has been
reached or exceeded. The City or TEA traders shall not exceed the Counterparty
Credit Limit by executing transactions with any counterparty without approval of the
ERMC.
The ERMC will determine when it’s appropriate to require additional collateral if a
counterparty’s credit exposure exceeds its credit limit. Collateral includes standing
letter of credit, cash, and prepayments.
All credit exceptions will be documented and reported to the ERMC and the Committee
as Policy Exceptions.
REPORTING
A. Risk Reporting
Preparation of timely reports is critical to monitoring risk. TEA will furnish the
required reports on a regular frequency for the City in a format acceptable to the ERMC.
In addition, the ERMC and its designees will be provided access to the City’s risk
reports as updated daily via TEA’s secure Web Portal.
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Reports required on a monthly basis and for periodic meetings of the ERMC include the
following:
• Profit and Loss Report
The Profit and Loss (P&L) Report shows the daily realization of transactions at either
the transaction price or the market price as transaction roll from unrealized to realized.
This report should show volumes, transaction prices and market prices of realized
physical and financial power and fuel transactions.
• Mark to Market Report
The Mark to Market (“MTM”) Report conveys the potential transaction exposure, of all
existing forward transactions executed, if the energy commodity portfolio was
liquidated at the most recent market settlement prices. This report should show
volumes, transaction prices and market prices of unrealized physical and financial
power and fuel transactions.
• Daily Activity Report
The Activity Report presents a summary of the day’s trades executed in the bilateral
energy market.
• Cost of Service Report
The City’s exposure to energy price risk shall be monitored and reported on a Cost-of-
Service basis. All calculations are at the wholesale level. The Cost-of-Service recognizes
all prior (expired) months within the Power Year on the basis of actual (incurred) costs,
and recognizes all forward (pending) months within the Power Year on the basis of
expected forward power and fuel prices and expected forward load-following risks. As
defined below, the Cost-of-Service is an aggregation of Forward Energy Commodity
Portfolio Cost, the Load Following Cost Expectation and the City’s Budget Target for
Purchase Power Expense.
o The Net Purchased Power Cost shows the net cost of all physical and financial
transactions related to the City’s anticipated commodity requirements for power
and fuel and is based on the price of all hedge transactions plus the forward
market price of all unhedged transactions valued at current forward prices for
energy commodities, customer-level cost per MWH of all physical and financial
transactions related to Dover’s actual plus anticipated energy.
o The expected fixed costs defined as load-serving entity (LSE) capacity costs,
transmission costs and TEA management fees.
o The Expected Load-Following Cost for a specified power year is defined as the
expected cost (or revenue) associated with intra-month load variations due to
weather or other events affecting demand. TEA has completed a historical
analysis to measures the effective monthly average unit cost paid for Dover’s
PJM Wholesale Load Responsibility (WLR) was calculated for each month since July
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2013. From this analysis, TEA recommends using the post-Garrison results as a proxy
for future estimates of the WLR and as an estimate of the Load Following Cost to be
used for estimating the City’s Forward Cost-of-Service Report. The ERMC will
update the Expected Load Following estimate while lack of necessary market
information persists no less than annually.
o For the historical payment analysis, an effective monthly average unit cost paid for Dover’s
PJM Wholesale Load Responsibility (WLR) was calculated for each month since July
2013. This effective unit cost was constructed using Dover’s monthly PJM load payment
(Dover Budget line item: PJM – Energy, Congestion & Losses), adding back the West Hub
hedging credits, and dividing by the WLR. The values pre-Garrison-online and post-
Garrison-online were compared with both straight and WLR-weighted averages. This
effective LMP therefore includes the effects of intra-month load variations, contributions
of both the DALMP and RTLMP, and the additional PJM charge types reflected in the
monthly Dover Budget line item: PJM – Energy, Congestion & Losses. Pre-Garrison (July
2013 – May 2015) weighted average monthly load costs were $3.02, while the average
post-Garrison cost (Jun 2015 – Apr 2018) has been $2.60.
o
o The Budget Target for Purchase Power Expense represents the City’s view of
expected purchase power expense.
B. Credit Reporting
• Counterparty Credit Report
The Counterparty Credit Report conveys the exposure to all counterparties with which
the City has credit exposure resulting from its energy commodity risk management
activities.
