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UTILITY COMMITTEE
AGENDA
March 9, 2009 - 5:00 P.M. - Council Chambers - City Hall - City of Dover
Public comments are welcomed on any item and will be permitted at appropriate times.
When possible, please notify the City Clerk (736-7008 or e-m ail at Tm cdowell@dover.de.us)
should you wish to be recognized.
AGENDA ADDITIONS/DELETIONS
1. Federal Stimulus Program and Dover’s Utilities and Energy Programs
A. Water/Wastewater
B. Energy Block Grant
C. Renewable Energy
2. PACE/NAES Monthly Report (January)
A. Status Report - Pollution Remediation Project
3. Adjournment by 5:55 P.M.
/tm
S:\ClerksOffice\PACKETS\2009\Committee\UTILITY\03-09-2009\03-09-2009 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.
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Memorandum
Office of the City Manager
PO Box 475
Dover, DE 19903
Phone: (302) 736-7005
FAX: (302) 736-7002
E-mail tdeprima@dover.de.us
To: Utility Committee
From: Anthony J. DePrima, AICP, ICMA-CM
City Manager
Date: March 9, 2009
Subject: American Recovery and Reinvestment Act
Please see the enclosed information we received from the United States Conference of Mayors
which summarizes all aspects of the stimulus funding.
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Page 17
CITY OF DOVER PUBLIC UTILITIES DEPARTMENT
WATER / WASTEWATER INFRASTRUCTURE IMPROVEMENT PROJECTS
FUNDING TO
PROJECT DESCRIPTION
COMPLETE
1.0 MG Elevated Storage Proposed water storage tank to meet future $3,284,230.00
Tank demand and fire protection storage volume
requirements.
Piney Point Well Proposed water production well to increase $453,800.00
production capacity to meet future demand and
fire protection requirements as well as improve
system pressure and stabilize chlorine residuals.
E. State Street Area Replace approximately 5,500 l.f. of old, $846,897.50
Water Quality undersized water main to alleviate brown water
Improvements issues and structural concerns. (Includes N.
Penn. Ave, Madison Rd., American Ave. Ext.,
Hazel Rd., Smith St. and Maryland Ave.)
US Route 13 Water Replace approximately 5,000 l.f. of old, $953,700.00
Quality Improvements undersized water main to reduce brown water
issues and structural concerns. (Includes area of
US Route 13 between N. State St and Oak Lane.)
Pear Street Water Replace approximately 4,700 l.f. of old, $722,357.00
Quality Improvements undersized water main to reduce brown water
issues and structural concerns. (Includes Pear
St., Mary St., and N. West St.)
Bayard Avenue Water Replace approximately 3,400 l.f. of old, $533,510.00
Quality Improvements undersized water main to alleviate brown water
issues and structural concerns. (Includes Bayard
Ave., Bayard Ave. Alley and Greenhill Rd.)
Inflow/Infiltration Reline approximately 7,500 l.f of sanitary sewer $3,600,000.00
Removal main and 640 v.f. of manholes which are
deteriorating to address groundwater infiltration
and structural concerns. (Includes mains from
12" to 36".)
US Route 13 Sewer Construct approximately 5,700 l.f. of gravity $3,058,306.81
Interceptor sanitary sewer main to meet future demand
requirements, to reroute flow to avoid backups
on older lines and to abandon older force mains
and a pump station.
Fox Hall Retreat Force Construct approximately 1,600 l.f. of force main $123,661.00
Main Rerouting to direct flow from the Walker Road sewer basin
which is nearing capacity to the McKee sewer
basin which is underutilized.
Acorn Lane Pump Station Replace the aging pump station which is $382,555.00
Replacement operating beyond the projected life cycle.
DSU Pump Station Replace the aging pump station which is $383,190.00
Replacement operating beyond the projected life cycle.
$14,342,207.31
Page 18
City of Dover
January Monthly Report
Energy and Operations Management
February 19, 2009
This Report was produced by Pace Global Asset Management, 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 January, 2009. 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.
over
25 Website: www.paceglobal.com
Washington New York Houston Columbia San Diego London Moscow Mexico City
Page 19
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...................................................................................................................9
3.1 - Purchased Power .................................................................................................................9
3.2 - Generation Management ...................................................................................................12
3.3 - Emissions and Allowance Management............................................................................19
4.0 – Operations Management..........................................................................................................21
Appendices..........................................................................................................................................38
I. PJM Invoice Breakdown....................................................................................................38
II. Load, All In Energy and all in cost of service table ..........................................................39
III. Glossary ........................................................................................................................40
Dover Monthly PGAM Report January 2009 - Final
1
Page 20
1.0 - EXECUTIVE SUMMARY
All In Unit Energy Cost - Actual v Budget
Generation MWh's: Actual v Budget Actual Load vs Budget Load
12,500 $96
100,000
$94
10,000
75,000 $92
$90
7,500
MWh MWh 50,000 $ /M W h
$88
5,000 $86
25,000 $84
2,500
$82
0 $80
0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Budget Gen Actual Gen Budget Actual Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA
Purchased Power Management
Wholesale load for the month of January was 65,021 MWhs versus a three year historic weather
normalized load of 64,805 MWhs. Hedged transactions accounted for 60,480 MWhs or 93% of this
volume (93% of forecasted load) at a cost of $4.7 million. Spot Market purchases resulted in a PJM
charge of $0.66 million ($0.58 million charge in the Day Ahead market and a $0.09 million charge
in the real time market). Other PJM related charges accounted for an additional $1.05 million cost,
inclusive of all load related fees. January All-In Energy Unit Cost, excluding capacity obligations
and credits matched the January 2009 budget of $88.79/MWh. For the year, projected All-In Energy
Unit Cost is $0.06/MWh above the budget; based on YTD actual results and budgeted values for
subsequent months.
Generation and Asset Management
For the month of January McKee Run and Van Sant units did not dispatch into the PJM market. A
relatively low average on-peak LMPs for the month demonstrated that the PJM system did not
generally require support from the peaking units. The budget for the month expected approximately
1,000 MWh of generation.
For any revenues and costs associated with the Pollution Remediation CIP testing, it is appropriate
to allocate these funds into the planned CIP budget. Therefore the negative Generation Production
margin reported in December report was transferred from the electric revenue fund to the Dover’s
CIP fund.
Dover Monthly PGAM Report January 2009 - Final
2
Page 21
Emissions and Allowance Management
Dover engaged in no allowance transactions during the month of January. McKee Run operated
during December, but due to a delay in CEMS conversions for December, the adjustment to
inventory values now has been accounted of for the current monthly report. Total net revenue
through December 31st from allowance sales for the 2008-09 fiscal year is $165,470, accounting for
Broker’s fees.
Given current dispatch expectations, the market value of the Dover total allowance inventory is
approximately $600 thousand at the time of this report. If sold, Dover would realize approximately
$765 thousand in revenue for the year. This would result in a $677 thousand unfavorable variance.
In December the D.C. Circuit Court remanded the Clean Air Interstate Rule (CAIR) without
vacature. However, the SO2 allowance market has seen a marked decline. After initial positive
reaction to the court ruling, continuing uncertainty regarding ultimate emissions limits and market
structure has combined with the greater economic downturn to move allowance prices down to
$100/ton. Additionally, generators have largely met compliance requirements for 2008, and with
speculators currently avoiding the market, SO2 allowance demand is low approaching the March
true-up.
