Appropriations & Oversight Committee — 2014-10-09
Attendance
Jaclyn L. Bird ; Robert A. Boisselle ; Donald L. Conn Jr. ; Scott M. Forbes ; Gail Infurna ; Jennifer L. Lemmerman ; Mary Beth McAteer-Margolis ; Monica C. Medeiros ; Peter D. Mortimer ; John N. Tramontozzi ; Francis X. Wright Jr.
Agenda
Minutes
CITY OF MELROSE APPROPRIATIONS COMMITTEE CALENDAR● OCTOBER 9, 2014 Aldermanic Chamber Committee Meeting 7:30 PM The public should take notice that the Melrose Board of Aldermen may, on certain occasions, have a quorum in attendance due to standing committees of the Board of Aldermen consisting of both voting and non-voting members. Members attending this duly posted meeting are participating and deliberating only in conjunction with the business of the standing committee. Attendee Name Title Status Arrived John N. Tramontozzi Chairman Present Jaclyn L. Bird Vice Chairman Present Monica C. Medeiros Alderman at Large Present Mary Beth McAteer-Margolis Alderman at Large Present Gail M. Infurna Ward 5 Alderman Present Robert A. Boisselle Ward 4 Alderman Present Scott M. Forbes Ward 7 Alderman Absent Francis X. Wright Jr. Ward 3 Alderman Absent Jennifer L. Lemmerman Ward 2 Alderman Present Peter D. Mortimer Ward 6 Alderman Present Donald L. Conn Jr. President/Ex-officio Member Present In Attendance: Martha Grover, Energy Efficiency Manager; Ryan Fahey, LEED GA/Senior Analyst, Cadmus, Energy Services Division; Charles Jenkins, CEO, Synergy Energy
ORDER-2015-43 Authorization Power Purchase Agreement for Solar Net Metering Credits Recommend Passage Board of Aldermen City of Melrose Page 1 Updated 10/14/2014 4:09 PM
Transcript
▶ 4:49 John N. Tramontozzi: melrose board of aldermen this meeting is being recorded for in pursuant to the massachusetts open meeting laws and uh present is myself uh chairman uh john tramontosi also present with us this evening is vice chair alderman byrd alderman at large monica Medeiros alderman at large mary beth mcintyre margolis ward 5 alderman gail inferna ward 2 alderman jennifer lemmon ward 6 alderman peter mortimer and president of the board of alderman donald khan jr motion to open the floor for public participation mr chairman very good thank you we have a motion open the floor for public participation by alderman mortimer seconded by alderman bird on the motion all in favor aye opposed seeing none this is the opportunity for any members of the public who wish to come
▶ 5:45 John N. Tramontozzi: forward uh to speak on any matters of on our agenda uh this evening please come forward come forward no you don't want to okay motion to close public participation okay we have a motion to close public participation by alderman mortimer seconded by second alderman mcintyre my goal is motion to suspend the rules that we may hear from people on order two zero one five dash four three we will have that motion in a second after we have a ruling on the motion to close public participation uh on that motion all in favor aye any opposed saying that we are closed for public participation we now have a motion to suspend the rules uh i will read the order for the record we have one order on the appropriations committee agenda this evening
▶ 6:32 John N. Tramontozzi: its order 2015-43 power purchase agreement for solar net metering credits we have a motion on the floor by alderman mortimer to suspend the rules they hear from the appropriate officials and there's a second to that motion by alderman third okay and on the motion all in favor you're posting then so we are on a suspension of rules which allows uh Please come forward, and if you could state your name for the records, and then proceed to either give us an overview of what we have before us this evening, and then give the opportunity for any members of the Appropriations Committee to ask some questions. Good evening. Good evening. Thank you very much. I am Martha Grover, the Energy Efficiency Manager for the City of Melrose.