• CFTC Reporting
The City understands that transacting over the counter (OTC) swaps carries an
additional Commodity Futures Trading Commission (CFTC) reporting function. Once
required by the CFTC, the City will report on how the City generally meets its financial
obligations associated with entering into non-cleared swaps in a manner acceptable to
the CFTC.
C. Hedge Effectiveness Reporting
If the City’s transactions require a hedge effectiveness test, those testing results will be
reported to the ERMC no later than one month after the end of the financial reporting
period. The report will include a summary of testing methodology, assumptions of the
testing and the outcome of results with a pass or fail by transaction.
INFORMATION TECHNOLOGY SYSTEMS
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Since information systems play a vital role in The City’s trading abilities, the City shall
ensure that the information systems and technology used to store all transaction
information is maintained and secure. The City’s transactions will be stored in TEA’s
enterprise trading and risk management system. TEA uses the TriplePoint Commodity
XL (CXL) system, integrated with Commodity XL for Credit Risk (Credit Risk). TEA
has assigned a Database Administrator (DBA) that is charged with the database security
and maintenance for the transaction database, CXL.
The following safeguards for data security and backup will be installed:
• Transaction data stored in the system of record will be replicated daily to ensure
data redundancy;
• The CXL database will be backed up at least daily after the close of business.
POLICY DISTRIBUTION AND COUNSEL
A. Distribution Outside The City
The City’s Policy is restricted to the use of the City and TEA organizations. It shall not
be distributed outside these organizations without the consent the ERMC.
B. Designated Counsel
Questions about the interpretation of any matters of this Policy should be referred to
ERMC. The ERMC will provide clarification and explanation on any updates to this
Policy.
All legal matters stemming from this Policy will be referred to the City’s Legal Counsel.
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APPENDIX A – Approved Products
The following shall constitute a list of approved products to be utilized by TEA to
manage the City’s energy commodity portfolio:
• Physical Power
• Physical Natural Gas
• Physical Residual Fuel Oil (#2)
• Capacity
• Financial Power
• Financial Options
• PJM Demand Bids and Generation Offers
• PJM InSchedules
• PJM Transmission Products
o Financial Transmission Rights
o Annual Auction Revenue Rights
• PJM Tier 2 Synchronized Reserves
The above instruments can be executed by TEA on behalf of the City of Dover for the
current and next two successive Power Years (July to June).
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APPENDIX B – Approved Counterparties and Threshold Tables
This Appendix establishes approved counterparties and their Collateral thresholds.
Collateral thresholds, term limitations and credit exposure limits that are subject to the
following maximums based upon the lower of the S&P and Moody’s credit ratings:
Credit Thresholds from Dover Extended to the Counterparty
Exelon Generation Company, LLC
Threshold S&P Moody's
$ 60,000,000 AAA Aaa
$ 50,000,000 A- to AA+ A3 to Aa1
$ 40,000,000 BBB+ Baa1
$ 30,000,000 BBB Baa2
$ 20,000,000 BBB- Baa3
$ - Below BBB- Below Baa3
AEP Energy Partners, Inc.
Threshold S&P Moody's
$ 10,000,000 BBB- and Above Baa3 and Above
$ - Below BBB- Below Baa3
BP Energy Company
Threshold S&P Moody's
$ 60,000,000 AA- to AAA Aa3 to Aaa
$ 45,000,000 A+ A1
$ 30,000,000 A A2
$ 15,000,000 BBB to A- Baa2 to A3
$ - Below BBB Below Baa2
Calpine Energy Services, L.P.
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 15,000,000 AA- to AA+ Aa3 to Aa1
$ 10,000,000 A- to A+ A3 to A1
$ 5,000,000 BBB+ Baa1
$ 3,000,000 BBB- to BBB Baa3 to Baa2
$ - Below BBB- Below Baa3
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EDF Trading North America, LLC
Threshold S&P Moody's
$ 18,000,000 Fixed Fixed
PSEG Energy Resources & Trade, LLC
Threshold S&P Moody's
$ 20,000,000 BBB- and Above Baa3 and Above
$ - Below BBB- Below Baa3
Sequent Energy Management, L.P.