The uncertainty regarding allowance value was further heightened by the EPA announcement of its
decision not to pursue the Clean Air Mercury Rule, which applied a cap-and-trade approach to
mercury reduction. Instead, EPA will attempt a maximum achievable control technology (MACT)
standard. The mercury reduction strategy likely to be employed through a MACT standard will be
the use of scrubbers, which will also reduce SO2 emissions. Therefore, even if there becomes some
clarity with respect to the updated CAIR rules, decisions regarding the MACT standard will leave
the SO2 allowance market in uncertainty for at least the next year.
After the Court decision to remand CAIR, annual NOx prices jumped sharply before settling to near
$4000/ton. Over the past month, these prices have seen a steady decline to $3000/ton. Emissions
controls appear to be working properly, and the poor economic forecasts have dampened allowance
values.
The seasonal NOx market had limited activity in January as the winter lull in trading continued. The
limited trading did see the price drop from near $665/ton down to $600/ton, reflecting the downward
pressure across the broader emissions markets. Similar to last month, however, market participants
appear to be waiting for more regulatory certainty before the start of the ozone season. Pace is
closely monitoring the NOx markets and will provide Dover with assessments of allowance
allocations, liquidity, and value as information becomes available.
The December RGGI quarterly auction cleared 31,505,898 allowances at $3.38/ton, and demand was
reported to be 3.5 times greater than supply. Since the auction, the market has been very active with
prices initially moving up over $4.00/ton, but since dropping to $3.50/ton. Based on projected
generation and emissions Dover is projected to have an excess of 70,000 allowances through 2013
with a market value of nearly $245,000.
Dover Monthly PGAM Report January 2009 - Final
3
Page 22
EMISSIONS & ALLOWANCE SUMMARY
Allowance Allowance Emissions Emissions Allowances Allowances Allowance
Vintage Allocation Month YTD Sold Month Sold YTD Balance
SO2 – 2007 2723 0 98 0 2076 549 1
SO2 – 2008 2723 0 32 0 0 2,691
SO2 – 2009 2723 0 0 0 0 2723
NOx – 2007 198 0 32 0 166 0
NOx – 2008 198 0 20 0 178 0
NOx – 2009 198 0 0 0 0 198
Operations Management Summary
During the month of January we experienced one restricted work day accident.
There were no employee lost time accidents and no contractor related OSHA injuries, illnesses or
lost time accidents. There were zero Environmental Notices of Violations issued during the month.
All McKee Run Units and the VanSant unit were available to run during the month but were not
dispatched by PJM.
Monthly Budget Variance - The actual expenses attributable to O&M of the two sites for the month
of January were $597,750. The expenses were $158,712 under the approved budget of $756,462.
The principal reason for the favorable variance is due operating permits costing less than anticipated
and rescheduling of turbine maintenance until the spring Unit 3 outage.
These favorable variances were offset by an unfavorable variance for electrical usage during the
Unit 3 testing.
1
Corrected 2007 SO2 tons emitted to reflect actual emission for Units 3 & 11. December, 2007 report included
emissions for all four units.
Dover Monthly PGAM Report January 2009 - Final
4
Page 23
Risk Management Summary
Energy commodity prices fell further since the last reporting period, and have fallen almost
continuously since June 2008. Bearish economic outlook kept oil prices below the $40/barrel
mark, and natural gas prices, a prime driver of power prices relevant to the City, fell to their lowest
levels in 6 years. In turn, PJM forward power prices decreased since the last reporting period by
$5.19/MWh (8.4%) for Fiscal Year 2009-2010 and $3.39/MWh (3.7%) for Fiscal Year 2010-2011.
Outer years observed comparable price declines as the entire forward curve drifted lower.
The City’s projected wholesale Cost-of-Service for all forward power years is shown in the table
below: 2
Wholesale Cost-of-Service Summary (Projected
Date 02/17/2008 Budget February January December
Cost-of- Cost-of Hedge Year-to Forecasted Cost-of Cost-of
Power Year Service Service Ratio Year over 2008- Service Service
Budget $/MWh Increase 09 Budget $/MWh $/MWh
2008-2009 $90.18 $90.55 92% 9.5% 0.41% $90.43 $90.65
2009-2010 N/A $93.66 87% 3.4% 3.86% $93.01 $93.28
2010-2011 N/A $87.84 73% -6.2% -2.60% $87.35 $88.15
2011-2012 N/A $83.51 62% -4.9% -7.40% $83.47 $84.04
2012-2013 N/A $82.68 38% -1.0% -8.32% $83.18 $84.15
2013-2014 N/A $79.15 0% -4.3% -12.24% NA NA
* Reflects balance of year hedge ratio for current Power Year
** FY 07/08 Cost-of-Service is $82.70/ MWh
2
Note that the PJM-W to DPL zone basis has been updated based on actual basis values observed in the past 2 years,
consistent with the proposed 2009-10 budget. The higher basis values are reflected in the February Wholesale Cost-of-
Service values shown above, but not in the January and December values (which are consistent with prior reports).
Dover Monthly PGAM Report January 2009 - Final
5
Page 24
2.0 - BUDGET REPORT
2.1 – VARIANCE REPORT
Budget Actual Variance
Jan-09 Jan-09 Jan-09
Load Forecast 64,805 65,021 (216)
Power Supply
Power Supply $4,346,873 $4,694,135 ($347,262)
Power Supply Management $231,472 $250,516 ($19,044)
Capacity Charges - Load $885,313 $893,960 ($8,647)
PJM Charges - Load $1,175,441 $827,999 $347,442
Total - Power Supply $6,639,098 $6,666,609 ($27,511)
Generation
Plant Operations $717,731 $597,750 $119,981
Generation Fuel $249,417 $8,221 $241,196
Capacity Credits ($765,406) ($765,406) $0
PJM Credits ($236,901) ($5,729) ($231,173)
Total - Generation ($35,160) ($165,164) $130,004
Emission Allowance Sales
Total - Emission Allowance Sales $0 $0 $0
Total Power Supply & Generation $6,603,939 $6,501,445 $102,493
Total Power Supply, Generation & Emission
Sales $6,603,939 $6,501,445 $102,493
Unit Costs
Total – Power Supply $102.45 $102.53 ($0.08)
Total - Generation + Emission Sales ($0.54) ($2.54) $2.00
Final Cost of Service to City of Dover
Ratepayers $101.90 $99.99 $1.91
Dover Monthly PGAM Report January 2009 - Final
6
Page 25
Budget Actual Variance
YTD YTD YTD
Load Forecast 474,533 461,164 13,369
Power Supply
Power Supply $32,346,502 $34,534,927 ($2,188,425)
Power Supply Management $1,641,200 $1,759,441 ($118,242)
Capacity Charges - Load $6,140,075 $6,200,726 ($60,651)
PJM Charges - Load $8,280,765 $4,835,979 $3,444,785
Total - Power Supply $48,408,541 $47,331,074 $1,077,467
Generation
Plant Operations $3,559,088 $3,034,270 $524,818
Generation Fuel $2,031,219 $1,410,419 3 $620,800
Capacity Credits ($5,359,912) ($5,341,541) ($18,371)
PJM Credits ($2,242,787) ($1,500,514) 4 ($742,274)
Total - Generation ($2,012,393) ($2,397,365) $384,972
Emission Allowance Sales
Total - Emission Allowance Sales ($144,500) ($165,470) $20,970
Total Power Supply & Generation $46,396,148 $44,933,709 $1,462,440
Total Power Supply, Generation & Emission
Sales $46,251,648 $44,768,239 $1,483,410
Unit Costs
Total – Power Supply $102.01 $102.63 ($0.62)
Total - Generation + Emission Sales ($4.55) ($5.56) $1.01
Final Cost of Service to City of Dover
Ratepayers $97.47 $97.08 $0.39
3
The values are corrected to reflect updates to the total amounts reported from December, 2008 testing fuel and
generation values associated with Pollution Remediation Project CIP. Generation Fuel was lowered by $521,797.