▶ 7:23 I am Ryan Fahey, a renewable energy analyst with the Cadmus Group, the city's owner's agent. I'm Charles Jenkins, I'm the CEO of Synergy Energy, representing Revio, which we have a joint venture agreement with. So we are here tonight to present an opportunity for the city of Melrose, and we're looking here tonight for your authorization for the mayor to enter into a contract. with Revio for a solar net metering agreement. This is something that I've been looking into and researching and talking to a lot of people about for a couple of years and have gone down the path with a few different developers and this is the closest we've gotten to signing an agreement. And it's what's different about it and I've talked to you about, you know, solar projects
▶ 8:21 We have one here in Melrose on our rooftop of our high school, middle school. What's different about this one is that the solar development is planned for a location outside of Melrose. It's an opportunity for municipalities to be an off-taker of what's called the net metering credits that these solar projects produce. and use, and Ryan will go through it a little bit further, but it's an opportunity for the city to invest in a renewable energy project here in the state of Massachusetts and also use those credits to offset some of our electricity prices and hedge against future increases. So we're going to share with you a short. Can I add something? Yep. That'd be fine. So as Martha was, originally when these regulations came into being for the solar and energy,
▶ 9:24 it became pretty clear that these municipalities were, because of their tax structure, it was a little almost prohibitive for them to invest large-scale capital in order to build their own solar facilities. And then here in Melrose, we have a situation where there's not really any room that's suitable. the roofs are historical so therefore it's a it's a win-win situation for us to build large-scale sites in other places in remote locations and the net metering mechanism was developed in order to allow the municipalities to join forces in a public private partnership where we provide the large cap large-scale capital because we have also investing partners with with the proper tax status and appetite. This now creates an opportunity for municipalities to join into the green
▶ 10:21 sustainable energy initiatives without having to leverage themselves with a capital burden and raise funds with bonds and so forth. This is, again, an opportunity for the city or town in this case city of Melrose to become to participate in the the initiatives that Massachusetts is set up and to the and again the mechanism is is is nice because it does and especially he's on this these upward trends of the solar of the energy market in general we're able to create a mechanism that will hedge hedge against future increases so that was just my addition thank you great um thank you for the introduction martha and for uh your input charles um so i would like to to help describe what a net metering service agreement is exactly and how melrose will benefit
▶ 11:20 from entering into such an agreement if you could go to the next slide revio revio a a solar developer has approached the city to enter into this net metering services agreement With the intention of Melrose purchasing the control of net metering credits that are generated by a number of solar arrays located outside of Melrose, utilizing, as Martha and Charles had said, utilizing the state's net metering regulations that allow power that is generated by a remote solar array to be created. credited towards Melrose's Municipal Electricity Bills. And just sort of some added background here. Cadmus has been working with the city of Melrose throughout this agreement and through the previous agreement with Amoresco as an owner's agent through this process.
▶ 12:40 to help sort of guide and provide expertise throughout contract negotiations and evaluating opportunities for the city here. Next slide, please. Sorry. So what Revio has proposed is several large scale solar projects that will generate renewable energy and Effectively, because those sites are remote, they will utilize the state's net metering regulations. And so to describe that a little more, there will be a meter at the site that will count the number of kilowatt hours, the unit of energy that the solar array is producing. And for each kilowatt hour that's generated, the utility will create what's called a net metering credit. That net metering credit has a dollar value that can be used to offset charges on your
▶ 13:44 electricity bill. This net metering services agreement would give Melrose control of all of the net metering credits that are produced by the proposed solar arrays and use those credits to offset a significant portion of the city's municipal electricity. The value to the city in this instance is the difference between the value that the utility will credit your bill for having one of those net metering credits versus the price that is paid to Revio to have control of that net metering credit. In this instance, given the current market and the terms that have been negotiated with REBIO, the difference between those two prices is approximately five cents per kilowatt hour or per net metering credit.
▶ 14:42 Next slide, please. Now those prices are not static over the life of this contract, and in fact the electricity market can be somewhat volatile. There is assumptions or projections as to what electricity costs in the future might be. The Department of Energy and the Energy Information Administration and other federal agencies predict that on average over the next 20 years, electricity prices will increase at approximately 2% per year. The rate that is paid to REVIO will also escalate over time. So it will start at 10 and a half cents per net metering credit that's purchased. That rate will then increase at 2% per year for the life of the contract. The added value, not only the difference in the price that the utility will assign versus
▶ 15:48 the price that Melrose would pay to Revio, another value is, as Martha and Charles said, a hedge against increases in the electricity in electricity costs in the future and so this this is a very basic graph sort of trying to depict the projected increases in the price of electricity coming from the utility and the price that would be paid to Revio to control these net metering credits over time thank you so earlier I had mentioned the the essential the value that Melrose gains through this agreement per kilowatt hour was approximately five cents per kilowatt hour given this the scale and the size of these projects they're estimated to generate approximately 6.8 million kilowatt hours a year which could in the first year of this contract lead to
▶ 16:56 approximately three hundred and twenty thousand dollars in savings versus having to buy all of that electricity from the utility and not having any net metering credits to lower that electricity bill so to sort of highlight some of the benefits of this project it would be electricity cost avoidance in the future if electricity prices were to increase dramatically for instance it's fairly well publicized that this winter electricity prices are expected to increase by about a third this has some seasonal variation to it but as the contract goes on electricity prices are projected to increase over time having a a set schedule as to what you will pay for electricity, gives certainty as to what the city's cost will be
▶ 18:03 for electricity. And so it's really a hedge against the future price increases that could potentially be coming. Additionally, it's a regional source of renewable energy. Charles can discuss a little bit about where the projects may be located, the power will ultimately be generated from and also there's lots of examples of communities in Massachusetts that have executed these sorts of agreements and in the early years of their contracts are seeing considerable savings there are a few listed there and over Lowell Chelmsford New Bedford really communities of all shapes and sizes that are taking advantage of the incentives in this sort of public-private partnership and then lastly the goals that Martha has already outlined we're seeking the the
▶ 19:02 committee's approval this evening and really some of the drivers of why we're seeking the approval now is the incentives that make this this deal so lucrative are on a first-come first-served basis and the longer that moving forward the project is delayed the less lucrative those incentives are likely to become if available at all additionally investors have a significant interest in what those incentives are and are eager to deploy their money and if with delays in projects sort of investors sort of become restless and look to take their money elsewhere to projects that are in fact moving forward. And so given some timeline constraints with incentives, we're at sort of a critical juncture to move forward with this project.
