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UTILITY COMMITTEE AGENDA January 24, 2011 - 4:30 P.M. - Council Chambers - City Hall - City of Dover Public comments are welcomed on any item and will be permitted at appropriate times. When possible, please notify the City Clerk (736-7008 or e-m ail at CityClerk@dover.de.us) should you wish to be recognized. AGENDA ADDITIONS/DELETIONS 1. Request for Alley Abandonment (Improved) - Adjacent to 514 Loockerman Street and 222 S. DuPont Highway - HUB Associates, LLC and A & G Kramedas Associates 2. Proposed Ordinance #2011-01 - Amendment to Appendix B - Zoning, Article 5 - Supplementary Regulations, (New) Section 20 - Solar and Small Wind Energy Systems (Deferred by Committee on 01/10/2011) 3. Annual Engineering Consultant's Report on the Operation and Maintenance of the Electric System - Fiscal Year 2010 (Deferred by Committee on 01/10/2011) 4. Annualized Comparison of Utility Rates (Deferred by Committee on 01/10/2011) 5. Development Projects - Performance and Maintenance Bonding Concerns 6. Review of Utility Related Capital Investment Plan (CIP) (Electric and Water/Wastewater) (November) (Deferred by Committee on 01/10/2011) 7. PACE/NAES Monthly Report (November) 8. Adjournment by 5:55 P.M. /tm S:\AGENDAS & MINUTES\Committee-Agendas\2011\01-24-2010 UTILITY.wpd THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS.

REQUEST TO ABANDON AN IMPROVED ALLEY Report to the Utility Committee from the Dover Planning Commission January 24, 2011 Applicants: HUB Associates LLC and A&G Kramedas Associates Location: 514 East Loockerman Street and 222 South DuPont Highway Parallel to and south of East Loockerman Street between Bayard Avenue and South DuPont Highway Reason for Request: HUB Associates LLC and A&G Kramedas Associates have requested that the City abandon a segment of alley approximately 220 feet in length that runs parallel to East Loockerman Street, east of Bayard Avenue. The request is a precursor to redevelopment of the property owned by HUB Associates LLC and A&G Kramedas Associates Existing Property: The subject property is a 15-foot-wide alley, bounded on the south by lands owned by A&G Kramedas Associates, and bounded on the north by three parcels, two of which are owned by HUB Associates LLC and one owned by Thelma F. Johnson. The alley is at least partially improved with paving that serves as the fire lane for the hotel on the property owned by A&G Kramedas Associates. Recommendation of the Planning Commission: Following a public hearing on December 20, 2010, where no members of the public spoke in favor of or in opposition to the alley abandonment request, the Planning Commission voted unanimously (5 members in favor, 4 members absent) to recommend approval of the alley abandonment, provided that all necessary easements are in place related to City utilities. File Number: MI-10-19

CITY OF DOVER DEVELOPMENT ADVISORY COMMITTEE APPLICATION REVIEW COMMENTARY APPLICANT D.A.C. MEETING DATE: DECEMBER 9, 2010 APPLICATION: REQUEST FOR ALLEY ABANDONMENT: PORTIONS OF LOOCKERMAN STREET ALLEY SOUTH FILE #: MI-10-19 REVIEWING AGENCY: City of Dover Public Utilities Department CONTACT PERSON: Steve Enss - Electric Sharon Duca, P.E. - Water, Wastewater, Stormwater CONTACT PHONE #: 302-736-7070 T HE S UBJECT P ROPOSAL HAS BEEN R EVIEWED FOR C ODE C OMPLIANCE , P LAN C ONFORMITY AND C OMPLETENESS IN A CCORDANCE WITH THIS A GENCY ’ S A UTHORITY AND A REA OF E XPERTISE . T HE F OLLOWING I TEMS HAVE BEEN I DENTIFIED AS E LEMENTS W HICH N EED TO BE A DDRESSED BY THE A PPLICANT : CITY AND STATE CODE REQUIREMENTS ELECTRIC / WATER / WASTEWATER 1. None. RECOMMENDATIONS SUGGESTED AS CONDITIONS OF APPROVAL TO MEET CODE OBJECTIVES ELECTRIC / WATER / WASTEWATER 1. The alley proposed for abandonment contains electric, water and sanitary sewer. Our office recommends as a condition of approval that the alley become a public utilities easement in order to maintain proper service to our customers. The easement may not contain any structures or signage as per the Water / Wastewater Handbook. It is our understanding that adjacent parcels are to be redeveloped and lot lines will be re-recorded. As utility locations are to be redesigned at that time the public utilities easement is to be re-evaluated by the Public Utilities Department with revisions made as appropriate at that time as well. ADVISORY COMMENTS TO THE APPLICANT ELECTRIC / WATER / WASTEWATER 1. None. I F Y OU H AVE A NY Q UESTIONS OR N EED TO D ISCUSS ANY OF THE A BOVE C OMMENTS , P LEASE C ALL THE A BOVE C ONTACT P ERSON AND THE P LANNING D EPARTMENT AS S OON AS P OSSIBLE .

514 East Loockerman Street Alley Proposed Alley Abandonment !Ò§ !Ò§ S Du p !Ò§ §Ò on ! tH wy St an m k er !Ò§ oc !Ò§ Lo E !Ò§ !Ò§ . ! !Ò§ × !Ò§ . ! §Ò ! !Ò§ . ! !Ò§ !Ò§ !§Ò ! Ò§ rd !Ò§ ya !Ò§ Ba Ave !Ò§ !Ò§ !Ò§ !Ò§ 0 !Ò§ 65 130 260 Feet × ¯ Legend Date Printed: November 23, 2010 Date Created: November 23, 2010 !Ò§ Overhead Electric Pole ! . × Hydrants Manholes File: m:\gis_data\projects/tech_mxds Underground Electric Lines Sewer Line \st_abandonment_map Overhead Electric Lines Right of Way to be Abandoned Department: Public Services GIS Water Main Dover Parcels City of Dover, Delaware Hydrant Line

CITY OF DOVER ORDINANCE #2011-01 1 BE IT ORDAINED BY THE MAYOR AND COUNCIL OF THE CITY OF DOVER, IN 2 COUNCIL MET: 3 4 That Appendix B - Zoning, Article 5 – Supplementary Regulations be amended by adding a new 5 section 20 as follows: 6 Section 20. Solar and Small Wind Energy Systems. 7 Solar energy systems and small wind energy systems shall be permitted as accessory uses within 8 all zones subject to the following requirements: 9 20.1Residential Zones 10 11 20.11Solar Energy Systems shall be subject to the following: 12 a. Ground-mounted solar energy systems shall be permitted only in the rear yard. 13 b. Ground-mounted solar energy systems shall be set back a minimum of five feet 14 from side and rear property lines, or the height of the tallest point on the system, 15 whichever is higher. 16 c. Ground-mounted solar energy systems shall not exceed 15 feet in height. 17 d. Ground-mounted solar energy systems shall be visually screened from adjacent 18 properties to a height of six feet by either an opaque fence or a dense vegetative 19 screen. 20 e. All exterior electrical and/or plumbing lines must be buried below the surface of 21 the ground and placed in a conduit. 22 f. Roof-mounted solar energy systems must comply with all building height 23 requirements for the zoning district where the system is to be installed. 24 20.12Small wind energy systems in residential zones shall be subject to the following 25 restrictions: 26 a. Small wind energy systems shall be setback 1.0 times the turbine height from 27 adjoining property line. Turbine height means the height of the tower plus the length 28 of 1 blade. 29 b. The aggregate noise or audible sound of a small wind energy system shall not exceed 30 5 decibels above the existing average noise level of the surrounding area and shall be 31 restricted to a maximum of 60 decibels measured at any location along the property 32 line to the parcel where the wind system is located. Red text indicates changes made between 1/10/11 packet and draft presented at 1/10/11 Utility Committee Meeting. Blue text indicates changes made following the 1/10/11 Utility Committee Meeting.

33 c. Small wind energy systems shall be free from signage, advertising, flags, streamers, 34 any decorative items or any item not related to the operation of the wind turbine. 35 Electric wiring for the turbines shall be placed underground for non-building 36 integrated systems. 37 d. Small wind energy systems shall not be permitted within the H (Historic District) 38 Zone. 39 e. Any small wind energy system shall be visually screened from any properties or 40 structures included on the National Register of Historic Places. 41 20.2Non-Residential Zones 42 20.21 Solar energy systems shall be subject to the following: 43 a. For the purposes of this subsection, a use is considered accessory if it is located 44 within a complex or campus that includes one or more contiguous lots under 45 common ownership and management, where the principal use of the complex or 46 campus is other than a solar energy system, and the energy generated by the 47 solar energy system is intended to primarily reduce on-site consumption of 48 utility-supplied energy. 49 b. Ground-mounted solar energy systems shall not occupy more than 30 percent of the 50 lot area of the complex or campus for which the solar energy system is proposed. 51 c. If ground-mounted solar energy systems are proposed to occupy more than 30 percent 52 of the lot area of the complex or campus, their placement shall be subject to 53 conditional use approval by the Planning Commission. 54 d. Ground-mounted solar energy systems shall not be located between the principal 55 structure and the street upon which the principal structure fronts. 56 e. All exterior electrical and/or plumbing lines must be buried below the surface of 57 the ground and placed in a conduit. 58 f. Solar energy systems, whether roof-mounted or ground-mounted, must comply with 59 all building setback and height requirements for the zoning district where the system 60 is to be installed. 61 20.22Small wind energy systems shall be subject to the following restrictions: 62 a. Small wind energy shall be setback 1.0 times the turbine height from adjoining 63 property line. Turbine height means the height of the tower plus the length of 1 blade. 64 b. The aggregate noise or audible sound of a wind system shall not exceed 5 decibels 65 above the existing average noise level of the surrounding area and shall be restricted 66 to a maximum of 60 decibels measured at any location along the property line to the 67 parcel where the small wind energy system is located. 68 c. Small wind energy systems shall be free from signage, advertising, flags, streamers, 69 any decorative items or any item not related to the operation of the wind turbine. 70 Electric wiring for the turbines shall be placed underground for non-building 71 integrated systems. Red text indicates changes made between 1/10/11 packet and draft presented at 1/10/11 Utility Committee Meeting. Blue text indicates changes made following the 1/10/11 Utility Committee Meeting.