4
The values are corrected to reflect updates to the total amounts reported from December, 2008 testing fuel and
generation values associated with Pollution Remediation Project CIP. PJM Credits was lowered by $265,616 in the real-
time energy and credit of Balancing Operation Reserves Charges of $7,772.85.
Dover Monthly PGAM Report January 2009 - Final
7
Page 26
2.2 – VARIANCE ANALYSIS
Power Supply
• Power Supply realized an unfavorable $347 thousand variance compared to the budget due to
the purchase of additional 6.5% hedge forward positions totaling 3,720 MWh in January.
This purchase was transacted after the FY 2008 budget was submitted to Dover.
• The Power Supply Management variance is merely an estimate at this point.
• As discussed during the July, 2008 Management Committee the PJM Base Residual Auction
on April 3, 2008 resulted in a new $ per MW.day UCAP charge. This charge results in
unfavorable variances each month.
• The PJM Charges for Load experienced a positive $347 thousand variance due to the
placement of additional hedge position of 3,720MWh; thereby displacing the open position
by the same amount, and $162 thousand favorable load following variances for the month.
Furthermore there were $26 thousand increase in transmission rights credits and $43
thousand favorable PJM ancillary charges for the month. Offsetting these favorable variances
were $45 thousand increase in transmission costs and $152 thousand unfavorable basis
variance.
Generations
• Plant O&M resulted in a favorable variance of $120 thousand compared to the approved
budget of $717 thousand due to operating permits costing less than anticipated and
rescheduling of turbine maintenance until the spring Unit 3 outage. These favorable
variances were offset by an unfavorable variance for electrical usage during the Unit 3
testing for the month.
• Generation Fuel realized a favorable variance of $241 thousand for the month due to no
dispatch for the month. The budget expected nearly 94 thousand gallons of fuel oil no.2
consumed for the month.
• PJM Credits resulted in $231 thousand unfavorable variance for the month. The budget
expected 1,000MWh of generation for the month. Neither McKee Run nor Van Sant units
dispatched into the PJM market. For the month of January McKee Run Unit 3 was placed
under maintenance outage with PJM until the completion of pollution remediation project.
• Variable costs and credits for testing post conversion from #6 residual oil to the much
cleaner low sulfur #2 oil will be applied to the CIP for Pollution Remediation project. The
variable production margin positive or negative will be applied to the CIP project and will
not be reflected in the monthly operations report.
Dover Monthly PGAM Report January 2009 - Final
8
Page 27
3.0 – ENERGY MANAGEMENT
3.1 - PURCHASED POWER
Management Highlights
• Dover’s January load was 65,021 MWh which was slightly above the historic weather
normalized load of 64,805 MWh. Hedge volumes accounted for 93% of actual load for the
month.
• January All In Unit Energy cost excluding capacity of $88.78 is $0.01 per MWh below
budget for the month.
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
Dover Monthly PGAM Report January 2009 - Final
9
Page 28
All In Unit Energy Cost - Actual v Budget
$96
$94
$92
$90
$/MWh
$88
$86
$84
$82
$80
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA
Dover Monthly PGAM Report January 2009 - Final
10
Page 29
Purchased Power Variance Report
Budget Actual Variance
Jan-09 Jan-09 Jan-09
City of Dover Load
Load Obligation (MWh) 64,805 65,021 (216)
Unit Energy Costs ($ per MWh)
Energy Cost (inc. Load Following & Pace Fees) $83.34 $83.42 ($0.09)
Pass Through $4.45 $4.07 $0.38
Incentive Fees $1.00 $1.29 ($0.29)
Total - All In Unit Energy Cost $88.79 $88.78 $0.01
Purchased Power Variance Analysis
• Actual Dover load of 65,021 MWh was 0.3% above the projected January load of 64,805
MWh.
• The All In Unit Energy Cost resulted in a favorable $0.01 per MWh variance due to
positive $162 thousand load following variances, lower than anticipated open position
energy costs, transmission rights credits, and PJM ancillary charges contributed to
favorable variance for the month. The favorable variances were offset by an additional
6.5% of forward contracts placed after the Dover budget was submitted, $152 thousand
unfavorable basis variance and the increased FERC approved DP&L transmission rates.
• 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): 60,480 MWh’s @ $77.61/MWh: $4,694,135
Power Balancing and Additional PJM and Energy Manager Fee 5: $1,972,474
Total Cost to Serve Load (65,021 MWh’s) $6,666,609
ALL in $/MWh load cost inclusive of Energy Manager Fees: $102.53/MWh
5
Includes estimated Incentive Fees.
Dover Monthly PGAM Report January 2009 - Final
11
Page 30
3.2 - GENERATION MANAGEMENT
• PJM did not dispatch Dover units into the market.
Generation MWh's: Actual v Budget
12,500
10,000
7,500
MWh
5,000
2,500
0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Budget Gen Actual Gen
Dover Monthly PGAM Report January 2009 - Final
12
Page 31
2008-09 Generation Production Margin v Budget
$500
Thousands
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
($50) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
($100)
Budget ($) Actual ($)
*Notes: July 2008 Report’s 2008-09 Generation Production Margin v Budget graph displayed incorrect actual amount. The graph shown above has
been corrected to reflect the actual value.
Dover Monthly PGAM Report January 2009 - Final
13
Page 32
Generation Management Variance Report
Budget Actual Variance
Jan-09 Jan-09 Jan-09
Self-Supplied Capacity from Gen (MW)
McKee Run 1 13.2 13.2 0
McKee Run 2 16.7 16.7 0
McKee Run 3 97.4 97.4 0
Van Sant 38.1 38.1 0
Self Supplied Capacity from Gen (MW) 165.4 165.4 0
Additional Capacity from PJM Incremental
Auction 7.9 7.9 0
Total Capacity from Gen (MW) 173.3 173.3 0
Gen Capacity Sales to PJM ($/MW.d) $148.80 $148.80 0
Incremental Auction Sales to PJM ($/MW.d) $10.00 $10.00 0
Power Sales
Power Sales (MWh) 1,000 0 1,000
Sales Revenue ($ per MWh) ($231.50) $0.00 ($231.50)
Power Sales Revenue ($) ($231,498) $0.00 ($231,498)
Variable Fuel & Transport
Fuel Oil No.2 Volume (gal) 93,863 0 93,863
Fuel Oil No.2 ($/gal) $2.20 $0.00 $2.20
Fuel Oil No.2 Cost of Goods Sold ($) $206,498 $0.00 $206,498
Fuel Oil No.6 Volume (gal) 0 0 0
Fuel Oil No.6 ($/gal) $0.00 0.00 $0.00
Fuel Oil No.6 Cost of Goods Sold ($) $0.00 0.00 $0.00
Gas Volume (Dth) 0 0 0
Unit Gas Price ($/Dth) $0.00 0 $0.00
Variable Gas Cost ($) $0.00 0 $0.00
Transport ($) $0.00 0 $0.00
Variable Gas and Transport Costs ($) $0.00 $0.00 $0.00
Variable Fuel & Transport Costs ($) $206,498 $0.00 $206,498
Testing $0.00 $0.00 $0.00
Generation Production Margin ($25,000.00) $0.00 ($25,000.00)
Generation Capacity Payment
Total - Generation Capacity Payment ($765,406) ($765,406) $0.00
Dover Monthly PGAM Report January 2009 - Final
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Generation Management Variance Analysis
Fuel Expense
• PJM did not dispatch Dover units into the market and it did not consume any fuel oil nor spot
natural gas purchase for the month.