▶ 20:04 Can I add a couple things? So to Ryan's point, because I'll speak on behalf of some of the investment interests, investment is based on tax events and therefore therefore timing we need to move certain you know there's large quantity billions of dollars has been earmarked for this this Massachusetts sustainable market so that's that includes wind solar bio digesters so on the the latest example as I was talking with Ryan earlier is that when we were waiting for legislation to come down from the state level every week that went by there was perhaps hundreds of millions of dollars that would be removed from Massachusetts because it was the timeline was clicking down that there's so aside from the timing from the investor groups which is always
▶ 21:01 there you have the legislative aspect where there's a queue there's a certain amount of what they call managed growth capacity afforded or that's been carved out as they call it for these types of initiatives aka the solar or bio digester that creates power generates power so what I'm trying to say here is is that it is first-come first-serve and it's limited it's moving swiftly so again that's that's one of the reasons you know there's actually a two-fold reason why there's a fairly urgent matter some more room opened up in this in this queue or within this cap on July 31st at the end of the last legislative season. So we've been working very hard over the last couple of months to come to an agreement.
▶ 21:49 And this contract has been reviewed by, obviously, our city solicitor and others. So we're here today. We did a lot of work with some very specialized attorneys in Massachusetts who this is what they specialize in, is the the green sustainable energy uh issues um and along with that we had uh help from uh cadmus attorneys and and several different uh consultant uh in that area we also brought to the table our uh engineers uh who specialize in the sustainable marketplace so i think we've we've done a very thorough job uh and when it's been well vetted so i and um just one last thing if i if i could we when we come to these these types of meetings we we we talk about a lot of the legal wrangling and and so on but there's um there's also a great deal of residual effects that
▶ 22:43 don't get to be talked about we we actually are creating many jobs this is a uh and we're we we bring curriculums to the communities that we share that can track and create awareness and interest and and understanding of what we're doing here so it's we try to benefit we bring more to the communities and just hedging against the future or you know trying to save money it's actually there's a lot of other community things we bring to the community that we think are value-added if you will did you anything further that you want at this time at this point in time we'll have some questions uh by uh board members uh alderman khan president khan is up first and thank you mr chairman can you explain um to the committee and to anybody who might be watching us at home
▶ 23:32 How our financial commitment to this project would work? So when the projects get built, which will likely be some point next year, 2015. Second quarter. It's very similar to the existing project on the high school. So we have some experience and familiarity with how this works. So when the projects get built and are interconnected and authorized by the utility. And the developer, Revio, will start to send bills to the city for the kilowatt hours that are produced on the meter at ten and a half cents. We'll pay those bills and at the same time, credits will appear on all of our utility bills from the utility at the current, it's called G1 rate, which is at about 15, 15 and a half cents right now.
▶ 24:32 So the credits will appear on the bills and at the same time we're paying for the power. So it's the, that delta's like a coupon. So there's nothing outside of the credit transaction that's gonna cause us to expend any money. don't have any obligation to make any payment to buy into the system no that's all that's all there that's all there yeah that's that's exactly right by the developer we come into it uh with complete funding owning operation of the system and maintaining it you have it basically it's a turnkey paper transaction that uh that was how you know created in the in to give another opportunity besides public procurement which where you start to you know so it's it's exempt from 30b you uh
▶ 25:22 because otherwise uh you know it gets you're messing you're you're unsettling your your power purchase your power supply from your utility so what this this doesn't upset that you continue to purchase power as you always have uh your same continue you know you continue to do the same thing and these are just generation credits and it's you get the they come in on the invoices from utility and then at the sit and then you turn over the portion of it to us you retain the amount as Ryan was saying about five cents which is then you're you're creating a net savings with that so there's actually no time that you're actually buying into the system or funding it or investing it at any point we're simply sending you our credit
▶ 26:12 that in total, you retain the portion of it that gives the contracted savings to you. And you return the balance of that to us, thereby we satisfy our loan obligations and pay for our developing costs. And Ms. Grover, in terms of our funding source for this, are we going to make these payments out of the line that we have for payment of electric bills? Is that how this is going to work? Yes. And is this going to have any impact? But we're not going to have to increase that line or anything of that nature? No. And this has been reviewed by the city law department, this contract? It has. And 20 year term, the contract is permissible for the city solicitor? Yes. And do we have any rights to withdraw for any reason from the contract during the 20 year period?