72 d. Small wind energy systems shall not be permitted within the H (Historic District) 73 Zone. 74 e. Any small wind energy system shall be visually screened from any properties or 75 structures included on the National Register of Historic Places. 76 77 20.3Decommissioning 78 Solar energy systems and/or small wind energy systems must be maintained and kept in a 79 state suitable for immediate operation. When it can be demonstrated that a solar energy 80 system or small wind energy system as approved in accordance with this section is in a state 81 of disrepair and is not suitable for immediate operation, that system shall be removed and 82 the accessory use terminated. 83 84 BE IT FURTHER ORDAINED: 85 86 That Appendix B – Zoning, Article 12 – Definitions, be amended to add the following 87 definitions: 88 89 Solar energy system – any solar collector or other solar energy device, or any structural design 90 feature, mounted on a building or on the ground, and whose primary purpose is to provide for the 91 collection, storage, and distribution of solar energy for space heating or cooling, for water 92 heating, or for electricity. 93 94 Small wind energy system - a wind energy conversion system consisting of a wind turbine, a 95 tower, and associated control or conversion electronics, which has a rated capacity of not more 96 than 100 kilowatts (kW) and which is intended to primarily reduce on-site consumption of 97 utility-supplied energy. 98 99 SYNOPSIS 100 The proposed ordinance adds solar energy systems and small wind energy 101 systems as accessory uses within all zoning districts; sets standards for these 102 systems to ensure protection of the character of the zones, as well as public 103 health, safety and welfare; and adds definitions for such systems to the Zoning 104 Ordinance. 105 106 Actions History: January 10, 2011 – Introduced at Utility Committee and referred to 107 back to staff for changes. Red text indicates changes made between 1/10/11 packet and draft presented at 1/10/11 Utility Committee Meeting. Blue text indicates changes made following the 1/10/11 Utility Committee Meeting.

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

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

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

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

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

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

EXECUTIVE SUMMARY

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

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

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

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

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

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

PART I - INTRODUCTION

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

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

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

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

PART II – ELECTRIC SYSTEM OVERVIEW AND ASSESSMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PART III – FINANCIAL ASSESSMENT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PART IV – CONCLUSIONS

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

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

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

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

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

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

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

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

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

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

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

4401 Fair Lakes Court Fairfax, VA 22033 USA Phone: 1.703.818.9100 www.paceglobal.com City of Dover November Monthly Report Energy and Operations Management December 23, 2010 This Report was produced by Pace Global Energy Services, LLC (“Pace Global”) and is meant to be read as a whole and in conjunction with this disclaimer. Any use of this Report other than as a whole and in conjunction with this disclaimer is forbidden. Any use of this Report outside of its stated purpose without the prior written consent of Pace Global is forbidden. Except for its stated purpose, this Report may not be copied or distributed in whole or in part without Pace Global’s prior written consent. This Report and the information and statements herein are based in whole or in part on information obtained from various sources as of November, 2010. While Pace Global believes such information to be accurate, it makes no assurances, endorsements or warranties, express or implied, as to the validity, accuracy or completeness of any such information, any conclusions based thereon, or any methods disclosed in this Report. Pace Global assumes no responsibility for the results of any actions and inactions taken on the basis of this Report. By a party using, acting or relying on this Report, such party consents and agrees that Pace Global, its employees, directors, officers, contractors, advisors, members, affiliates, successors and agents shall have no liability with respect to such use, actions, inactions, or reliance. This Report does contain some forward-looking opinions. Certain unanticipated factors could cause actual results to differ from the opinions contained herein. Forward-looking opinions are based on historical and/or current information that relate to future operations, strategies, financial results or other developments. Some of the unanticipated factors, among others, that could cause the actual results to differ include regulatory developments, technological changes, competitive conditions, new products, general economic conditions, changes in tax laws, adequacy of reserves, credit and other risks associated with City of Dover and/or other third parties, significant changes in interest rates and fluctuations in foreign currency exchange rates. Further, certain statements, findings and conclusions in this Report are based on Pace Global’s interpretations of various contracts. Interpretations of these contracts by legal counsel or a jurisdictional body could differ. Setting the Pace in energy since 1976 Washington • Houston • Columbia • London • Moscow

TABLE OF CONTENTS 1.0 – Executive Summary ..............................................................................................................2 2.0 – Budget Report .......................................................................................................................6 2.1 – Variance Report ..................................................................................................................6 2.2 – Variance Analysis ...............................................................................................................8 3.0 – Energy management ...........................................................................................................10 3.1 – Purchased Power ...............................................................................................................10 3.2 – Generation Management ...................................................................................................13 3.3 – Emissions and Allowance Management ...........................................................................20 4.0 – Operations Management ....................................................................................................26 Appendices ....................................................................................................................................42 I. PJM Invoice Breakdown ....................................................................................................42 II. Load, All In Energy and all in cost of service table...........................................................43 III. Glossary .............................................................................................................................44 1

1.0 – EXECUTIVE SUMMARY All In Unit Energy Cost - Actual v Budget Generation MWh's: Actual v Budget Actual Load vs Budget Load 30,000 100,000 $92 25,000 $90 75,000 $88 20,000 $86 MWh MWh $/MWh 15,000 50,000 $84 10,000 $82 25,000 5,000 $80 0 $78 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Gen Actual Gen Budget Actual Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA Purchased Power Management Wholesale load for the month of November was 54,396 MWhs, versus a weather normalized projected load of 54,220 MWhs. Hedged transactions accounted for 47,810 MWhs or 88% of this volume (88% of forecasted load) at a cost of $3.61 million. Spot Market purchases resulted in a PJM charge of $307 thousand (a $424 thousand charge in the Day Ahead market and a $117 thousand credit in the Real Time market). Other PJM related charges accounted for an additional cost of $1.4 million, inclusive of all load related fees. November’s Energy Only Unit Cost, excluding capacity obligations and credits, was $2.12/MWh favorable compared to the budgeted value of $84.68/MWh. Dover’s projected all in Cost of Service for FY2010-2011 is $88.08/MWh, or $3.15/MWh favorable as compared to the Budget1. Generation and Asset Management For the month of November the McKee Run and Van Sant units were not dispatched into the PJM market. A relatively low average for on-peak LMPs during the month demonstrated that the PJM system did not generally require support from peaking units. The budget did not project generation for this month. Emissions Allowance Management Given the regulatory uncertainty surrounding the allowance markets, Dover has elected not to include revenues from emission allowance sales in its 2010-2011 fiscal year budget. Dover purchased and retired 53 NOX seasonal allowances on November 23rd in order to meet its 2010 NOX seasonal compliance position. An appropriate number of allowances associated with unit dispatch events during the current fiscal year have been set aside for retirement (see Exhibit 1). The following emissions summary reflects Dover’s emissions and allowance balance through the 1 The projected all in Cost of Service is based on YTD actual results for 5 months and 7 months of projected costs. 2

end of November, but does not account for the potential annual NOx allowances needed for retirement. Exhibit 1: Emissions and Allowance Summary through November 30, 2010 2010-2011 EMISSIONS & ALLOWANCE SUMMARY SO2 NOx Date Action Allowance Sale Revenue1 Allowance Sale Revenue1 Allocation Price Allocation2 Price Seas. Ann. 1/1/08 2007 Carryover 549 0 -- -- -- 1/1/09 2008 Carryover 2,691 0 1/1/09 Initial 2009 2,723 -- -- 51 78 -- -- Allocation 2/1/10 Initial 2010 1,988 49 76 Allocation N/A 2003-2006 139 Carryover 9/29/09 SO2 Sales (1,500) 11/12/09 NOX Ann. Sales (45) 11/13/09 SO2 Sales (1,410) 11/20/09 NOx Seas. Sales (25) 12/31/09 2009 YTD (1) -- -- (6) (13) -- -- Emissions3 12/31/10 2010 YTD (2) -- -- (54) (54) -- -- Emissions 6/1/10 State Re- -- -- -- 3 2 -- -- allocation 10/31/10 EPA Linearity (68) TBD Testing Req. 11/23/10 Market Purchase 53 Totals - Allowances 5,177 -- $0 2 44 -- $0 $0 $0 Total Revenue $0 Notes: (1) Revenue calculations account for a $0.50/ton broker fee for SO2, $10/ton broker fee for NOx annual and $5/ton broker fee for NOX seasonal. (2) Per the Clean Air Interstate Rule, in 2009 NOx emissions will be governed by a seasonal and annual program. The NOx seasonal emissions pertain only to emissions (May 1 – Sep 30), similar to the previous trading regimen. Annual emissions cover the entire year. Given current dispatch expectations, the market value of the remaining 2007-2010 Dover allowance inventory is approximately $34,766.25 at the time of this report. This represents 3