Threshold S&P Moody's
$ 5,000,000 Fixed Fixed
Conectiv
Threshold S&P Moody's
Unspecified * Above BBB+ Above Baa3
$ - Below BBB- Below Baa3
* Conectiv does not have a defined credit threshold, so for planning purposes, a
$10,000,000 threshold is imposed as a conservative limit
Macquarie Energy, LLC
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ Aa3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
Morgan Stanley Capital Group
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ Aa3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
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NextEra Energy Marketing, LLC
Threshold S&P Moody's
$ 30,000,000 AAA Aaa
$ 25,000,000 AA- to AA+ Aa3 to Aa1
$ 20,000,000 A- to A+ A3 to A1
$ 15,000,000 BBB+ Baa1
$ 10,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
Deutsche Bank
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ Aa3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
Barclays Bank
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ Aa3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
Credit Thresholds from the Counterparty Extended to Dover
AEP Energy Partners, Inc.
Threshold S&P Moody's
$ 10,000,000 BBB- and Above Baa3 and Above
$ - Below BBB- Below Baa3
BP Energy Company
Threshold S&P Moody's
$ 30,000,000 AA to AAA Aa2 to Aaa
$ 25,000,000 AA- Aa3
$ 20,000,000 A+ A1
$ 15,000,000 A A2
$ 5,000,000 BBB to A- Baa2 to A3
$ - Below BBB- Below Baa3
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Calpine Energy Services, L.P.
Threshold S&P Moody's
$ 10,000,000 AA- to AAA Aa3 to Aaa
$ 7,500,000 A- to A+ A3 to A1
$ 5,000,000 BBB+ Baa1
$ 3,000,000 BBB- to BBB Baa3 to Baa2
$ - Below BBB- Below Baa3
Exelon Generation Company, LLC
Threshold Fitch Moody's
$ 60,000,000 AAA Aaa
$ 50,000,000 A- to AA+ A3 to Aa1
$ 40,000,000 BBB+ Baa1
$ 30,000,000 BBB Baa2
$ 20,000,000 BBB- Baa3
$ - Below BBB- Below Baa3
Conectiv
Threshold Fitch Moody's
Unspecified * Above BBB+ Above Baa3
$ - Below BBB- Below Baa3
*Conectiv does not have a defined credit threshold, so for planning purposes, a
$10,000,000 threshold is imposed as a conservative limit
PSEG Energy Resources & Trade, LLC
Threshold S&P Moody's
$ 12,000,000 * Fixed Fixed
*Threshold is $12,000,000 as long as Dover maintains a Debt Service Coverage greater
than 1.25% and Total Net Assets of at least $50,000,000 and Total Net Assets do not
decline by more than 25% on a fiscal year end basis.
Morgan Stanley Capital Group
Threshold S&P Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ Aa3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
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Macquarie Energy, LLC
Threshold Fitch Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ AA3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
NextEra Energy Marketing, LLC
Threshold Fitch Moody's
$ 23,000,000 AAA Aaa
$ 18,000,000 AA- to AA+ AA3 to Aa1
$ 13,000,000 A- to A+ A3 to A1
$ 8,000,000 BBB+ Baa1
$ 3,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
EDF Trading North America, LLC
Threshold S&P Moody's
$ 18,000,000 Fixed Fixed
Deutsche Bank
Threshold Fitch Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ AA3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
Barclays Bank
Threshold Fitch Moody's
$ 25,000,000 AAA Aaa
$ 20,000,000 AA- to AA+ AA3 to Aa1
$ 15,000,000 A- to A+ A3 to A1
$ 10,000,000 BBB+ Baa1
$ 5,000,000 BBB Baa2
$ - BBB- or below Baa3 or below
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APPENDIX C – Business Risks
Business Risks Topology
Commodity Counterparty Process Volume Budget Regulatory
Risk Risk Risk Risk Risk Risk
Market
Receivables Load Market
Price Risk Deadline CFTC
Risk Uncertainty Uncertainty
Risk
Performance Reporting Load
Volume Risk Supply Risk FERC
Risk Risk Uncertainty
M2M/Forward Generation Forecast
RTO
Curve Risk Uncertainty Error
Liquidity Risk
Basis Risk
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APPENDIX D – Glossary
Back Office – That part of a trading organization which handles transaction accounting,
confirmations, management reporting, and working capital management.
Bilateral Transaction - Any physical or financial transaction between two
counterparties, neither of whom is an Exchange or market entity (e.g. MISO).
Capacity – The real power output rating of a generator or system, typically in
megawatts, measured on an instantaneous basis.