▶ 27:06 There are termination. Yes, yeah. For instance, for instance if the net metering, the regulations that allow for net metering. If they were to go away and the economics significantly changed for the city, there is a clause in the agreement that both parties would come back to the table and try to negotiate a reasonable outcome. I think there's also protections built in that if performance failure clauses and things of that nature, if we don't fulfill as we contracted, there's provisions for that and you can be released or we try to make a cure. If not, then you can be released. That's a thing that came to mind for me is if this whole regulatory structure was radically changed, as it might be over a 20 year period, what would happen?
▶ 28:02 Are we tied into something that's not going to exist in 10 years? I think the first thing you would see would be if something like that were to change, this would go away. We go out of business and you cease to get the benefit and you just go back to doing business as usual. So there's no downside liability. You really can only benefit here the way that the whole thing's set up. And some of those communities, we've replicated this many, many times already in the state with these same terms and these same mechanisms. So it's working already, we have working models. These models have also been proved in New York, New Jersey, Maryland, California. So we believe we have a very good model. We also feel like the legislation and
▶ 28:52 The way the mechanisms have been designed to benefit in this way, the municipal entities, has now matured to the point where we feel we don't foresee any of that. But then again, but I think the important key to address your question is that there's no downside liability. You're not on the hook for anything. If it fails to work or it doesn't work as we set it up, you just don't get any benefit. You just go back to business as usual. That's all I have for now, Mr. Chairman. Very good. Alderman Lemmerman is next. Thank you, Mr. Chairman. Thank you for this presentation and the information. Just a couple of questions. The structures, the actual structures themselves in the remote sites, those don't exist yet, right?
▶ 29:38 They're not built yet. Right. This is one of the first requirements entering into this agreement, In addition to a few others that the developer has to line up in order to even start the building process. If I can add, so the way this has been structured with the application process for the utility, it's required that we have what they call an off-taker agreement or the net metering agreement. Early on in this sustainable initiatives, that was not necessarily a criterion. And thereby, there was a tidal wave of applications that went into National Grid that were pretty much not sustainable. It means they wouldn't be successful. And so, and the grid also wanted to remain, you know, wanted to control their flow.
▶ 30:30 They need to know how much is coming in. They don't want just people pumping and generating it in where they can't, that they don't know what to do with it. Sustainables are, you know, by nature, a little bit, you know, you have sun, not sun, you know, and it goes out in wind, no wind. so in order to create put that into their mix in their portfolio they needed to control how much and unders and make sure that there was somebody who actually demanded it or that was going to take it they didn't just want us pumping it in on their generation line their transmission lines and and causing a mess frankly so the um um i lost my train thought there but uh they're not built we do have sites that are in progress and oftentimes especially in this stage
▶ 31:18 of the marketplace there we find projects in peril if you will people who have run out of money or something of that nature it's gone through the application process they can't afford to the end of the half a million or a million dollar interconnection charge and we can come in and those things happen so there are oftentimes opportunities and we stand ready for that because we have funding available so if the project in peril comes at us and we can supply you with benefits and fulfill our contract earlier we will do so but otherwise we're setting reasonable expectations based on our experiences that will be we're looking to have our sites ready for to fulfill our contract with with the city you know probably second quarter next year weather permitting
▶ 32:01 obviously you know we are in new england but we we're looking to move as quickly as possible we We have ample sites and backstop sites, so we believe we have good confidence that we're going to get this done for you as quickly as possible. But again, and I let Martha know this as well, I assured her if any of these projects in peril or anything turns, you know, comes up, and there's also opportunities with smaller sites based on the last regulations that we can get expedited processing. We can put something like that in in a couple months. So we would be obviously looking for those opportunities and do that as best we can. So to answer your question, no, they're not built, but they will be in short order
▶ 32:44 Jennifer L. Lemmerman: and there are opportunities for short term. Thank you, great. Once they are, and you know, if we were to enter into this agreement and we were the host customer, the city is, am I right in interpreting it that the city's not actually responsible for the upkeep or the maintenance of these structures? it's turn it's turn key you're completely hands off okay uh we we again we fund own you know build maintain own and operate you do nothing except we did actually in the agreement reserve the right to inspect it and to visit it and to um inspect you know audit and check the meter yeah check the meter and great but we're not on the hook for to maintain it great yeah um one more question the the estimated 6.8 million kilowatt hours that the presentation gives for what we can expect