3,191 pre-CAIR SO2 allowances trading at $8.25/ton and 1,986 post-CAIR SO2 allowances2 trading at $4.25/ton. NOx seasonal allowances are currently trading at $30/ton, however after an expected true-up with the 2010 ozone seasonal NOX program, Dover does not currently have any NOX seasonal allowances in its allowance bank. NOx annual allowances are currently trading at $290/ton, however after an expected true-up with the 2010 annual season NOx program, Dover does not have any NOx annual allowances in its allowance bank. EMISSIONS & ALLOWANCE SUMMARY Through November 30, 2010 Allowance Allowance Emissions Emissions Allowances Allowances Allowance Vintage Allocation Month Sold Month Sold Balance SO2 – 2003-06 1393 N/A N/A 0 139 0 SO2 – 2007 2723 0 98 0 2,455 1704 SO2 – 2008 2723 0 32 0 2,392 299 SO2 – 2009 2723 0 1 0 0 2722 SO2 – 2010 1988 0 2 0 0 1986 NOx – 2007 198 0 32 0 166 0 NOx – 2008 198 0 20 0 178 0 NOx Annu – 2009 80 0 135 0 45 22 NOx Seas – 2009 53 0 6 0 25 0 NOx Annu – 2010 76 0 54 0 0 22 NOx Seas – 2010 50 0 54 0 0 0 Operations Management Summary During the month of November, there were no reportable or lost time accidents or injuries. The facility has now gone 47 days without an OSHA recordable accident and 47 consecutive days without a lost time reportable accident. There were zero Environmental Notices of Violations issued and no near miss events. There were no unit dispatches by PJM for the generating Units at McKee Run or the Unit at Van Sant. Units 1, 2 and 3 scheduled maintenance outages were completed on November 21. 2 Pace Global is assuming and recommending that Dover retire vintage 2010 SO2 allowances for its 2010 emissions. Per CAIR, 2010 or later vintage allowances are worth half of a ton for compliance purposes. Given the regulatory and legislative uncertainty surrounding the SO2 markets, and the greater value 2009 allowances have for compliance purposes, Pace Global recommends retaining 2009 vintage allowances over 2010 vintage allowances when possible. 3 To facilitate tracking of emission allowances, the EPA assigns an identification number and serial number to every allowance. During the allowance transfer transaction, 139 unaccounted SO2 allowances from vintage years 2003-06 were utilized. 4 Corrected 2007 SO2 tons emitted to reflect actual emission for Units 3 & 11. The December 2007 report included emissions for all four units. 5 Approximately 10 tons of NOx emissions resulted from the February 2010 McKee Run testing associated with the Pollution Remediation project and the June 2010 emission testing project. 4

Monthly Budget Variance - The actual expenses attributable to O&M of the two sites for the month of November were $447,254. These expenses were $62,952, or 16.38%, over the approved budget of $384,302. The principal reasons for this negative variance were due to higher electricity demand charges, and the repair costs associated with the repair of the Unit 3 boiler. Risk Management Summary Forward PJM power prices were fell in the short-term and remained largely flat further out since the last reporting period. The 2010-2011 year fell while the outer years stayed mostly flat. Continued high storage numbers have been the major factor in driving the prompt year downward, while the remainder of the curve has been less affected by this due to a projected increase in demand in future years. Forward Dover Zone power prices for FY 2010-11 decreased by $2.51 (a decrease of 5.37%) since the last reporting period while FY 2011-2012, FY 2012-2013, FY 2013-2014, and FY 2014-2015 all changed by approximately $0.33/MWh to $-0.57/MWh (an change between 0.64% increase and a 0.97% decrease) compared with the last reporting period. The individual years’ hedge ratios and Cost-of-Service projections – with and without the cost impact of expected solar plant volumes – are shown in the table below: Wholesale Cost-of-Service Summary (Projected) Date 12/17/2010 Budget December Nov Oct Cost-of Cost-of- Cost-of Service Year-to Forecasted Cost-of Cost-of Hedge Power Year Service Service w/Solar Year over 2009- Service Service Ratio Budget $/MWh Costs Only Increase 10 Budget $/MWh $/MWh $/MWh* 2010-2011 N/A $84.71 $84.93 89% -5.0% -9.16% $84.86 $84.93 2011-2012 N/A $78.56 $79.49 85% -7.3% -15.76% $78.52 $78.11 2012-2013 N/A $72.07 $73.04 76% -8.3% -22.72% $72.05 $71.48 2013-2014 N/A $70.40 $71.46 48% -2.3% -24.50% $70.43 $69.25 2014-2015 N/A $69.13 $70.24 9% -1.8% -25.87% $69.68 $67.77 *Note that the "Cost-of-Service w/Solar Costs Only" column does not reflect the SREC benefit the City will receive since the SREC prices are currently unknown **Assumes solar generation will start in June 2011 5

2.0 – BUDGET REPORT 2.1 – VARIANCE REPORT Budget Actual Variance Nov-10 Nov-10 Nov-10 Load Forecast 54,220 54,396 (175) Power Supply Power Supply $3,657,588 $3,613,258 $44,329 Power Supply Management $183,080 $198,410 ($15,330) Capacity Charges - Load $992,607 $1,043,504 ($50,896) PJM Charges - Load $750,458 $678,984 $71,474 Total - Power Supply $5,583,733 $5,534,156 $49,577 Generation Plant Operations $384,302 $447,254 ($62,952) Generation Fuel $0 $0 $0 Capacity Credits ($970,188) ($970,188) $0 PJM Credits ($34,875) ($34,012) ($863) Total - Generation ($620,761) ($556,946) ($63,815) Emission Allowance Sales Total - Emission Allowance Sales $0 $3,445 ($3,445) Total Power Supply & Generation $4,962,972 $4,977,210 ($14,238) Total Power Supply, Generation & Emission Sales $4,962,972 $4,980,655 ($17,683) Unit Costs Total – Power Supply $102.98 $101.74 $1.24 Total - Generation + Emission Sales ($11.45) ($10.18) ($1.27) Final Cost of Service to City of Dover Ratepayers $91.53 $91.56 ($0.03) 6

Budget Actual Variance YTD YTD YTD Load Forecast 330,792 339,548 (8,755) Power Supply Power Supply $21,855,989 $21,464,610 $391,380 Power Supply Management $972,001 $1,002,522 ($30,521) Capacity Charges - Load $5,062,298 $5,319,820 ($257,522) PJM Charges - Load $5,082,326 $6,111,524 ($1,029,197) Total - Power Supply $32,972,614 $33,898,475 ($925,861) Generation Plant Operations $2,180,013 $2,459,687 ($279,674) Generation Fuel $191,020 $3,138,177 ($2,947,157) Capacity Credits ($4,947,958) ($4,959,252) $11,294 PJM Credits ($405,874) ($5,244,519) $4,838,645 Total - Generation ($2,982,799) ($4,605,907) $1,623,109 Emission Allowance Sales Total - Emission Allowance Sales $0 $3,445 ($3,445) Total Power Supply & Generation $29,989,816 $29,292,568 $697,248 Total Power Supply, Generation & Emission Sales $29,989,816 $29,296,013 $693,803 Unit Costs Total – Power Supply $99.68 $99.83 ($0.16) Total - Generation + Emission Sales ($9.02) ($13.55) $4.54 Final Cost of Service to City of Dover Ratepayers $90.66 $86.28 $4.38 7

2.2 – VARIANCE ANALYSIS Power Supply • Power Supply realized a favorable $44 thousand variance compared to the budget. This favorable variance was primarily due to the timing of Dover’s options purchase and payment of the associated premium. During FY2009-10 the City of Dover purchased Options as insurance to protect Dover from incremental energy cost exposure. The current City of Dover power supply and generation budget indicates that 100% of this purchase was expensed as a Power Supply Cost in the FY2009-10 period, however the FY2010-11 budget accrues this expense monthly. • PJM Charges for Load experienced a positive $71 thousand variance relative to the monthly budget. This variance was driven by favorable variances that include a $97 thousand favorable variance in Basis costs and a $251 thousand favorable Load Following variance. Offsetting these favorable variances were a $115 thousand unfavorable variance in open position costs, a $21 thousand unfavorable variance in the Transmission Loss Refund, a $54 thousand Transmission Cost increase (in June PJM raised the transmission costs going forward due to the transmission owner’s update of its annual network service requirements and rates), a $12 thousand unfavorable variance in Transmission Rights Credits, and a $76 thousand unfavorable variance in PJM ancillary charges. • Capacity Charges for Load realized a negative $51 thousand variance relative to the monthly budget. This variance is the result of PJM finalizing its new prices for the FY 2010-11 PJM Base Residual Auction. These revised prices, which became effective in June 2010, resulted in a 5% increase in the per MW-day UCAP charge applicable to Dover (increasing the rate to $187.34/MW-day). PJM also adjusted the Interruptible Load for Reliability (ILR) resources cost for the Delivery Year relative to the Forecasted RTO IRL Obligation in a manner that negatively impacts Dover. These charges will result in unfavorable variances each month during the current fiscal year. • For the month a favorable $116 thousand net variance between Power Supply (fixed positions) and PJM Charges for Load (open positions, transmission, etc.) was realized due to an unfavorable $14 thousand variance, caused by a change in volume, and a favorable $130 thousand variance, caused by a change in price. Hence, 100% of the favorable variance can be attributed to pricing changes. • The Power Supply Management variance includes a volume variance adjustment to the fixed monthly rate paid in October and is merely an estimate at this point. 8

Generation • Plant O&M reported an unfavorable variance of $63 thousand compared to the monthly O&M Budget of $384 thousand. The principal reasons for this unfavorable variance were (i) higher than expected electric demand charges, and (ii) unbudgeted costs associated with Unit 3 boiler. Emission Allowance Sales • In order to meet compliance requirements, Dover is required to retire seasonal and annual NOx allowances. To fully comply with its obligations, Dover purchased 51 NOX seasonal allowances in November and is also expected to procure additional NOx annual allowances early next year. Once all anticipated purchase and retirement activities for the 2010 period are complete, Dover’s seasonal and annual inventories will be zero. 9