Generation Production Margin
Transaction Volumes Revenue/(Cost)
PJM Invoice for Power Sold 0 MWh’s $0
Fuel and Transport 0 dth gas/0 gal #6 oil $0
0 gal #2 oil
Generation Production Margin 0 MWh’s $0
The following non-production energy revenues and costs are generally fixed and not directly related
to generation dispatch and power production.
PJM Invoice (Black Start) $5,729
Fuel Oil Tank Heating & Black Start Gas Supply $0
Eastern Shore Demand Charge ($4,490)
Eastern Shore Transport and Imbalance Charge $0
Transco Demand Charge ($3,732)
Non-Production Energy Revenue/Costs ($2,493)
Dover Monthly PGAM Report January 2009 - Final
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Fuel and Transportation
Date Volume (Dth) Price ($/Dth) Total Commodity
Cost ($)
Hess Corp
Sub-Total 0 $0
PESCO
Sub-Total 0 $0
NJNG
Sub-Total 0 $0
Total 0 $0
Do 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 fuel is no longer required. Some gas will still be required for winter
heating of the building(s). Pace will still coordinate with NAES on the procurement of supply.
However, this expense will now fall under the plant utility costs and be paid and budgeted for by the
station.
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Gas Transportation Purchased
Eastern Shore Natural Gas Pipeline and TransCo agreements provide for deliveries to the McKee
Run and VanSant stations. These charges include a firm demand charge and adjustments as follows:
ESNG FT Demand Charge $4,490
TransCo FT Demand Charge $3,732
Total Purchases $8,222
Other Gas Purchases
Commodity and transportation imbalances on Eastern Shore Pipeline for the month resulted in no
cost and it is summarized as follows.
Eastern Shore Transport and Imbalance Charges
Imbalance/dth Estimated Cost/dth Estimated Total Cost
0 $0
$0
Transport Volume/dth $/dth Total Cost
Firm/IT $0 $0
Net $0
Dover Monthly PGAM Report January 2009 - Final
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Purchased Commodity Fuel Oil Summary
Neither McKee Run units nor Van Sant were dispatched into PJM and no fuel oil #2 was consumed
for the month.
McKee Run tank will maintain 3 days of load equivalent dispatches for McKee Run Units. At
current fuel market prices, Pace and NAES are considering purchasing ultra low #2 fuel oil
inventory when McKee Run tank testing are complete.
Tank Inventory Estimates as of January 31
Tank Tank Capacity Inventory In Days of Burn
(gallon) (gallon) (Typical Dispatch 6)
McKee Run 7 (#6 2,554,105 416,831 N/A
Fuel Oil to #2 Fuel
Oil)
VanSant 258,000 110,948 3
(#2 Fuel Oil)
6
As measured by tank level instruments. Tank levels may change due to oil temperature.
7
#6 Fuel Oil was sold ( approx. 122, 000 gallons) and #2 Fuel Oil was purchased in October and December.
Dover Monthly PGAM Report January 2009 - Final
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3.3 - EMISSIONS AND ALLOWANCE MANAGEMENT
As shown in Exhibit 1, total net revenue from allowance sales for the 2008-09 fiscal year is
$165,470, accounting for Broker’s fees. City of Dover holds 2,693 tons of vintage 2008 SO2
allowances and no tons of vintage 2008 NOx allowances. Additionally, the City has a balance of 549
tons of vintage 2007 SO2 allowances. At the August 21, 2008 Management Committee meeting the
Committee set a trigger price for the SO2 allowances of $260/ton whereby if the City could achieve
this price it would sell half of its SO2 allowances.
Exhibit 1: Emissions and Allowance Summary through January 31, 2008
2008-2009 EMISSIONS & ALLOWANCE SUMMARY
SO2 NOx
Date Action Allowance Sale Revenue1 Allowance Sale Revenue1
Allocation Price Allocation2 Price
Seas. Ann.
1/1/08 Initial 2008 2,723 -- -- 198 -- -- --
Allocation
1/1/08 2007 549 -- -- 0 -- -- --
Carryover
7/21/08 Sold 150 -- -- -- -150 -- $975 $144,750
tons NOx
10/14/08 Sold 28 -- -- -- -28 -- $750 $20,720
tons NOx
12/31/08 2008 YTD -32 -- -- -202 -- -- --
3
Emissions
1/1/09 Initial 2009 2,723 -- -- 49 76 -- --
Allocation4
Totals
- 2007 Vintage 549 -- -- 0 -- -- --
Allowances
- 2008 Vintage 2,691 -- -- 0 -- -- --
Allowances
- 2009 Vintage 2,723 -- -- 49 76 -- $165,470
Allowances
$165,470
$0
Total Revenue $165,470
Notes:
(1) Revenue calculations account for a $1/ton broker fee for SO2 and a $10/ton broker fee for NOx.
(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.
(3) The 2009 initial allowance allocation accounts for the reinstatement of CAIR while new SO2 and NOx
emissions rules are completed. These allocations may changes as the rulemaking process continues.
Dover engaged in no allowance transactions during the month of January. McKee Run operated
during December, but due to a delay in CEMS conversions for December, the adjustment to
inventory values now has been accounted of for the current monthly report. Total net revenue
Dover Monthly PGAM Report January 2009 - Final
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through December 31st from allowance sales for the 2008-09 fiscal year is $165,470, accounting for
Broker’s fees.
Given current dispatch expectations, the market value of the Dover total allowance inventory is
approximately $600 thousand at the time of this report. If sold, Dover would realize approximately
$765 thousand in revenue for the year. This would result in a $677 thousand unfavorable variance.
During December the D.C. Circuit Court remanded the Clean Air Interstate Rule (CAIR) without
vacature. However, allowance values have dropped sharply across all emissions trading markets.
The SO2 allowance market has seen a marked decline. After initial positive reaction to the court
ruling, continuing uncertainty regarding ultimate emissions limits and market structure has
combined with the greater economic downturn to move allowance prices down to $100/ton.
Additionally, generators have largely met compliance requirements for 2008, and with speculators
currently avoiding the market, SO2 allowance demand is low approaching the March true-up.
The uncertainty regarding allowance value was further heightened by the EPA announcement of its
decision not to pursue the Clean Air Mercury Rule, which applied a cap-and-trade approach to
mercury reduction. Instead, EPA will attempt a maximum achievable control technology (MACT)
standard. The mercury reduction strategy likely to be employed through a MACT standard will be
the use of scrubbers, which will also reduce SO2 emissions. Therefore, even if there becomes some
clarity with respect to the updated CAIR rules, decisions regarding the MACT standard will leave
the SO2 allowance market in uncertainty for at least the next year.
After the Court decision to remand CAIR, annual NOx prices jumped sharply before settling to near
$4000/ton. Over the past month, these prices have seen a steady decline to $3000/ton. Emissions
controls appear to be working properly, and the poor economic forecasts have dampened allowance
values.
The seasonal NOx market had limited activity in January as the winter lull in trading continued. The
limited trading did see the price drop from near $665/ton down to $600/ton, reflecting the downward
pressure across the broader emissions markets. Similar to last month, however, market participants
appear to be waiting for more regulatory certainty before the start of the ozone season. Pace is
closely monitoring the NOx markets and will provide Dover with assessments of allowance
allocations, liquidity, and value as information becomes available.