▶ 33:36 Jennifer L. Lemmerman: to be generated what did you know what percentage of the city's actual municipal electricity use that would be um about 80 okay so we we consume about eight and a half eight about eight million kilowatt hours annually at a cost of um right this last year uh 1.2 million dollars So this is sort of a hypothetical, but with it being that high percent, looking at the contract, we are required to purchase all of the electricity generated, right? So what would happen if it was under our usage? Or our usage was under, I'm sorry. Melrose would have the opportunity to sign an intermunicipal agreement where another municipality would elect to take control of a portion of those net metering credits. they could then use them to offset their own municipal bills and that's happened
▶ 34:33 before certainly so the mechanism that's that's part of this the the whole net metering process is a schedule Z which is a document that we we on there we show that site a will be dedicated to the city of Melrose okay and and this is you know it's not un unusual and a lot of cities and towns are actively trying to conserve and they're planning to their target is to get 20 conservation or something over the next couple three years we understand that the nice the good thing is that the schedule z can be reallocated every six months okay so we just want to know and of course if you're going to be doing a conservation effort i mean we're going to be cognitive of that i mean you're probably going
▶ 35:21 to you know you'll let us know we'll see the effects of it but um so so the way we manage that is we utilize that schedule z and as ryan was saying we we have to move that if we're under a municipal cap which this would be we have to send it to someone else utilizing our schedule z who has another qualified dpu number vis-a-vis another uh municipal entity that could be a city town water district sewer you know wastewater district school district they all have qualified dpu numbers so we would then reallocate to that right okay the qualifier there would be that they're also in national grid territory oh okay sure it has to be in the same utility district in order to sell them net metering credits but right national grid is the largest uh
▶ 36:13 utility so there are plenty of opportunities there great i would closely monitor it over time because as you know i am trying to reduce reduce that number and um so that's a good question right and one one last thing um we don't just actually you know as i said we try to benefit the communities a lot of ways we we don't just build solar we do have biodigesters and water technologies and as i said curriculum that we like to interweave into the schools if possible to to you know benefit the other way so we actually like to work closely with a you know with our folks at the at the municipal level we don't just like to build it and sign a contract and see you later I actually had a meeting with the
▶ 36:58 city of the town of Abington a couple days ago and I called that meeting to say okay we've got our agreement in place I want to sit with you and understand what your top five goals are and I want to see how we can use our resources to reach your goals and we want to come up with a plan that that you know affects all those different goals and one of them you know you're building a high school we want to make it green we want to have you know certain lead qualification on it we want to enter we wind that with the different types of sustainable energies that we're going to have there to create a practical lab that's going to be supported by that curriculum we are we want to help you buy your street lights back and and we you know retrofit them
▶ 37:38 Monica C. Medeiros: with the with the led lighting you know so these are some of the things and when you have a close relationship with the community with the the energy committees and so forth i don't think we're ever all any going to be blindsided by your your conservation efforts and i think we can work that out as long as we you know we just don't want to be blindsided i guess as long as we know in advance we can reallocate that's not a problem great okay great thank you very much thank you very good alderman Medeiros is up next thank you uh some of my questions have been answered um so in this agreement this is for melrose and we're looking for one specific site or multiple sites it could be it could be multiple multiple and are there other
▶ 38:24 municipalities that would be sharing in this with us for the same site no no well um okay let me me give you an example if we were to build a site that had five you know seven megawatts because that's more than what so in that case if you were gonna take five we could then share the generation from that site with another municipality to take off the other remaining two is that what you're asking I think so I wasn't sure if we were buying sort of shares of a project in a in a way rather than just I think a lot of cases we like to we'd like to keep it cleaner but that's the best kid perfect world but so yeah the other side of the coin could be again as I indicated to you with some of the newer regulations
▶ 39:09 if we were into indeed to find five different sites that are one megawatts you might end up with five sites small to add up to the cumulative amount to fulfill your contract so it's not clear it's case by case we we have some situations that we've done in the past where a site was to end a bit it was completely taken by one municipality and then we've had a larger site that was seven megawatts that was split up so you know in the last few years in the solar industry is that you know there are so many steps and so many places where a project can veer off the rails and this where this is pretty much at the beginning of a project so you kind of you don't know where it's gonna end up and you don't know which ones are gonna take off because they're still permitting