3.0 – ENERGY MANAGEMENT 3.1 – PURCHASED POWER Management Highlights • Dover’s November load was 54,396 MWh, which was slightly above the weather normalized load of 54,220 MWh. Hedge volumes accounted for 87.9% of actual load for the month. • The November All In Unit Energy cost (excluding capacity) of $82.56 per MWh is $2.12 per MWh lower than the monthly budget. Actual Load vs Budget Load 100,000 75,000 MWh 50,000 25,000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Actual 10

All In Unit Energy Cost - Actual v Budget $92 $90 $88 $86 $/MWh $84 $82 $80 $78 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA 11

Purchased Power Variance Report Budget Actual Variance Nov-10 Nov-10 Nov-10 City of Dover Load Load Obligation (MWh) 54,220 54,396 (175) Unit Energy Costs ($ per MWh) Energy Cost (inc. Load Following & Pace Fees) $78.50 $73.82 $4.68 Pass Through $5.22 $7.80 ($2.58) Incentive Fees $0.95 $0.94 $0.01 Total - All In Unit Energy Cost $84.68 $82.56 $2.12 Purchased Power Variance Analysis • The actual Dover load of 54,396 MWh was 0.3% above the projected November load of 54,220 MWh. • The All In Unit Energy Cost was $2.12 per MWh lower than budget due to favorable basis and load following charges. Offsetting the positive variance were increased open energy costs, increased PJM ancillary charges and higher than expected transmission charges. • The Management Incentive fee variance on a $/MWh basis is merely an estimate at this point. PJM Power Balancing and Load Related Fees Purchased Power (Hedges): 47,810 MWhs @ $75.58/MWh: $3,613,258 Power Balancing; Additional PJM, and Energy Manager Fee6: $1,920,898 Total Cost to Serve Load (54,396 MWhs) $5,534,156 All In $/MWh load cost inclusive of Energy Management Fees: $101.74/MWh 6 Includes estimated Incentive Fees. 12

3.2 – GENERATION MANAGEMENT • During the month, PJM did not dispatch Dover’s units into the market. The budget did not expect any generation for the month. Generation MWh's: Actual v Budget 30,000 25,000 20,000 MWh 15,000 10,000 5,000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Gen Actual Gen 13

2010-11 Generation Production Margin v Budget $1,500 Thousands $1,250 $1,000 $750 $500 $250 $0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget ($) Actual ($) 14

Generation Management Variance Report Budget Actual Variance Nov-10 Nov-10 Nov-10 Self-Supplied Capacity from Gen (MW) McKee Run 1 17 17 0 McKee Run 2 17 17 0 McKee Run 3 100.3 100.3 0 Van Sant 39 39 0 Self Supplied Capacity from Gen (MW) 173.3 173.3 0 Additional Capacity from PJM Incremental Auction 1.7 1.7 0 Total Capacity from Gen (MW) 175 175 0 Gen Capacity Sales to PJM ($/MW.d) $186.12 $186.12 $0.00 Incremental Auction Sales to PJM ($/MW.d) $50.00 $50.00 $0.00 Power Sales Power Sales (MWh) 0 0 0 Sales Revenue ($ per MWh) $0.00 $0.00 $0.00 Power Sales Revenue ($) $0.00 $0.00 $0.00 Variable Fuel & Transport Fuel Oil No.2 Volume - McKee (gal) 0 0 0 Fuel Oil No.2 - McKee ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.2 Cost of Goods Sold - McKee ($) $0.00 $0.00 $0.00 Fuel Oil No.2 Volume - Van Sant (gal) 0 0 0 Fuel Oil No.2 - Van Sant ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.2 Cost of Goods Sold - Van Sant ($) $0.00 $0.00 $0.00 Gas Volume (Dth) 0 0 0 Unit Gas Price ($/Dth) $0.00 $0.00 $0.00 Variable Gas Cost ($) $0.00 $0.00 $0.00 Transport ($) $0.00 $0.00 $0.00 Variable Gas and Transport Costs ($) $0.00 $0.00 $0.00 Variable Fuel & Transport Costs ($) $0.00 $0.00 $0.00 Testing $0.00 $0.00 $0.00 Generation Production Margin $0.00 $0.00 $0.00 Generation Capacity Payment Total - Generation Capacity Payment ($970,188) ($970,188) $0 15

Generation Management Variance Analysis Fuel Expense • PJM did not dispatch Dover’s units into the market, nor did the units consume natural gas or fuel oil related to power generation. Generation Production Margin Transaction Volumes Revenue/(Cost) PJM Invoice for Power Sold 0 MWhs $0 Fuel and Transport 0 Dth gas/0 gal #6 oil $0 0 gal #2 oil Generation Production Margin 0 MWhs $0 The following non-production energy revenues and costs are generally fixed and are not directly related to generation dispatch and power production. Effective September 2009 FERC approved the City of Dover’s reactive supply service compensation resulting in approximately $29 thousand of revenue per month. PJM Invoice (Black Start) $4,545 Reactive Supply Credit $29,468 Fuel Oil Tank Heating & Black Start Gas Supply $0 Eastern Shore Demand Charge $0 Eastern Shore Transport and Imbalance Charge $0 Transco Demand Charge $0 Non-Production Energy Revenue/(Costs) $34,013 16

Fuel and Transportation • During the month there were no unit dispatches by PJM. Date Volume (Dth) Price ($/Dth) Total Commodity Cost ($) Hess Corp Sub-Total 0 $0.00 $0.00 PESCO Sub-Total 0 $0.00 $0.00 NJNG Sub-Total 0 $0.00 $0.00 Total 0 $0.00 $0.00 Due to the conversion from #6 residual oil to low sulfur #2 oil, the need for a constant supply of natural gas to heat the #6 oil is no longer required. Some gas will still be required for winter space heating of the building(s). Pace will coordinate with NAES on the procurement of such supply. This expense will now fall under the plant’s utility costs and be paid and budgeted for by the station. 17

Gas Transportation Purchased City of Dover decided not to renew agreements with the Eastern Shore Natural Gas Pipeline (“ESNG”) and TransCo to provide firm natural gas deliveries to the McKee Run and Van Sant stations. The City of Dover previously notified ESNG and TransCo of its intent to terminate these existing firm capacity agreements and, as a result, the City no longer pays firm demand charges or adjustments. ESNG FT Demand Charge $ 0 TransCo FT Demand Charge $ 0 Total Purchases $ 0 Other Gas Purchases Commodity and transportation imbalances on Eastern Shore Pipeline for the month resulted in no charge. The components of this charge are summarized as follows: Eastern Shore Transport and Imbalance Charges Imbalance/Dth Estimated Cost/Dth Estimated Total Cost 0 $0.00 $0.00 Transport Volume/Dth $/Dth Total Cost Firm/IT 0 $0.00 $0.00 Net Charge $0.00 18

Purchased Commodity Fuel Oil Summary Neither McKee Run nor Van Sant was dispatched into PJM and no #2 fuel oil was consumed for the month. The McKee Run tank must maintain 3 days of load equivalent dispatches for its units. Due to a low fuel inventory level at McKee Run, Pace procured a quantity of fuel oil sufficient to bring the City of Dover’s inventory into compliance with approved levels. This procurement resulted in four transactions with Hess for a total of 82,563 gallons of no. 2 fuel oil. These purchases were completed in late October and early November, with fuel delivers occurring between October 28th and November 3rd. The McKee Run tank must maintain 3 days of load equivalent dispatches for its units. Tank Inventory Estimates as of November 30 Tank Tank Capacity Inventory In Days of Burn (gallon) (gallon) (Typical Dispatch7) McKee Run (#2 Fuel 2,554,105 454,725 3 Oil) Van Sant 258,000 140,065 3 (#2 Fuel Oil) November 2010 Fuel Oil Purchases Date Vendor #2 Oil Price ($/gal) Total Cost gal 28-Oct Hess 30,003 $2.5619 76,865.96 29-Oct Hess 22,553 $2.5619 57,779.49 01-Nov Hess 22,504 $2.5619 57,653.95 03-Nov Hess 7,503 $2.5619 19,222.25 Total 82,563 $2.5619 211,521.66 7 As measured by tank level instruments. Tank levels may change due to oil temperature. 19

3.3 – EMISSIONS AND ALLOWANCE MANAGEMENT Given the regulatory uncertainty surrounding the allowance markets, Dover has elected not to include revenues from emission allowance sales in its 2010-2011 fiscal year budget. Dover purchased and retired 53 NOX seasonal allowances on November 23rd in order to meet its 2010 NOX seasonal compliance position. An appropriate number of allowances associated with unit dispatch events during the current fiscal year have been set aside for retirement (see Exhibit 1). The following emissions summary reflects Dover’s emissions and allowance balance through the end of November, but does not account for the potential annual NOx allowances needed for retirement. Exhibit 1: Emissions and Allowance Summary through November 30, 2010 2010-2011 EMISSIONS & ALLOWANCE SUMMARY SO2 NOx Date Action Allowance Sale Revenue1 Allowance Sale Revenue1 Allocation Price Allocation2 Price Seas. Ann. 1/1/08 2007 Carryover 549 0 -- -- -- 1/1/09 2008 Carryover 2,691 0 1/1/09 Initial 2009 2,723 -- -- 51 78 -- -- Allocation 2/1/10 Initial 2010 1,988 49 76 Allocation N/A 2003-2006 139 Carryover 9/29/09 SO2 Sales (1,500) 11/12/09 NOX Ann. Sales (45) 11/13/09 SO2 Sales (1,410) 11/20/09 NOx Seas. Sales (25) 12/31/09 2009 YTD (1) -- -- (6) (13) -- -- Emissions3 12/31/10 2010 YTD (2) -- -- (54) (54) -- -- Emissions 6/1/10 State Re- -- -- -- 3 2 -- -- allocation 10/31/10 EPA Linearity (68) TBD Testing Req. 11/23/10 Market Purchase 53 Totals - Allowances 5,177 -- $0 2 44 -- $0 $0 $0 Total Revenue $0 Notes: (1) Revenue calculations account for a $0.50/ton broker fee for SO2, $10/ton broker fee for NOx annual and $5/ton broker fee for NOX seasonal. 20