The December RGGI quarterly auction cleared 31,505,898 allowances at $3.38/ton, and demand was
reported to be 3.5 times greater than supply. Since the auction, the market has been very active with
prices initially moving up over $4.00/ton, but since dropping to $3.50/ton. Based on projected
generation and emissions Dover is projected to have an excess of 70,000 allowances through 2013
with a market value of nearly $245,000. Pace will continue to monitor the RGGI market and will
advise Dover regarding allowance sales if the market alters.
Dover Monthly PGAM Report January 2009 - Final
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4.0 – OPERATIONS MANAGEMENT
Management Highlights
• During the month of January, the plant experienced a recordable accident when an operator
sprained his ankle when he slipped and fell while making rounds. There was no lost work
time pertaining to the incident as the employee was assigned other duties still within his
existing work description. Until the time of the accident, the plant had completed 1,392 days
without a recordable accident.
• During the month, there were no unit dispatches of any of the McKee Run units or Unit #11
at VanSant. All units were available for the month of January.
• A representative of DNREC’s Tank Management Branch visited the site December 31, 2008
for the purpose of inspecting the fuel oil storage tank dike repairs required as the result of a
fuel oil spill event. DNREC was satisfied with the completed remediation and repair work.
• NAES completed several work orders that were initiated from the Areva Vibration
Inspection report indicating possible mechanical problems. Also NAES completed work
orders from recent Storm Technologies Inspection report indentifying minor repairs or
adjustments to equipment clearances.
• The plant received confirmation from the DNREC that there was no additional work or
documentation needed from the remediation work of the oil leak in and around the #1 Tank
berm.
• The position of I,C/E Technician Applicant screening and the conducting preliminary
interviews for the position of I,C/E Technician was completed and an employment offer has
been given and accepted by Robert Gallucio.
• The station continues to work on compliance with NERC and RFC standards for Generator
Operator (GOP).
• Preliminary discussions continue with Pace Global and Applied Power Projects on the
addition of a HRSG at VanSant which could supply additional power output on the unit.
• Aaron Jester passed the PJM certification exam on January 16th. He is our first operator to
pass the exam other than management. Other operators are scheduled to take the exam in the
coming weeks.
• The station continues to work on compliance with NERC and RFC standards for Generator
Operator (GOP).
• The following is the NAES Monthly Report as submitted to PGAM
Dover Monthly PGAM Report January 2009 - Final
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North American Energy Services
Dover, DE
January 2009
Monthly Report
New #2 Fuel Oil Transfer and Unloading Pumps
Dover Monthly PGAM Report January 2009 - Final
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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
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1.0 Environmental, Health and Safety:
During the month of January, we experienced one restricted work day accident. The incident
occurred when one of our employees slipped and fell on a patch of ice that was undetectable due to
snowfall that same morning. The employee sprained his ankle during the fall. Even though the
facility was able to assign the employee some of his normal work duties, the physician who
examined the employee recommended some work restrictions resulting in this incident being
categorized as a restricted work day accident. The employee was on restricted work for seven days
when he returned to the physician and was released to full duty. It is our interpretation that this
incident is considered an OSHA restricted work day accident. The employee did report to work
every day so this was not considered a lost work day incident. The facility has now gone four days
without an OSHA recordable accident and 1,397 consecutive days without a lost time reportable
incident.
A near miss occurred at the facility when two employees were transferring water treatment
chemicals from drums to a bulk storage tank. The employees failed to read the labels on the drums
assuming they were the same product. As a result, two different products were added to the same
bulk storage tank. Fortunately, there was no chemical reaction when the two products were mixed
together.
A representative of DNREC’s Tank Management Branch visited the site December 31, 2008 for the
purpose of inspecting the fuel oil storage tank dike repairs required as the result of a fuel oil spill
event. DNREC was satisfied with the completed remediation and repair work. As a result of this
inspection, DNREC issued the facility a letter indicating that this incident was officially closed out
and no further action was required by the facility.
Environmental, Health and Safety Statistics
Month Fiscal Year to Date
(January 2009) (7/1/08-6/30/09)
NOVs 0 0
Opacity Deviations 0 8
Environmental Deviations 0 1
OSHA Recordable 1 1
OSHA LTA's 0 0
First Aid cases 0 0
Restricted Workday Accident 1 1
Near Miss 1 3
Man Hours Worked 4,836.5 34,992.25
Date last OSHA Recordable 1/27/09
Date last Lost Time Accident 4/05/05
Days since last OSHA recordable 4
Days since last Lost Time Accident 1,397
Dover Monthly PGAM Report January 2009 - Final
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Emissions (NOx & SO2) All data thru 1/31/09
NOx Summary - Year (May-Sept.)Tons
Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL
2005 20.16 20.64 103.3 2.19 146.29
2006 1.82 1.78 19.25 1.72 24.57
2007 3.3 2.7 25.9 0.7 32.6
2008 1.01 0.96 17.0 1.28 20.25
2009 0.0 0.0 0.0 0.0 0.0
NOx Allowances Summary
NOx NOx NOx Allowances Available Total NOx NOx
Allowance Allowances (Per Facility, Prior to Sale) Tons Emitted Allowance
Vintage Sold YTD McKee Run VanSant (NOx Season) Balance
2007 165 191 7 33 0
2008 178 191 7 20 0
2009 0 191 7 0 198
Note: NOx Season is May 1 to September 30.
SO2 Summary - Year (Jan.-Dec.)Tons
Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL
2005 49.91 52.08 530.24 2.30 634.69
2006 3.69 1.51 50.7 0.40 56.30
2007 6.28 5.31 97.69 0.28 109.56
2008 0.011 0.009 31.0 0.6 31.6
2009 0.0 0.0 0.0 0.0 0.0
Note: *Denoted data is as of 12/31/2008
SO2 Allowances Summary
SO2 Allowances
SO2 Available Total SO2 SO2
Allowances (Per Unit, Prior to Tons Allowances
SO2 Allowance
Sold - YTD Sale & Emitted – Balance
Vintage
Reconciliation) U3 and U11
Unit #3 Unit #11 YTD
2006 2725 2586 139 51 0
2007 2076 2585 138 98 549
2008 0 2585 138 32 2691
2009 0 2585 138 0 2723
Note: Denoted data is as of 1/31/2009
Dover Monthly PGAM Report January 2009 - Final
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CO2 Allowances Summary*
CO2 CO2 CO2 Allowances Available Total CO2 CO2
Allowance Allowances (Per Facility, Prior to Sale) Tons Emitted Allowance
Vintage Sold YTD Balance
McKee VanSant
Run
2009 0 59,805 2,045 0 61,850
2010 0 47,844 1,636 0 49,480
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.
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2.0 Financial
Financial – Current Month
Month – January 2009
Actual Budget Variance
Personnel 365,139 366,760 1,621
Administrative 80,606 204,552 123,946
EH & S 1,352 8,000 6,648
Maintenance Expense 17,147 75,350 58,203
Operations Expense 133,506 101,800 (31,706)
Total $597,750 $756,462 $158,712
Financial – Fiscal Year to Date
Number of Months – 7
Actual Budget Variance
Personnel 1,754,272 1,907,084 152,812
Administrative 548,491 709,664 161,173
EH & S 20,117 22,500 2,383
Maintenance Expense 199,773 290,950 91,177
Operations Expense 486,576 600,000 113,424
Total $3,009,229 $3,530,198 $520,969
2.1 Variance analysis:
The original budget for January was $756,462. The actual expenses for January are $597,750 for a
positive variance of $158,712 or 2.68%. The variance was due to the following:
PERSONNEL EXPENSES - Lower labor, overtime, and burden expenses accounted for a
favorable variance of $1,621.