▶ 40:02 if they have to get and other approvals so they've got so many projects in the works that it's hard to know exactly what the project is that we're gonna be the off taker of you know come next year yeah so if I give you some quick examples that say you you have we have a property in Haverhill we get up there the conservation committee finds a spotted toad or something the spotted salamander or painted turtle some something that on land that we had scheduled for you we would then not be able to use that so but we have control of hundreds of acres of land we just moved to another one that's why I've backstopped the committed you know we did early on commit to Martha she had the confidence that we wouldn't leverage against this this contract that we we
▶ 40:55 put in writing some sites that we had that we felt were suitable and would have be big enough to fulfill the contract however we don't stop from stop there we we backstop everything I've got several other sites already under control that I could use as a contingency plan because things do pop up and as you said there's a lot of work that still has to be done at which you know the concert and you can run into a lot of different hurdles but we've you know we've been at this a while so we know that it's not the first time at the rodeo but you know you've got to be ready for those things and they do come at you so you have to and how how long has Vizio been in business Revio is actually a new name change because we, the previous name was Solair and that
▶ 41:47 just indicated too much, sounded too much like all you did with solar. We actually have a broad range of, as I said, we have water technologies and bio-digestion and wind and battery storage, so it's a very large, you know, diverse portfolio. Revio was a new name to, not Pigeonhole was I guess. Right, okay, so. But the company itself, Solaire, has been around for many years in California. In California, and so how long has it been, Revio? Six months. Six months. I bet, yeah, I think about six months. And when you say many years, is that like 15, so okay. And we're looking at a 20 year contract, I mean it's just this is new somewhat new well this is a new industry new industry so you'll find many many of the companies that you that you out there
▶ 42:40 mm-hmm five years or less old because it just didn't exist before do you have any projects in Massachusetts already in place so some of those towns that were mentioned are those are those towns that you know we could speak to about revio or are they what I would refer to so you know Soler they're actually in some cases that's a hard because you do have like for instance we will develop a project oftentimes and then you have a funding group and they may want to have their own subsidy subsidy group build it okay so you may run into sunray you may win the blue wave you're gonna you know so it's hard to follow like a pathway we have involvement in probably 20 megawatts worth of projects up to date
▶ 43:33 which is pretty good we're middle of the pack we're not the biggest we're not the smallest and it varies on your involvement you know I in some cases we made our team here in Massachusetts may have derived the whole product project and brought it to where it has to be the actual site development and then we are brokering the the power at the end there's there's several different iterations that can happen but we we have completed two of this the mechanism here in Westboro we did a couple large sites that they took off total about seven megawatts one site was to one site they took five out of seven with the sites that Lowell takes off of are both sites we built up in Athol and orange those both are like three and a half megawatt sites if I may to be clear
▶ 44:27 the the list of communities that I provided were ones that I was aware of not necessarily that Revio had been a party to and also yeah there's I could go on and on I mean I because I'm out in the field I'm at cities and towns every day working on this this mechanism and there's just many many examples where this is being done and it's just building it's picking up speed that's why again you know we're sort of we're pushing along because everybody's got it now they're getting they understand it and the mechanism and model has matured to a point where it's it's manageable it works and it's being it's an in place so we're just we're in the duplication mode here we're moving it forward based on
▶ 45:12 precedent um so there's there's many many towns that i could name off to you that have the mecca this type of agreement in place and they're doing well with it and my dad it sounded and correct me if i'm wrong like your concern there may have been what happens if rebio goes away or goes under well i mean certainly i think you know i think uh president khan you know spoke to some of those those questions and i do see some of the the answers but i mean obviously you know it's something that we should consider so well um if i if i could respond a little bit to that there firstly we're building power plants you know so they're creating revenue uh if if you were to have because that's a question i've been asked obviously for for the
▶ 45:59 last some years you know it's a new it's a new thing and the people want to know how how's it you know what if you do go out of business where are we if we go out of business somebody else will take control of that power plant and they'll want to maintain the same agreement because it's generated cash for the for whoever owns it so i see it being highly unlikely that it would happen because once you've you've made the capital investment you're just now you're just waiting for your return on investment and so on and so forth i think the you know that's That's where the proof is in the pudding. We've been able to bring tens of millions of dollars of investment funding, funded these projects throughout the state, so.