(2) Per the Clean Air Interstate Rule, in 2009 NOx emissions will be governed by a seasonal and annual program. The NOx seasonal emissions pertain only to emissions (May 1 – Sep 30), similar to the previous trading regimen. Annual emissions cover the entire year. Given current dispatch expectations, the market value of the remaining 2007-2010 Dover allowance inventory is approximately $34,766.25 at the time of this report. This represents 3,191 pre-CAIR SO2 allowances trading at $8.25/ton and 1,986 post-CAIR SO2 allowances8 trading at $4.25/ton. NOx seasonal allowances are currently trading at $30/ton, however after an expected true-up with 2010 ozone seasonal NOX program, Dover does not currently have any NOX seasonal allowances in its allowance bank. NOx annual allowances are currently trading at $290/ton, however after an expected true-up with the 2010 annual season NOx program, Dover does not have any NOx annual allowances in its bank. SO2 After hitting near rock bottom pricing levels to end November, SO2 prices both for pre- and post- CAIR allowances rebounded some as 2010 comes to a close (see Figure 1 – SO2 Prices since Last Monthly Report). Major question remains regarding the value of existing SO2 allowances for compliance purposes after new regulatory rules are finalized by the Clean Air Transport Rule (Transport Rule). Pace Global’s expectation based on current draft language is that the existing bank of SO2 allowances will not be permitted for compliance under the Transport Rule. Current pricing supports this expectation. Figure 1 – SO2 Prices since Last Monthly Report SO2 Allowance Prices (Oct / Nov) $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2009 (pre‐CAIR) 2010 (post‐CAIR) 8 Pace Global is assuming and recommending that Dover retire vintage 2010 SO2 allowances for its 2010 emissions. Per CAIR, 2010 or later vintage allowances are worth half of a ton for compliance purposes. Given the regulatory and legislative uncertainty surrounding the SO2 markets and the greater value 2009 allowances have for compliance purposes, Pace Global recommends retaining 2009 vintage allowances over 2010 vintage allowances when possible. 21

NOx NOX annual allowances have gained some value in the first have half of December (See Figure 2 – NOX annual prices since last monthly report.) While prices remain well below where they were to close the record hot summer months, recently prices have remained fairly steady hovering around $300/ton. Pace Global is currently working with Dover and NAES in evaluating the potential need to purchase additional NOX annual allowances to cover Dover’s 2010 emissions. The deadline for purchase and retirement of allowances, should such a transaction be necessary, is March 1, 2011. NOX seasonal prices have fluctuated between $25/ton and $30/ton for most of November and December (See Figure 3 – NOX seasonal prices since last monthly report.) Dover purchased a very small strip of NOX seasonal allowances at the end of November paying a bit of premium given the small amount of allowances purchased and the very limited time frame from which they needed to turn around the transaction. The true-up deadline for the ozone season NOX program was November 30. Under the proposed Transport Rule, it is unclear how existing NOX allowances will be treated for compliance purposes. The rule contemplates a number of methods for dealing with the existing NOX banks, including permitting use for compliance at a discounted rate. Current expectation is that the existing bank will not be permitted to carry over into the new program. Figure 2 – NOX annual prices since last monthly report NOX Annual Allowance Prices (Nov / Dec) $320.00 $300.00 $280.00 $260.00 $240.00 $220.00 $200.00 22

Figure 3 – NOX seasonal prices since last monthly report NOX Seasonal Allowance Prices (Nov / Dec) $31.00 $30.00 $29.00 $28.00 $27.00 $26.00 $25.00 $24.00 $23.00 $22.00 SO2 and NOx Outlook The SO2 and NOX markets opened 2010 in a state of flux and uncertainty, and after an EPA proposed rule to overhaul the system and a quantum shift in the political make-up of Congress, 2010 closes no more certain or stable than it began. The final version of the Transport Rule is not expected to be released until June 2011 with implementation likely taking place in January 2012. The proposed rule provides some guidance, however with changes likely being made for the final rule and Congress still capable of acting, market participants are largely forced to sit on the sidelines until some certainty is restored. The proposed Transport Rule would create a substantially more complicated trading system than that of the existing system under CAIR. Required to remain within the confines of the DC Circuit decision striking down CAIR, the Transport Rule would severely limit interstate trading. Under the Transport Rule, the SO2 market would be divided into two groups: 15 states in Group 1 would have caps set at 2012 and then further lowered in 2014. The 13 states in group 2 would have their caps set in 2012 and remain at those levels for the balance of the program. Delaware resides in what would be Group 2. For the NOX markets there would only be one class of allowances for seasonal and annual respectively. There is less clarity regarding how existing NOX allowances would be treated under the Transport Rule. Under the Transport Rule, allowances would be issued to individual units based on either their 2009 emission levels or EPA’s projected 2012 emissions for that unit – whichever is less. Thus, 23

units that have control technologies installed or planned could potentially receive fewer allowances through allocations. The same could be said for units that ran infrequently in 2009. Of course, all of the focus on the proposed Transport Rule could all be for naught if Congress chooses to step in. At this point it appears that congressional action on these markets could come in two forms. The less likely form would be a restriction of EPA’s budget to implement and enforce new rules. There have been rumblings amongst the new members of Congress that they will push to siphon EPA’s regulatory budget, however those efforts are more likely to be directed at CO2 regulation than SO2 and NOX. The more likely congressional action will come in the form of legislation, specifically designed to establish SO2 and NOX trading programs. The major challenge EPA currently has establishing rules for these programs, is they are crafting rules based on legislation that was originally intended for different environmental programs and pollutants. New legislation would grant EPA direct authority to regulate these markets. Senator Carper remains a champion for a 3 pollutant bill that would provide a smoother transition from the current rules under CAIR, allowing current allowances to retain some value for future compliance. Earlier in 2010, Carper was joined by Senator Lamar Alexander (R-TN) in introducing the Clean Air Act Amendments. While the bill was tabled due to an already full legislative docket, past bipartisan support on this bill, and bills like it, leaves the potential of movement in 2011 a real possibility. 24

RGGI and Federal Carbon Outlook RGGI allowance prices continue to flounder around the statutory floor price of $1.86/ton. RGGI is substantially over supplied and as a result allowances prices have remained extremely low (see Figure 4 – RGGI Allowance Prices). Figure 4 – RGGI Allowance Prices RGGI Prices (Nov / Dec) $1.91 $1.90 $1.89 $1.88 $1.87 The conversion potential of RGGI allowances into federal allowance volume in a national carbon market remains the main support for RGGI pricing. However, with major uncertainty surrounding the ultimate ability to pass legislation in the near-term, RGGI allowance prices continue to remain very low. Based on projected generation and emissions, Dover is projected to have an excess of 150,000 allowances through 2013 with a market value at current prices of $283,500. Despite the high level of uncertainty surrounding carbon legislation, Pace Global continues to anticipate an eventual price on carbon at a national level, although the timing, method, and scope of coverage are all substantially unknown at this time. Pace Global expects carbon regulation to evolve through three main drivers: 1. Legislation; 2. EPA regulation under their existing authority; and 3. Linkage of regional and state initiatives. The third peg of these drivers, regional and state initiatives, got a major boost on December 16, 2010, as the California Air Resource Board approved rules for a cap-and-trade program that will begin in 2012. The carbon pricing three drivers will likely develop in parallel and, at times, in concert with one another. Through the three drivers, Pace Global anticipates a national price on carbon emissions via a market based system, or combination of systems, beginning sometime between 2014 and 2017. 25

4.0 – OPERATIONS MANAGEMENT Management Highlights • During the month of November, there were no restricted work days or lost time accidents. The facility has now gone 47 days without an OSHA recordable accident and 47 consecutive days without a lost time reportable accident. • The plant received no Notice of Violations (NOVs). There were no environmental deviations or other permit deviations during the month. • No units were dispatched by PJM for the month of November. Units 1, 2, and 3 Planned Outage was cleared on November 21st. • Mechanical staff installed thirty-two zinc blocks in the Unit 1 & 2 condensers. This was a recommendation from the Nalco Inspection Report. • Mechanical staff removed and replaced forty linear feet of steam piping on the Unit 3 air heater soot blower line. • During the month of November, the entire plant staff had training on the SPCC, NPDES Permit, ARPP and the Storm Water Plan. • Work is being finalized on the FY2011-2012 Budget. The final budget will be supplied to Pace Global for review in early December. • Plant staff installed Christmas lights on the Unit 3 Stack for City of Dover’s residents viewing pleasure. • The following is the NAES Monthly Report as submitted to PGAM. 26

NAES Corporation Dover, Delaware November 2010 Monthly Report New Unit 3 Cooling Tower Distribution Valve and Crossover Pipe 27

Table of Contents 1.0 Environmental, Health and Safety 2.0 Financial 3.0 Operations 4.0 Maintenance 5.0 CIP 6.0 General Plant Information 7.0 Summary of NAES Performance 28