ADMINISTRATIVE EXPENSES - A favorable variance of $123,946 was mainly due to the
operating permits costing less than anticipated.
ENVIRONMENTAL, HEALTH, AND SAFETY EXPENSES – A favorable variance of $6,648
was due to not needing to dispose of hazardous and non-hazardous waste as anticipated.
MAINTENANCE EXPENSES- A favorable variance of $58,203 was due to the repairs to Unit #3
turning gear being moved out to April due to the later delivery of parts to complete the repairs.
There was also an inventory reconciliation for items that were previously charged to our O&M
budget.
OPERATING EXPENSES – An unfavorable variance of $31,706 was due to higher electric usage
than anticipated to support Unit #3 testing and for the replenishing of bulk chemicals. Sulfuric acid
costs have increased significantly since the annual budget was submitted and approved.
The current total for Project EG0804 expensed to date is $1,366,511. The expenses for the month of
January were $195,690.
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3.0 Operations
Unit Operations / Outages / Trips
• During the month, there were no unit dispatches of any of the McKee Run units or
Unit #11 at VanSant. All units were available for the month of January.
Month – January 2009
McKee McKee McKee MRS VanSant 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
Starts # 0 0 0 0 0 0
Gross Generation MWh 0 0 0 0 0 0
Net Generation MWh 0 0 0 0 0 0
Total Auxiliaries MWh 40.013 40.013 178.858 258.884 8.891 267.775
Auxiliaries purchased MWh 40.013 40.013 178.858 258.884 8.891 267.775
Fuel Gas Used MMBTU 0 0 0 0 0 0
Fuel Oil Used MMBTU 0 0 0 0 0 0
Fuel Oil Used Gallons 0 0 0 0 0 0
Total Fuel MMBTU 0 0 0 0 0 0
Net Heat Rate BTU/KWh 0 0 0 0 0 0
Unit Trips # 0 0 0 0 0 0
Capacity Factor % 0.00 0.00 0.00 0.00 0.00 0.00
Availability Factor % 100 100 100 100 100 100
Commercial
% 0 0 0 0 0 0
Unavailability (CU)
Planned Outage 0 0
Hours 0 0 0 0
Hours
Maintenance Outage
Hours 0 0 0 0 0 0
Hours
Forced Outage Hours Hours 0 0 0 0 0 0
Reserve Shutdown
Hours 744.000 744.000 744.000 2,232.000 744.000 2,976.000
Hours
HW Boiler Gas Usage MMBTU 1,116 1,116
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
Dover Monthly PGAM Report January 2009 - Final
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2008-2009 Fiscal Year-to-Date (7 Months)
McKee McKee McKee MRS VanSant Total
Unit 1 Unit 2 Unit 3 Facility Unit 11 All Units
Capacity MW 17 17 102 136 39 175
On Line Hours Hrs 11.066 11.667 214.566 237.299 36.084 273.383
Starts # 1 1 18 20 6 26
Gross Generation MWh 123.315 132.412 12,203 12,458 1,240 13,699
Net Generation MWh 118.511 126.506 11,141 11,386 1,240 12,626
Total Auxiliaries MWh 203.253 204.356 2,303 2,711 27.264 2,738
Auxiliaries purchased MWh 198.449 198.450 1,241.157 1,638.054 26.456 1,665
Fuel Gas Used MMBTU 756 972 72,884 74,613 9,754 84,367
Fuel Oil Used MMBTU 776 616 61,409 62,801 6,273 69,074
Fuel Oil Used Gallons 0/5,568 0/4,418 0/116,114 297,805 45,328 469,233
/126,100
Total Fuel MMBTU 1,533 1,588 134,293 137,414 16,028 153,441
Net Heat Rate BTU/KWh 12,939 12,560 12,754 12,068 12,931 12,153
Unit Trips # 0 0 0 0 0 0
Capacity Factor % 0.14 0.14 2.12 1.90 0.62 1.40
Availability Factor % 60.05 60.05 58.01 63.37 98.91 72.26
Commercial
% 0 0 0 0 0 0
Unavailability (CU)
Planned Outage Hours Hours 1,752 1,752 2,166 5,670 0.0 5,670
Maintenance Outage
Hours 0 0 0 0 56 56
Hours
Forced Outage Hours Hours 0 0 0 0 0 0
Reserve Shutdown Hours Hours 3396.934 3,396.333 2,778.972 9,572.239 5,068 14,640.239
HW Boiler Gas Usage MMBTU 7,432 7,432
Pilot Gas Usage MMBTU 0 0 0 0
VanSant Lifetime through 1/31/09
Actual Starts Factored Starts Fired Hours
VanSant 1189 2000.15 3,912.2
Since HGP - Dec 2004 140 332.45 528.578
Fuel Oil Inventory
Monthly Monthly Fuel Monthly FY 08-09 Fuel FY 08-09
Inventory Inventory Purchases Inventory Inventory Purchases Inventory
(Start) (End) (Month) (Change) (Start) (YTD) (Change)
McKee Run
(#6 Fuel Oil
364,838 416,831 53,210 51,993 426,048 536,660 (9,217)
to #2 Fuel
Oil)
VanSant
(#2 Fuel Oil) 111,496 110,948 0 452 99,950 56,801 10,998
Note: As measured by tank level instruments. Tank levels may change due to oil temperature.
Note: * - #6 Fuel Oil was sold ( approx. 122, 000 gallons) and #2 Fuel Oil was purchased in October and
December.
Dover Monthly PGAM Report January 2009 - Final
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Capacity Testing – FY 2008-2009
Summer 2008 (June 1- Aug 31) Winter 2008-2009 (Dec 1- Mar 1)
Unit Rated Net Reported Net Unit Rated Net Reported Net
Capability (MW) Capability (MW) Capability (MW) Capability (MW)
1 17 17.09 1 17 17.3
2 17 17.55 2 17 17.9
3 102 102.72 3 102 Scheduled for 2/09
VanSant 39 40.09 11 40 40*
Total 175 177.45 Total 176 74
Note: * depicts a unit that has not completed capacity test for the PJM Demonstration Period in FY 2008-2009 but has
been accepted into the PJM Winter Capacity Test Exemption Program.
Team Report:
The operations teams continue to support maintenance. The teams have been involved in the
construction of two new offices that used to be an old break room which is no longer being used.
These two offices will help support the development of our management team in working together in
the future.
Teams continued training within the Plant Readiness Program (PRP) to keep their skills and
knowledge of the plant up to date particularly when the generating units are off line or when they are
not supporting maintenance activities. The GPI online training which supports our safety and
environmental training are being used by the teams to complete their training as they begin the
training cycle for the year 2009. GPI also has a number of courses that are used to support operator
advancement and refresher training.
Confined space program was updated and reviewed over this month resulting in indentifying more
confined space areas. These areas were marked by signs or stickers by the operators.
All the Senior Operators are preparing to take the PJM Systems Operator exam in February. There
are several already scheduled for the exam and we anticipate all Senior Operators will all test in
February.
Operations staff updated waste profiles and satellite station signage to reflect the oil conversion from
#6 fuel oil to #2 fuel oil.
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4.0 Maintenance
During the month of January, plant maintenance staff continued addressing the backlog of work
orders. Sixty-two work orders were issued during the month, with eighty-five work orders being
completed during the month.
The table below summarizes the monthly work order activities.