▶ 46:45 Monica C. Medeiros: And I would just add that it's part of the benefit that this is a project not located on Melrose's property. That if no developer were to step in in the event that Revio went under, Melrose is then not left with the bill to decommission that system at some point. The contract would end and it would essentially go back to business as usual, but there isn't this equipment that now Melrose needs to either find someone to own and operate it or to come and decommission it. And so we're talking a 2% annual rate increase locked in and this is over the course of 20 years. and and i believe that we had just been on a different matter kind of looking at our electricity rates um i think over the course of the past eight or ten years and that we had seen that i could be
▶ 47:40 wrong uh ms grower you can probably correct me that we had seen some fluctuations in the i want to say six percent range in some cases it actually went down yeah it kind of does you know like this So if the rates comes down, we're not seeing a decrease in what we owe to Revio. It's still going up at 2%. That's right. Well, part of those fluctuations are seasonal. Others are, for instance, the one in the last several years was the introduction of very cheap natural gas. part of what could potentially drive prices in the region up is not a shortage in natural gas but the limitations in what the pipelines can bring to the area the the organization that that runs the utilities in new england has experienced significant difficulties in trying to find
▶ 48:43 land to build additional pipelines to keep that natural gas coming, and those sorts of restrictions are the types of events that keep electricity trending upwards. But you're right. If there were some technological change and prices weren't to increase at 2% per year over the life of the contract, eventually the graph that we were looking at may come together more closely but there is still a significant buffer that's built in there you know to the to the tune of half of what you know the city would be paying to revio and so as those prices merge there's still cost savings realized it's uh to a lesser extent and so that is the risk of this disagreement okay could i add a little for you so generally
▶ 49:39 speaking to what we've seen more traditionally is as more you know the five to seven percent increase annually recently we saw an 11 percent increase from January to June I believe it is and now we're looking at you know they're projected they're looking for like 37 percent increase now in front of us they may not get it but it's going to be significant to answer to sort of you've seen some little dips or plateaus those have been very short term and probably will not they were pretty significant it was about six percent it was about half what it in short term now the other thing i have people ask is what if it just and you know hydrogen cells become everybody's got one and the supply you know it it drops well the first thing is is that
▶ 50:25 you just cease to benefit but the other side of that coin is if there's a major market downturn or of that nature, you're going to benefit on your supply side dollars. You're going to be okay. We're going to be in trouble. It's not going to work for us. But you're going to be okay because your supply side is also going to be in that market trend. So you're just going to cease to benefit from our mechanism, but you're going to be fine because you're going to benefit from that trend itself. But, you know, there's, you're protected pretty much, you don't have any downside liability here. That's the nice part about this whole thing. You're hedging the upside. I mean, the downside potentially is if, you know, if rates crash and we don't, yeah, and
▶ 51:15 Jaclyn L. Bird: we have to still pay you at an increased rate, that's our risk. But, no, thank you very much, I'm glad we're looking into doing this, it's an interesting way to look into some renewable energy. Thank you. Very good. Alderman Burrett, if you're welcome. Thank you, Mr. Chairman. I think several of my questions have been asked and answered. One was just on the, on the billing and crediting piece. Is there any lag time between when the city is billed by Revio and when the credits are given? 30 days. 30 days, is that what it was? We have to pay in 30 days. Yeah. Yeah. okay that's the only okay and then um can you talk a little bit further about the typical timeline for a community um that part you know joins this agreement uh during the first year what that would
▶ 52:07 Jaclyn L. Bird: look like or do we not quite know because the sites haven't been built so there's not really a typical model yet is that correct like if you're if a community enters into an agreement for net metering the first year could look very different from community to community based on if the site has been built and all of that yes okay yeah it really could it's almost case by case okay there's a lot of factors there but generally speaking it's because of the way the application process is set up at this point in time anyway if we're approaching you for a net metering agreement you don't have something built yet because you wouldn't be able to put an application in on the site so it's you know and i've run into that a lot lately people say oh yeah we've we've got this
▶ 52:49 site ready to go that but and they're all over people to get the net meaning agreement I said how can you have a site ready to go if you don't have an agreement to be an off-taker or an off-taker you're you just those are mutually exclusive but again there's a lot of variation so if we did a half megawatt site we can build that we can we get expedited processing through the utilities feasibility studies and an impact study if you will we can build that you know that can be a 30-day turnaround through the grid we can build that in 30 days you know we can we can start fulfilling us your thing reflexively if you have a larger scale project anything over like two megawatts you're probably you know that could that could be up to a year to get through an
▶ 53:33 impact study so they're actually they're giving us incentive obviously to build smaller use brownfields rooftops landfills parking lot coverages and that kind of thing which makes perfect sense because you don't want to be going and cutting down 50 acres of prime timber to save the environment so I think this is a great I great thing but long and short of it is it depends on which scenario you were at and what the available land is related to your project we have you know the project in Abington we have already several small sites that we know we're going to be able to build quickly so we'll probably be you know whether permitting we could have stuff for them first quarter next year okay ready to go excellent
▶ 54:19 Peter D. Mortimer: that's all i have for now thank you thank you very much and then we'll have all of them in mecca to my goals after that thank you very much chairman Tramontozzi um i i caught your title charles if i may call you charles and what's your title please ryan uh i'm a senior renewable energy analyst with the cadmus group all right and you're acting as a consultant for our city that's right He's been representing us throughout this process. All right, just want to get a feel for the players. And now, Ryan, you mentioned that this is something we need to grab fast because other people will grab it if we don't. Now, when a used car salesman tells you this deal, you got to buy it today or it goes away, you get askance.