1.0 Environmental, Health and Safety: During the month of November, there were no restricted work days or lost time accidents. The facility has now gone 47 days without an OSHA recordable accident and 47 consecutive days without a lost time reportable accident. One Near Miss occurred when filling Unit 1 Hot Well to check the condenser tubes and expansion joint for leaks. It was determined that the written procedure did not identify the need to isolate the air ejector during the leak check process. The procedure has been modified to incorporate the isolation of the air ejector valves. The plant received no Notice of Violations (NOVs). There were no environmental deviations or other permit deviations during the month. Environmental, Health and Safety Statistics Month Fiscal Year to Date ( November 2010) (7/1/10-6/30/11) NOVs 0 0 Opacity Deviations 0 9 Environmental Deviations 0 0 OSHA Recordable 0 1 OSHA LTA's 0 0 First Aid cases 0 0 Restricted Workday Accident 0 0 Near Miss 1 3 Man Hours Worked 3,852.75 74,852.75 Date last OSHA Recordable 10/14/10 Date last Lost Time Accident 10/14/10 Days since last OSHA recordable 47 Days since last Lost Time Accident 47 Emissions (NOx & SO2) All data thru 11/30/10 NOx Summary - Year (May-Sept.)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2009 0.9 0.7 4.2 0.6 6.4 2010 0.7 2.2 119.2 3.3 125.4 2011 0.0 0.0 0.0 0.0 0.0 29

NOx Summary - Year (Jan. – Dec.)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2009 0.9 0.7 10.1 0.6 12.3 2010 0.7 2.2 119.2 3.3 125.4 2011 0.0 0.0 0.0 0.0 0.0 CAIR NOx Allowances Summary* NOx Allowances Available NOx Allowance Balance CAIR NOx CAIR NOx (Per Facility, Prior to Sale) Total NOx Allowance Allowances McKee Run Tons Vintage Sold YTD (Yr/Season) Van Sant Emitted McKee Run Van Sant (Yr/Season) (Yr/ (Yr/Season) (Yr/Season) Season) 2009 45/25 75*/50* 5/3 12/5 - 1/1 18/19 4/2 2010 0 73/47* 5/3 119**/119** -46/-72 2/0 - 3/3 Note *- State Reallocation for McKee Run 2 tons Year 2009, 2 tons Ozone Season 2009 and 1 ton Ozone Season 2010. Note ** - The higher NOx emissions are attributed to data substitution rules that use significantly higher emission rates than actually were emitted. The implementation of the data substitution rules were caused by performing a linearity test outside the grace period. NAES ESS was able to provide assistance in reducing the NOx emissions from 137 tons to 119 tons since the October report. They are also investigating another option with the EPA that could reduce the emissions further. SO2 Summary - Year (Jan.-Dec.)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2009 0.05 0.05 0.1 0.2 0.4 2010 0.0 0.0 0.3 0.0 0.3 2011 0.0 0.0 0.0 0.0 0.0 Note: Denoted data is as of 10/31/2010 from EDR submittal to EPA 30

SO2 Allowances Summary SO2 Allowances Available Total SO2 SO2 (Per Unit, Prior to Sale & Tons Emitted SO2 SO2 Allowance Allowances Reconciliation) – Allowances Vintage Sold - YTD U3 and U11 Balance Unit #3 Unit #11 YTD 2003-2006 139 138 1 0 0 2007 2455 2585 138 98 170 2008 2392 2585 138 32 299 2009 0 2585 138 0 2723 2010 0 1850 138 0 1987 2011 0 1850 138 0 1988 Note: Denoted data is as of 11/30/2010 CO2 Allowances Summary* CO2 CO2 CO2 Allowances Available Total CO2 CO2 Allowance Allowances (Per Facility, Prior to Tons Emitted Allowance Vintage Sold YTD Sale) Balance McKee Run Van Sant 2009 0 59,805 1,699 5,796 55,708 2010 0 47,844 1,636 32,971 16,509 2011 0 35,883 1,227 0 37,110 2012 0 23,922 818 0 24,740 2013 0 11,961 409 0 12,370 Note: All CO2 allowance values are provided by the RGGI CO2 Allowance Tracking System 31

2.0 Financial Financial – Current Month Month –November 2010 Actual Budget Variance Personnel 234,371 241,171 6,800 Materials & Supplies 7,226 12,950 5,724 Administrative Expenses 205,657 130,181 (75,476) Total $447,254 $384,302 ($62,952) Financial – Fiscal Year to Date Number of Months - 5 Actual Budget Variance Personnel 1,172,372 1,185,590 13,218 Materials & Supplies 167,999 85,920 (85,920) Administrative Expenses 1,119,317 908,503 (210,812) Total $2,459,688 $2,180,013 ($279,675) 2.1 Variance analysis: The original budget for November was $384,302. The actual expenses for November were $447,254 for an unfavorable variance of $62,952 or approximately 16.38%. The variance was due to the following: PERSONNEL EXPENSES – Lower labor, overtime, and burdens due primarily to an open position accounted for a total favorable variance of $6,800. The extension of the current Collective Bargaining Agreement by the company and by the union provided for a wage increase retroactive to July 1, 2010. This increase will be expensed in December 2010. MATERIALS AND SUPPLIES EXPENSES – A favorable variance of $5,724 was realized due to not spending the funds allocated for the Man-Down System. The Man-Down System is currently being investigated and is expected to be expensed in the April 2011 time frame. ADMINISTRATIVE EXPENSES - Higher than budgeted expenses in Electric, Environmental Expenses, Boiler Systems, Turbine Generator, Auxiliary Systems and Continuous Emission Monitors, Heating Oil/Gas contributed to an unfavorable variance of $75,476. The variance in the Electricity account is due to the increased run time in July, which due to plant equipment configuration change (running auxiliaries off the Unit 3 Start-up Transformer) caused a significant increase in the monthly ratcheting demand charge. Boiler Systems incurred an unfavorable variance due to unexpected costs associated with Unit 3 Boiler tube leak repairs. The budget is currently forecast to finish this fiscal year at $6,121,491 expensed versus $5,689,315 budgeted thereby realizing a 107.6% expenditure rate. The high expenditure rate is due primarily to increased unit operation time which to a large scale directly led to an increase in electric and water costs over the original budget. In addition, operational limits created a need for 32

alternate auxiliary power sources that resulted in a higher demand charge for electricity which will continue throughout the rest of the fiscal year and into the next fiscal year. 3.0 Operations Unit Operations / Outages / Trips No units were dispatched by PJM for the month of November. Units 1, 2, and 3 Planned Outage was cleared on November 21st. Month – November 2010 McKee McKee McKee MRS Van Sant Total Unit 1 Unit 2 Unit 3 Facility Unit 11 All Units Capacity MW 17 17 102 136 39 175 On Line Hours Hrs 0.0 0.0 0.0 0.0 0.0 0.0 Starts # 0 0 0 0 0 0 Gross Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Net Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Total Auxiliaries MWh 29.716 29.716 132.658 192.089 2.433 194.522 Auxiliaries purchased MWh 29.716 29.716 132.658 192.089 2.433 194.522 Fuel Gas Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used Gallons 0.0 0.0 0.0 0.0 0.0 0.0 Total Fuel MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Net Heat Rate BTU/KWh 0.0 0.0 0.0 0.0 0.0 0.0 Unit Trips # 0 0 0 0 0 0 Capacity Factor % 0.0 0.0 0.0 0.0 0.0 0.0 Availability Factor % 31.36 31.36 31.36 31.36 100.00 48.52 Commercial % 0 0 0 0 0 0 Unavailability (CU) Planned Outage Hours Hours 493.50 493.50 493.50 1,480.50 0.0 1,480.50 Maintenance Outage Hours 0.0 0.0 0.0 0.0 0.0 0.0 Hours Forced Outage Hours Hours 0.0 0.0 0.0 0.0 0.0 0.0 Reserve Shutdown Hours 227.50 227.50 227.50 682.50 721.00 1,403.50 Hours HW Boiler Gas Usage MMBTU 336 336 Pilot Gas Usage MMBTU 0 0 0 0 # Note: Does not include HWB or Pilot Gas. Fuel usage numbers are taken from fuel flow instruments. 33