Work Order Report
January - 09
Outstanding
From Outstanding
Previous Issued This Completed at the end of
Priority # Months Month This Month the month
P1 0 0 0 0
P2 5 10 10 5
P3 16 4 16 4
P4 41 29 27 43
P5 8 0 5 3
P6 0 0 0 0
P7 12 1 4 9
P8 0 0 0 0
P9 8 1 2 7
P6 - 1 0 0 0 0
P6 - 2 0 0 0 0
P6 - 3 0 0 0 0
P6 – 4 1 1 0 2
P6 – 5 0 0 0 0
P6 – 6 0 0 0 0
P6 – 7 0 0 0 0
P6 - 8 0 0 0 0
PM 33 16 21 28
Totals 124 62 85 101
Note: PM's are included in the priority totals
Notable activities during the month include:
1). Installed new heat tracing for Unit Three down comer line to sample panel.
2). Completed several work orders that were initiated from the Areva Vibration Inspection report
indicating possible mechanical problems. Some of the pieces of equipment that were identified
in the report which needed further inspection or repairs were the Lube Oil Exhauster, 3B EHC
Pump, Gland Steam Seal Exhauster and the Over Fire Air Motor. Follow up testing will be
conducted in order to ensure the repairs corrected the problems.
3). Completed work orders from recent Storm Technologies Inspection report indentifying minor
repairs or adjustments to equipment clearances.
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4). The Plant Air System had been recently found to have water in the piping which caused
critical equipment, such as FD Fan dampers, CEMS equipment, Ash system actuators and ash
reinjection gate, not to operate properly due to moisture in the lines. After investigating the
problem, it was found that the air dryer desiccant service life had expired requiring a change of
the material. The desiccant was replaced and plant staff has continued to blow down the air lines
in order to remove the remaining moisture in the lines. Presently, the plant air system is dry and
plant equipment is now working properly.
5). Construction was started on remodeling the break room on the ground floor into two offices
that will be used by the maintenance planner and maintenance supervisor in an effort to increase
communication and worker productivity.
6). Slots were cut in the air register shrouds on each burner. After the slots were cut, the Beck
drives were recalibrated for a stroke of 0 to 13.5 inches. This will help lower wind box pressure
and aid in controlling combustion in the boiler.
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5.0 Capital Improvement Projects (CIP)
Project Description Update
Number
EG0801 MR Fire Progress: Project deferred to 2009 to investigate
Protection an alternative technical approach.
System Upgrades Schedule: Installation now projected to be June
2009
EG0804 MR Pollution Progress: Change out of fuel oil equipment has
Remediation been completed. Plant in final stages of testing and
Equipment tuning Unit 3. Units 1 and 2 have successfully made
the conversion and successfully completed a
Winter Period Capacity Test. Schedule:
Additional testing scheduled for February and
June 2009.
EG0901 MR Unit 3 Progress: Complete
Continuous Replacement was completed in October 2008.
Emissions
Monitor
(CEM)
EG0902 VS Unit 11 Progress: Complete
Continuous Replacement was completed in October 2008.
Emissions
Monitor (CEM)
EG0903 MR Unit 3 Progress: Complete
Continuous Replacement was completed in November 2008.
Opacity Monitor
(COM)
EG0904 MR & VS Arc Progress: Phase one will determine scope and
Flash Analysis costs to implement which will provide input to cost
benefit analysis/ justification to proceed with the
second phase. Task statement defining the scope of
work currently being developed
Schedule: The initial phase of the project to be
completed no later than June of 2009 and the
second phase to complete in May 2010.
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5.1 CIP Budget
Project Description Original Budget Latest
Number ($ X 1000) Estimate
($ X 1000)
EG0801 MR Fire Protection System 50 50
Upgrades
EG0804 MR Pollution Remediation 3800 2800
Equipment
EG0901 MR Unit 3 Continuous 30 50
Emissions Monitor
(CEM)
EG0902 VS Unit 11 Continuous 30 50
Emissions Monitor (CEM)
EG0903 MR Unit 3 Continuous 30 30
Opacity Monitor (COM)
EG0904 MR & VS Arc Flash Analysis 125 75*
* $50k removed and put into O&M budget
The current total for Project EG0804 expensed to date is $1,366,511. The expenses for the month of
January were $195,690.
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6.0 General Plant Information
Training
The teams have been using our Plant Readiness Program (PRP) for training. The program is to keep
our operations staff training level current at all times. Each day and night shift reviews different
procedures for equipment operation, unit operation, and valving procedures. Included in the program
are also different emergency scenarios that are simulated to ensure personnel are properly prepared
to react should those situations actually occur.
Plant staff has started the GPI training for safety and OSHA for the new year. These courses have to
be completed by the end of the year and have to be repeated on an annual basis. Plant staff have also
started an annual review of the Plant SMPs ( Safety Manual Procedures) for 2009 and have to be
completed by the end of the year.
PJM Instructors were on site the week of January 5th for training on the PJM Manuals and to aid in
preparing plant staff to complete the Generation Systems Operator certification test. There
approximately fourteen employees in the class, three of which are already certified. In attendance
were Senior Operators, Auxiliary Operators, Operations Supervisors and one City of Dover Electric
Department employee. This training also builds credits towards keeping your certification. This class
gave current certified operators thirty-two hours worth of credits towards a required two hundred in
five years to maintain their certification status.
Aaron Jester passed the PJM certification exam on January 16th. He is our first operator to pass the
exam other than management. Other operators are scheduled to take the exam in the coming weeks.
Personnel
The position of I,C/E Technician Applicant screening and the conducting preliminary interviews for
the position of I,C/E Technician was completed and an employment offer has been given and
accepted by Robert Gallucio. Dependent on medical screening, Mr. Gallucio is scheduled to start
work on February 9, 2009.
We like to congratulate Aaron Jester in being promoted to Senior Operator I Step I after many
months of training and hard work. Aaron is now on “A” team due to only having one Senior
Operator shift which allows for more flexibility and less overtime.
Other Events
The plant received confirmation from the DNREC that there was no additional work or
documentation needed from the remediation work of the oil leak in and around the #1 Tank berm. A
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condition required by DNREC in the case closure notice was that they (DNREC-AST Branch) are to
be notified if any digging is to occur in or around the tank or tank berm area.
During the month of January, the plant experienced a recordable accident when an operator sprained
his ankle when he slipped and fell while making rounds. The accident occurred when the employee
was walking on an ice patch that was covered by a layer of snow. There was no lost work time
pertaining to the incident as the employee was assigned other duties still within his existing work
description. Until the time of the accident, the plant had completed 1,392 days without a recordable
accident.
The station continues to work on compliance with NERC and RFC standards for Generator Operator
(GOP). In January, Ken Beard and Dean Blaha (NAES) met with Jeremy Johnson and Steve Enss,
City of Dover employees, to ensure both entities remain in NERC compliance and to share notes on
file maintenance and data.
Preliminary discussions continue with Pace Global and Applied Power Projects on the addition of a
HRSG at VanSant which could supply additional power output on the unit. Next on the agenda is to
have a discussion with a Chevron site, which had incorporated the same Chang Cycle technology
several years ago to learn more about the pros and cons of such a project. The conference call is
scheduled for early February 2009.