Commodity - A basic good used in commerce that is interchangeable with other
commodities of the same type. Commodities are most often used as inputs in the
production of other goods or services. The quality of a given commodity may differ
slightly, but it is essentially uniform across producers. When they are traded on an
exchange, commodities must also meet specified minimum standards, also known as a
basis grade.
Financial Bilateral Transaction – A Bilateral Transaction that is non-physical and is
defined by a Source Point, Sink Point, and Delivery Point that may be any CP Nodes as
specified by the Midwest ISO.
Financial Forward – An agreement regarding a position in a specified commodity, a
specified price, and a specified future settlement date, that does not result in physical
delivery of the commodity. Rather one party in the agreement makes a payment to the
other party on the basis of the commodity price at the future date.
Front Office – That part of a trading organization which solicits customer business,
services existing customers, executes trades and ensures the physical delivery of
commodities.
Hedging Transaction - A transaction designed to reduce the exposure of a specific
outstanding position or portfolio; “fully hedged” equates to complete elimination of the
targeted risk and “partially hedged” implies a risk reduction of less than 100%.
Mark-to-Market Value – A measure of the current value of unrealized positions;
includes both Open Positions and Closed Positions.
Middle Office – That part of a trading organization that measures and reports on
market risks, develops risk management policies and monitors compliance with those
policies, manages contract administration and credit, and keeps management and the
Board informed on risk management issues.
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Policy – Dover’s Governing Policy for Energy Commodity Risk, as amended and
approved by The Utility Committee.
Portfolio – A collection of transactions.
Realized Gains/(Losses) – The amount earned (or lost) from a transaction, considered
to be realized once the time for performance has lapsed (e.g. delivery of power in the
case of physical transactions or expiration of an option in the case of financial
transactions).
Term – The total duration of a contract, defined as the number of days between the
beginning flow date and ending flow date, inclusive.
Unrealized Gains/ (Losses) – The amount expected to earn (lose) on a specific
transaction(s); however, the time for performance has not lapsed. The total value of
Unrealized Gains/ (Losses) is the Mark-to-Market value.
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APPENDIX E – Swap Transaction Representative
Purpose:
To ensure that the City of Dover, a Special Entity under the Dodd-Frank Financial Reform
Act, selects a qualified representative (“Representative”) to provide advice and guidance
when entering into swap transactions with Swap Dealers or Major Swap Participants.
Definitions:
Special Entity: As defined in 7 U.S.C. 6s(h)(2)(C) and further interpreted in 17 C.F.R.
23.401(c). The City of Dover is a Special Entity as defined by 17 C.F.R. 23.401(c)(2).
Swap Dealer: As defined in 7 U.S.C. 1a(49) and further interpreted in 17 C.F.R. 1.3(ggg)
Major Swap Participant: As defined in 7 U.S.C. 1a(33) and further interpreted in 17 C.F.R.
1.3(hhh)
Representative: As defined in this policy and 17 C.F.R. 23.450
Policy:
Selection: The City of Dover shall endeavor to seek and employ an individual or entity that
will voluntarily act as a Representative for all energy commodity swap transactions
between XXXX and any Swap Dealer or Major Swap Participant. The Representative must
meet the following qualifications identified in 17 C.F.R. 23.450(b):
(i) Has sufficient knowledge to evaluate the transaction and risks;
(ii) Is not subject to a statutory disqualification;
(iii) Is independent of the swap dealer or major swap participant;
(iv) Undertakes a duty to act in the best interests of the Special Entity it represents;
(v) Makes appropriate and timely disclosures to the Special Entity;
(vi) Evaluates, consistent with any guidelines provided by the Special Entity, fair pricing
and the appropriateness of the swap; and
(vii) In the case of a Special Entity as defined in § 23.401(c)(2) or (4), is subject to
restrictions on certain political contributions imposed by the Commission, the
Securities and Exchange Commission, or a self-regulatory organization subject to the
jurisdiction of the Commission or the Securities and Exchange Commission;
provided however, that this paragraph (b)(1)(vii) of this section shall not apply if the
representative is an employee of the Special Entity.
The Representative and the City of Dover shall enter into a legal agreement that binds the
Representative to comply with items (i) through (vii) in this policy.
At no longer than any 12-month interval, the City of Dover shall review the performance of
the Representative to ensure compliance with items (i) through (vii) in this policy.
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