2010-2011 Fiscal Year-to-Date (5 Months) McKee McKee McKee MRS Van Sant Total Unit 1 Unit 2 Unit 3 Facility Unit 11 All Units Capacity MW 17 17 102 136 39 175 On Line Hours Hrs 13.033 128.966 625.956 767.955 129.627 897.582 Starts # 1 3 43 47 24 71 Gross Generation MWh 154.626 1,216.601 44,513.459 45,884.686 4,334.660 50,219.346 Net Generation MWh 147.111 1,141.623 41,999.488 43,588.222 4,331.722 49,919.944 Total Auxiliaries MWh 157.123 224.585 4,572.931 4,954.639 10.805 4,965.444 Auxiliaries purchased MWh 149.608 149.608 2,063.204 2,362.420 8.377 2,370.797 Fuel Gas Used MMBTU 2,183.250 15,245.850 445,263.451 462,692.551 57,356.247 520,048.798 Fuel Oil Used MMBTU 0.0 0.0 12,488.410 12,488.410 135.922 12,624.332 Fuel Oil Used Gallons 0.0 0.0 87,457 87,457 982 88,439 Total Fuel MMBTU 2,183.250 15,245.850 457,751.861 475,180.961 57,492.169 532,673.130 Net Heat Rate BTU/KWh 14,841 13,355 11,047 13,081 13,234 13,158 Unit Trips # 1 0 3 4 2 6 Capacity Factor % 0.24 1.83 10.99 8.50 3.02 6.98 Availability Factor % 48.10 63.89 63.71 58.57 100.00 68.92 Commercial % 6.6 0 0.03* 0.85 0 0.66 Unavailability (CU) Planned Outage Hours Hours 1,326.500 1,326.500 1,326.500 3,979.500 0.0 3,979.500 Maintenance Outage Hours 0.0 0.0 0.0 0.0 0.0 0.0 Hours Forced Outage Hours Hours 579.830 0 6.317 586.15 0 586.15 Reserve Shutdown Hours 1,766.670 2,217.534 1,785.443 5,769.647 3,543.373 9,313.020 Hours HW Boiler Gas Usage MMBTU 336 336 Pilot Gas Usage MMBTU 0 0 0 0 Note: * Calculation does not include 3.317 hours that were Outside Management Control (OMC) Capacity Testing – FY 2010-2011 Summer 2010 (June 1- Aug 31) Winter 2010-2011 (Dec 1- Mar 1) Unit Rated Net Reported Net Unit Rated Net Reported Net Capability (MW) Capability (MW) Capability (MW) Capability (MW) 1 17 17.20 1 17 * 2 17 18.09 2 17 * 3 102 102.68 3 102 * VanSant 39 39.30 11 39 * Total 175 178.67 Total 175 * Note: * depicts a unit that has not completed capacity test for the PJM Winter Capacity Demonstration Period in FY 2010-2011. All City of Dover Units were in the revised PJM Winter Capacity Test Exemption Program 34

Fuel Oil Inventory Monthly Monthly Fuel Monthly FY 10-11 Fuel FY 10-11 Inventory Inventory Purchases Inventory Inventory Purchases Inventory (Start) (End) (Month) (Change) (Start) (YTD) (Change) McKee Run (#2 Fuel Oil) 423,881 454,725 30,007* 30,844 448,556 82,623* 6,169 Van Sant 140,486 140,065 0 (421) 143,099 0 (3,034) (#2 Fuel Oil) Note: As measured by tank level instruments. Tank levels may change due to oil temperature. Note: * An oil purchase was made in October, 2010 for #2 oil to replenish oil stocks used during testing of Unit 3 during the summer period. Approximately 53,000 gallons were received in October 2010 and 30,007 gallons were delivered in the first week of November to complete the purchase. Van Sant Lifetime through 11/30/10 Actual Starts Factored Starts Fired Hours Van Sant 1240 2147.65 4100.86 Since HGP - Dec 2004 189 479.95 717.28 Team Report: Operators are training for their PJM exam and are taking the online courses to gain CEH credits that count toward their certification hours in which they must have two hundred hours of training in five years or one hundred forty hours of training including thirty hours of simulation training credits. The PJM Generation Systems Operator exam study groups continue to meet during the month with different study topics. The study group focuses on subjects that are covered on the exam. This month’s topics were Reserves, Capacity Shortage, Supplementary Status Report, Transmission and Voltage Emergencies. Operations put the Hot Water System back in service for winter space heating by starting up one of the package boilers. Operations has also prepared the Units #1 & #2 boilers for the winter by checking for leaks on the valves and boiler so a nitrogen blanket can be put on the boilers for lay-up until the units are called upon to operate. All three steam boilers are drained for the winter although they remain available to operate if dispatched. 35

4.0 Maintenance During the month of November, plant maintenance staff continued addressing the backlog of work orders. There were thirty-six work orders issued with seventy-four work orders being completed during the month. In addition, work continued with outage work activities on Units 1, 2 and 3. The table below summarizes the monthly work order activities. Work Order Report November - 1 Outstanding From Outstanding Previous Issued This Completed at the end of Priority # Months Month This Month the month 1 10 3 9 4 2 26 1 19 8 3 41 4 23 22 4 40 1 2 39 5 10 4 0 14 SW1 0 2 2 0 SW2 0 0 0 0 SW3 0 1 0 1 SW4 0 0 0 0 SW5 0 0 0 0 PM 22 20 19 23 Totals 149 36 74 111 Note: PM's are included in the priority totals Notable activities during the month include: 1) Mechanical staff installed thirty-two zinc blocks in Unit 1 & 2 condensers. This was a recommendation from the Nalco Inspection Report. The Nalco Service representative inspected the condenser boxes and recommended installing the zinc blocks to aid in fighting metal corrosion. Nalco is the plant’s water treatment vendor. 2) IC&E staff installed forty-five new arc flash breakers. This started the final phase of the Arc Flash project. Breaker upgrades were needed to comply with the NFPA 70 Regulation for Arc Flash Protection. 3) Mechanical staff removed and replaced forty linear feet of steam piping on the Unit 3 air heater soot blower line. New condensate traps, valves and piping were installed and each line will receive new MI heat tracing, insulation and lagging to complete this project. 36

4) Maintenance staff investigated a caustic leak at the VanSant station. A leak was found on the caustic storage tank within the tank containment. The tank was isolated; fittings were repaired and the tank was returned to service. 5) Maintenance staff supported the City of Dover utility crew by cutting out the metal grating on the small pit just north of Units 1 and 2 boilers. The City of Dover utility crew assisted on this project by installing crusher run material in the vacated area. This work had been necessitated by the pit no longer being used and the metal grating had deteriorated and become a tripping hazard. 6) IC&E staff installed new wiring for the Unit 3 Generator Bearing Protection Alarm System. New wires were landed in the control room annunciation panel and connected to an alarm. Generator fire protection will monitor and alarm if excess heat or fire is detected. Once the alarm has been acknowledged, operations staff can investigate the nature of the cause and take appropriate action. 7) Plant staff installed Christmas lights on the Unit 3 Stack for City of Dover residents viewing pleasure. Season’s Greetings to All. 37

5.0 Capital Improvement Projects (CIP) Project Description Update Number EG0801 MR Fire Protection Progress: The project has been completed except for some final training System Upgrades for personnel. Final drawings and documentation would then be supplied to the plant to work towards closing out the project. Schedule: This work should be completed in December. EG0904 MR & VS Arc Flash Progress: Additional molded case breakers that will lower the Arc Flash Analysis Exposure level have been received for replacement at McKee Run. Once the new breakers have been installed, all breaker cubicles will be relabeled as necessary based on the updated Arc Flash Analysis which would incorporate the new breaker ratings. It is expected that, as a result of all the modifications to the electrical system, a revised plant uniform policy could be implemented, based on the final analysis. Schedule: Project is expected to be completed in January. EG1001 VanSant Mark IV Progress: This project has been completed. Final review of “as-built” Controls Upgrade documents from the controls system vendor is the only remaining work to complete. Schedule: This project should be closed out in the month of December. Miscellaneous Capital Progress: This project is for the unexpected needs that may occur Equipment during a budget year that were unexpected due to equipment failure for Replacements example. EG1105 Schedule: The funding is in place. Some funds have been used to cover the cost of the Unit 3 600-lb steam station valve repairs, Unit 3 Cooling Water Booster Pump Repairs, and circuit breakers for the power distribution system. Unit 3 Cooling Tower Progress: All electrical equipment and mechanical equipment was Life Extension tested and checked out for vibration. This work was completed on EG1101 November 21. Schedule: The fall outage work scope was completed on November 21 for 2010. Units 1 & 2 Cooling Progress: The scope of work was completed on November 21 for 2010. EG1102 Tower Life Extension Schedule: The fall outage work scope has been completed for this stage of the project. Progress: Started on the development of the project work scope Unit 3 Turbine documents. EG1103 Schedule: This project has been deferred until 2011-2012 fiscal year. Inspection Progress: Started on the development of the project work scope Unit 3 Aux System documents. EG1104 Schedule: This project has been deferred until 2011-2012 fiscal year. Components 38

Progress: Started on the development of the project work scope document. EG1106 Unit 3 Stack Repairs Schedule: This project has been deferred until 2011-2012 fiscal year. Progress: Started on the development of the project work scope Units 1 & 2 Life documents. EG1107 Schedule: This is tentatively scheduled for the Spring Outage 2011. Extension Some of the work has been deferred until the 2011-2012 fiscal year. Progress: The repair work has been completed. Unit 1 Forced Outage Schedule: This work is complete and final disposition of the insurance EG1108 Repairs reimbursement submittal is outstanding. 5.1 CIP Budget Approved Project Latest Estimate Description Budget Number ($ X 1000) ($ X 1000) EG0801 MR Fire Protection System Upgrades 50 45 EG0904 MR & VS Arc Flash Analysis Phase II 125 75* Miscellaneous Capital Equipment EG1005 71 71 Replacements EG1101 Unit 3 Cooling Tower Life Extension 398 380 Units 1 & 2 Cooling Tower Life EG1102 173 150 Extension EG1103 Unit 3 Turbine Inspection 348 348 EG1104 Unit 3 Aux System Components 113 113 EG1106 Unit 3 Stack Repairs 25 25 EG1107 Units 1 & 2 Life Extension 276 276 Unit 1 Forced Outage EG1108 412** 412 Repairs * $50K removed and put into O&M budget - $41K was actual Phase I cost. The remaining $75K was put into the 2010 O&M budget. ** This project was not budgeted for 2011. 39