Calendar of Events
Date
McKee Run Units 1, 2 and 3 Outage – Oil Conversion Project October 1, 2008 – December 31, 2008
McKee Run Unit 3 Maintenance Outage for air flow and controls January 26-February 2, 2009
tests
McKee run Unit 3 Net Capability test February 20, 2009 (tentative)
PJM Winter Capacity Demonstration Period December 1, 2008 – February 28,
2009
EIA Reporting Requirements February 1, 2009
Title V Annual Certifications Due February 1, 2009
Sara III/Tier II Reporting Due March 1, 2009
Annual SO2 Certification Due March 1, 2009
Unit 3 Annual Outage March 9 -23, 2009
Annual Emission Statement Due April 1, 2009
Appendix E Testing for Units 1 and 2 June, 2009
Unit 3 RATA Testing and Particulate Testing June, 2009
Unit 11 Appendix E Testing June, 2009
Fiscal Year Ends June 30, 2009
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7.0 Summary of NAES Performance to Date
Plant Performance FY 2008-2009
Measure Month Year to Date YTD FY Maximum
Incentive Incentive
Commercial
Unavailability (CU) 0% 0% $85,863 $85,863
Safety 1 1 $8,050 $16,099
Environmental 0 0 $16,099 $16,099
Capacity Tests
Summer Winter Summer Winter
Completed
Unit 1 No Yes Yes Yes $3,220 $3,220
Unit 2 No Yes Yes Yes $3,220 $3,220
Unit 3 No No Yes No $9,660 $19,319
Unit 11 No Yes* Yes Yes* $6,440 $6,440
Total YTD Total YTD
88.21% $132,551 $150,261
Incentive % Incentive
Note: * depicts a unit that has not completed capacity test for the PJM Demonstration Period in FY 2008-2009 but has been
accepted into the PJM Winter Capacity Test Exemption Program signifying completion of test.
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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 ($575,405.12) ($575,405.12)
Realtime Energy $0.00 ($92,386.60) ($92,386.60)
Transmission Losses Credits $0.00 $104,223.17 $104,223.17
Network Integration Transmission Service Charges $0.00 ($248,958.52) ($248,958.52)
Inadvertent Interchange Charges $0.00 ($70.83) ($70.83)
Regulation Charges $0.00 ($26,357.47) ($26,357.47)
Synchronized Reserve Charges $0.00 ($3,639.66) ($3,639.66)
Balancing Operating Reserves Charges $0.00 ($5,475.02) ($5,475.02)
Day Ahead Operating Reserves Charges $0.00 ($7,711.31) ($7,711.31)
Day-ahead Scheduling Reserve $0.00 ($376.57) ($376.57)
Synchronous Condensing Charges $0.00 ($1,259.34) ($1,259.34)
Reactive Services Charges $0.00 ($5.12) ($5.12)
Meter Correction Charges $0.00 ($12.00) ($12.00)
Day-ahead Economic Load Response Program Charges $0.00 $0.00 $0.00
Real-time Economic Load Response Program Charges $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 ($928,450.00) ($928,450.00)
Capacity Transfer Rights Credits $0.00 $32,628.12 $32,628.12
Capacity Resource Deficiency Credits $0.00 $1,862.17 $1,862.17
Demand Response and ILR Compliance Penalty Credits $0.00 $0.00 $0.00
RPM Auction Credits $765,406.12 $0.00 $765,406.12
Auction Revenue Rights Credits $0.00 $75,373.09 $75,373.09
Synchronized Reserve Credits $0.00 $0.00 $0.00
PJM Scheduling System Control and Dispatch Service Charges $0.00 ($13,845.30) ($13,845.30)
Transmission Owner Scheduling System Control and Dispatch
Service Charges $0.00 ($4,942.06) ($4,942.06)
Reactive Supply and Voltage Control from Generation Sources
Service Charges $0.00 ($23,161.47) ($23,161.47)
Black Start Service Charges $0.00 ($1,205.39) ($1,205.39)
North American Electric Reliability Corporation (NERC) Charge $0.00 ($452.30) ($452.30)
Reliability First Corporation (RFC) Charges $0.00 ($578.68) ($578.68)
Expansion Cost Recovery Charges $0.00 ($431.52) ($431.52)
Transmission Enhancement Charges - 2008 $0.00 ($8,105.60) ($8,105.60)
Black Start Service Credits $5,728.89 $0.00 $5,728.89
Non-Firm Point-to-Point Transmission Service Credits $0.00 $3,529.74 $3,529.74
Generation Deactivation $0.00 $0.00 $0.00
Market Monitoring Unit (MMU) Funding $0.00 ($357.79) ($357.79)
Organization of PJM States, Inc. (OPSI) Funding $0.00 ($41.91) ($41.91)
FERC Annual Recovery $0.00 ($3,711.53) ($3,711.53)
Amount Due for Interest on Past Due Charges $0.00 ($62.30) ($62.30)
PPA $0.00 $7,428.69 $7,428.69
$771,135.01 ($1,721,958.43) ($950,823.42)
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II. LOAD, ALL IN ENERGY AND ALL IN COST OF SERVICE TABLE
Budget Load Actual Load Budget AIE Actual AIE Actual YTD AIE Budget AICS Actual AICS Actual YTD AICS
(MWh) (MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh)
Jul 81,189 81,060 $92.30 $94.46 $94.46 $94.85 $97.04 $97.04
Aug 82,798 73,039 $92.29 $91.36 $92.99 $101.51 $101.39 $99.10
Sep 67,000 66,214 $85.81 $89.01 $91.80 $93.47 $95.27 $97.89
Oct 61,170 58,391 $87.47 $87.60 $90.92 $96.39 $97.90 $97.82
Nov 58,037 56,361 $87.62 $85.62 $90.02 $96.60 $93.43 $97.08
Dec 59,534 61,078 $87.25 $85.03 $89.25 $97.05 $98.21 $97.26
Jan 64,805 65,021 $88.79 $88.78 $89.19 $101.90 $99.99 $97.65
Feb 63,547 $89.48 $77.20
Mar 58,753 $86.98 $95.92
Apr 56,824 $85.94 $96.34
May 62,655 $85.52 $93.92
Jun 72,496 $88.32 $100.05
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III. GLOSSARY
All In Unit Energy Cost ("AIE") 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 capcity 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.
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McKee Run Station
Pollution Remediation Project
Purpose:
This project consists of activities which will reduce emissions of NOx and SOx at the McKee
Run Generating Station in supporting the goals of the Delaware Regulation 1146.
Project Scope Expected Benefit
1. Stop the burning of residual Reduce SOx and NOx emissions as a result of
fuel oil and convert the plant to lower content of fuel bound sulfur and nitrogen.
burning low sulfur distillate oil Reduce particulate emissions due to the lower
along with natural gas. particulate content in the distillate fuel oil
2. Replace necessary fuel oil Required to store, transport and burn the low sulfur
system equipment and perform distillate fuel oil.
modifications needed to burn
the low sulfur distillate oil.
3. Modify boiler controls on Unit Provides flexibility to “tune” the combustion
3 to improve the combustion process in order to minimize the thermal production
process of NOx
Progress to date:
• Residual oil removed from the storage tank and replaced with distillate oil
• All fuel oil system modifications and equipment replacements completed
• Planned boiler control modifications on Unit 3 completed
• All Units successfully test operated burning the low sulfur distillate oil.
Conditions found/ problems encountered:
• Condition of the fuel oil unloading piping to the oil tank required a section of piping to be
replaced which was not anticipated. No other issues were found or encountered during
the fuel oil system modifications and equipment replacement activities.
• Repairs to the flue gas system of Unit 3 not anticipated were completed.
Activities remaining:
• Boiler control tuning for optimizing of the combustion process
• Boiler performance testing to determine emission limits
• Flue gas system improvements for combustion will be completed during an upcoming planned
maintenance outage scheduled for March.
Budget Status :
• The approved budget for this project is $3.2 Million.
• Current estimate at completion is $3.1 Million