6.0 General Plant Information Training: During the month of November, the entire plant staff had training on the SPCC, NPDES Permit, ARPP and the Storm Water Plan. These training sessions were site specific and were based on the plant’s permit requirements. The training consisted of a quiz at the beginning of a topic then some discussion as the quiz was being reviewed. Plant employees continue with their General Physics safety training and environmental courses to enhance their overall knowledge of permit and safety requirements. As the GPI courses are being completed, the employee also reviews the Safety Manual and Procedures (SMP) for the same topic, when applicable. Topics discussed during the monthly safety committee meeting were reviewed by the entire staff. This month’s safety topic was “Back Injury Prevention Tips”. Other Events: The Fall Outage was cleared for all three units at McKee Run on November 21, 2010. The units were made available for dispatch after all final testing was completed on the work completed during the outage. Work is being finalized on the FY2011-2012 Budget. The final budget will be supplied to Pace Global for review in early December. The final FY11-12 budget must be entered into HTE no later than 1/3/10. Due to the amount of information needed to be inputted into the COD financial software, a time schedule has been developed to ensure enough time is allocated for the data entry process. 40

Calendar of Events Date Winter Capacity Period December 1, 2010 to February 28, 2011 McKee Run and VanSant Title V Annual Certification Due February 1, 2011 NOx Emissions Reconciliation Due March 1, 2011 SO2 Emissions Reconciliation Due March 1, 2011 SARA III Report March 1, 2011 Annual VanSant Black Start Test March 2011 (Exact Date TBD) Units 1, 2, and 3 Spring Outage April 4, 2011 – May 30, 3011 Unit 11 Spring Outage Date to Be Determined EIA-923 Report April 15, 2011 EIA-860 Report May 15, 2011 Fiscal Year 2010-20011 Ends June 30, 2011 PJM Summer Capacity Test Period June 1, 2011- August 31, 2011 McKee Run and VanSant Title V Semi-Annual Certification Due August 1, 2011 NOx Ozone Season Starts May 1, 2011 NOx Ozone Season Ends September 30, 2011 One Year Accident Free October 14, 2011 #1 Unit Annual Inspection October , 2011 #2 Unit Annual Inspection October , 2011 7.0 Summary of NAES Performance to Date Plant Performance FY 2010-2011 Measure Month Year to Date YTD FY Maximum Incentive Incentive Commercial 0% 0.66% $63,262 $89,586 Unavailability (CU) Safety 1 1 $8,398 $16,797 Environmental 0 0 $16,797 $16,797 Capacity Tests Summer Winter Summer Winter Completed Unit 1 No No Yes Yes* $3,360 $3,360 Unit 2 No No Yes Yes* $3,360 $3,360 Unit 3 No No Yes Yes* $20,157 $20,157 Unit 11 No No Yes Yes* $6,719 $6,719 Total YTD 77.85% Total YTD Incentive $122,052 $156,775 Incentive % Note - * Unit is expected to be in the PJM Winter Capacity Test Exemption Program 41

APPENDICES I. PJM INVOICE BREAKDOWN The PJM bill is a record of all Electricity Transactions, Transmission Services, Ancillary Services and Miscellaneous fees that allow the PJM to operate. Below is a list of the line items on the PJM bill including all generator activity. PJM Bill Line Items Gen Load Net Day Ahead Energy $0.00 ($424,063.15) ($424,063.15) Realtime Energy $0.00 $116,592.12 $116,592.12 Transmission Losses Credits $0.00 $52,835.44 $52,835.44 Network Integration Transmission Service Charges $0.00 ($261,318.00) ($261,318.00) Inadvertent Interchange Charges $0.00 $1,474.19 $1,474.19 Regulation Charges $0.00 ($13,201.13) ($13,201.13) Synchronized Reserve Charges $0.00 ($17,856.80) ($17,856.80) Balancing Operating Reserves Charges $0.00 ($7,487.92) ($7,487.92) Day Ahead Operating Reserves Charges $0.00 ($7,710.31) ($7,710.31) Day-ahead Scheduling Reserve $0.00 ($35.08) ($35.08) Synchronous Condensing Charges $0.00 ($29.83) ($29.83) Reactive Services Charges $0.00 ($81,687.80) ($81,687.80) Meter Correction Charges $0.00 $419.20 $419.20 Day-ahead Operating Reserve for Load Response $0.00 $0.00 $0.00 Balancing Operating Reserve for Load Response $0.00 $0.00 $0.00 Balancing Operating Reserves Credits $0.00 $0.00 $0.00 Day Ahead Operating Reserves Credits $0.00 $0.00 $0.00 Locational Reliability Charges $0.00 ($1,045,193.40) ($1,045,193.40) Capacity Transfer Rights Credits $0.00 $1,689.30 $1,689.30 Capacity Resource Deficiency Credits $0.00 $0.30 $0.30 Demand Response and ILR Compliance Penalty Credits $0.00 $0.00 $0.00 RPM Auction Credits $970,188.00 $0.00 $970,188.00 Auction Revenue Rights Credits $0.00 $30,433.80 $30,433.80 Synchronized Reserve Credits $0.00 $0.00 $0.00 PJM Scheduling System Control and Dispatch Service Charges $0.00 ($9,628.94) ($9,628.94) Transmission Owner Scheduling System Control and Dispatch Service Charges $0.00 ($4,120.46) ($4,120.46) Reactive Supply and Voltage Control from Generation Sources Service Charges $0.00 ($33,790.23) ($33,790.23) Reactive Supply Credit $29,467.58 $0.00 $29,467.58 Black Start Service Charges $0.00 ($1,284.59) ($1,284.59) North American Electric Reliability Corporation (NERC) Charge $0.00 ($449.21) ($449.21) Reliability First Corporation (RFC) Charges $0.00 ($820.75) ($820.75) Expansion Cost Recovery Charges $0.00 ($438.00) ($438.00) Transmission Enhancement Charges $0.00 ($9,673.22) ($9,673.22) Black Start Service Credits $4,544.50 $0.00 $4,544.50 Non-Firm Point-to-Point Transmission Service Credits $0.00 $596.08 $596.08 Generation Deactivation $0.00 $794.40 $794.40 Market Monitoring Unit (MMU) Funding $0.00 ($281.14) ($281.14) 42

Organization of PJM States, Inc. (OPSI) Funding $0.00 ($30.53) ($30.53) FERC Annual Recovery $0.00 ($3,460.54) ($3,460.54) PJM Annual Membership $0.00 ($5,000.00) ($5,000.00) EFOR-P $0.00 $0.00 $0.00 DPL Settlement B $0.00 ($0.63) ($0.63) PPA $0.00 $238.67 $238.67 $1,004,200.08 ($1,722,488.16) ($718,288.08) II. LOAD, ALL IN ENERGY AND ALL IN COST OF SERVICE TABLE Budget Load Actual Load Budget AIE Actual AIE Actual YTD AIE Budget AICS Actual AICS Actual YTD AICS (MWh) (MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) Jul 77,912 83,163 $83.50 $90.72 $90.72 $92.25 $81.36 $81.36 Aug 76,267 78,755 $85.20 $82.76 $86.85 $89.62 $83.03 $82.17 Sep 64,317 66,782 $84.83 $82.73 $85.65 $90.04 $91.13 $84.79 Oct 58,076 56,452 $83.68 $79.72 $84.47 $89.77 $87.24 $85.27 Nov 54,220 54,396 $84.68 $82.56 $84.17 $91.53 $91.56 $86.28 Dec 58,125 $85.35 $93.59 Jan 60,136 $84.94 $92.76 Feb 54,199 $83.56 $91.20 Mar 56,334 $84.16 $90.46 Apr 52,554 $83.69 $91.16 May 58,744 $79.63 $85.58 Jun 67,331 $80.51 $96.23 43

III. GLOSSARY Energy Only Unit Cost ("EOU") accounts for the wholesale energy costs excluding capacity obligations, capacity credits for Dover-owned generation, generation revenues, generating plant costs, the black start ancillary services credit for the Van Sant plant, and revenues associated with the sale of emission allowances. The AIE includes the costs from settling the hedged or forward transactions; the energy bought on the ISO (Independent System Operator or PJM) day-ahead to cover the open position (un-hedged); load following costs associated with balancing the actual load in the ISO real-time market; energy management service related fees; the ISO transmission charges and credits to load serving entities; the ISO ancillary services charges such as generation regulation, spinning reserve, and reactive power; and the ISO administrative charges and cost of service recovery fees. All In Cost of Service ("AICS") accounts for the net cost of wholesale power to the City of Dover Electric Utility. The AICS starts with the AIE and adds the costs or credits from capacity obligations, capacity credits for Dover-owned generation, generation revenues, generating plant costs, the black start ancillary services credit for the Van Sant plant, and revenues associated with the sale of emission allowances. Black Start is a generating ancillary service that is the process of restoring a generating plant to service without the support of an external power supply to power auxiliary equipment needed for start up operations. Capacity UCAP Obligated Purchased is the obligation and payment by all load serving entities in PJM including Dover for the Unforced Capacity (UCAP) requirement from PJM that satisfies the PJM reserve requirements. Generation Capacity Credit: is the credit provided to generators for supply capacity to the system. The price is determined by the PJM Reliability Pricing Market auction process that includes three auctions for each capacity year. Generation Production Margin accounts for the variable margin excluding variable O&M and emissions. The Generation Production Margin is calculated by taking the PJM revenues credited to the plant including any balancing charges or credits less the fuel costs. Generation Production Margin includes both “Economic and reliability dispatch” and “Testing.” Economic and reliability dispatch equals the margin achieved when Dover’s generating plants are dispatched by PJM for either economic dispatch (the system energy price is greater than the Dover bid price) or reliability dispatch whereby PJM pays the generating cost of the plants for the hours the plant is run to support the system. Generation Testing equals the Generation Production Margin associated with testing. This is usually expected to be a negative margin because the plant is potentially being dispatched / run when energy prices do not cover its costs. Non-Production Revenue equals the credits from PJM to Dover for Generation Capacity Credit, the Black Start Revenue and the sales by Dover of Emission Allowances. 44