▶ 55:05 Peter D. Mortimer: Right. In your case, I think you're a little more sincere than that. And we did face the same situation in 2004 when we started building the middle school. We had to get on the train or get left behind at the platform. And we did get on the train and it worked out excellently. So I don't think that's the case here. I think it is something we have to do. Something I'd like to hear a little more information on is The locations have been nebulous at this point, although a few words just mentioned in your final, in your last answer that you have Abington in mind. You said there won't be any within the city of Melrose? Correct. Definitely not. No way, all right. So that takes away my next question was, what would we do about wires?
▶ 56:01 But if they're not going to be in Melrose, the wires are going to be someone else's problem. one thing please that is um and originally our initial meeting Martha was you know basically she said we don't really have any suitable Brown you know brownfields rooftops or any of that nature and she was clear on that from the get-go so this is actually I use the example because this was a perfect example of where net metering really could be a play for people who who just didn't have the space for it or the opportunity whereas you know many of the smaller towns you know further out by 495 what-have-you they have all have a landfill that they'd like to do something with there's farms around or what-have-you people who have brownfields what-have-you but this was a
▶ 56:52 Peter D. Mortimer: good example where it was prohibitive to do it here reasonably and you were able to but you're able to participate because of the net metering regulation So it's actually a really good example of how it works for folks. Right. All right. I'll skip on the question since you mentioned central mass. I know in Bolton and Lemonster, they're trying to bring in another natural gas pipeline. I think from the big gas head that's in Tennessee for us. But a lot of people out there are fighting the pipeline, which might drive the price of natural gas further. Everybody just switched, and now that everybody has switched, the price of natural gas is starting to creep up, because now everybody's on the hook.
▶ 57:36 Peter D. Mortimer: It's illegal to have an oil system and a gas system in the same home in Massachusetts. You must have one or the other. But in regard, a little follow up on Alderman Medeiros question. The downside, if everybody did suddenly, if somebody came through with a hydrogen cell, you mentioned that made electricity dirt cheap, would be the downside, would be that there'd be no upside. Correct. We can't lose. Right. We can only not win. Correct. All right. So that's a little bit of a relief. And then if you want to weigh your offices in San Jose, California- Well, I'm here in Massachusetts. You're here in Massachusetts, right? That's exactly. The Revio is in California, San Jose. All right. Synergy Energy is a Massachusetts company.
▶ 58:28 Peter D. Mortimer: All right. For that reason in particular, is that I was, five years ago I joined a group of engineers, and I was put in a position to prove the market in Massachusetts. So I've been doing that, that's my, so I'm here in Massachusetts, I'm a local, I'm not going anywhere. All right, thank you, and not in Melrose. That's good news because our parkland and conservation land is pretty limited. We're close to Boston, and one of the nice things about Melrose is we do have some parkland and conservation land. Right. You did mention Abington, but are there any other locations? I'm on the Melrose men's soccer team, and we play Bolton, we play Air, we play Harvard Mass, so are you thinking more out that way?
▶ 59:12 So, there's different load zones in National Grid. We happen to be in the northeast mass load zone, they call it NEMA. Bolton, Lemonster, and so forth are in the western central mass load zone. We can't mix those two jurisdictions. The sites that are proposed for Melrose are in Haverhill, Boxford. There's three large farms in Haverhill and one large farm in Boxford. Those are your primary sites right now. Right. And then there's a fifth site that's also up in the Bradford Haverhill. Bradford's a village of Haverhill, and so we've got five large sites there that are targeted within your same load zone. Okay, the northeast load zone. Does that answer your question? It does, it does. Thank you very much.
▶ 1:00:04 Peter D. Mortimer: And in article 5.1, it talks about we have to make our payments within 30 days. As Alderman Bird was referencing, and this would probably go to Martha, and it might be a question that we might have to get further information on from Patrick. Will we need to create another revolving fund or a capital fund to make sure that the funds keep coming in and going out? And we can keep up with our payments and receive our payments. Do you think this will require another revolving fund to be put into place by the Board of Aldermen? I could ask Patrick about that, but I don't expect it to. I mean with a 30 day window, a payment window of 30 days and then interest begins to accrue at the interest rate from the glossary of terms.
▶ 1:00:52 Peter D. Mortimer: We certainly don't want to get stuck with any interest for late payments because we have reserve accounts to make sure and our bond rating is good. We have a triple A bond rating here in Melrose for you gentlemen and we're happy to have it, very happy to have it. the mayor and this board has worked very hard to make sure we have it and keep it um but we probably would have to have a revolving counter or some type of account about that that will come into get that paid thank you very much um a lot of this contract is boilerplate there are a few attorneys here on the board some who are city solicitors deputy city solicitors some who have been city solicitors so we're used to this contract material but it does talk about
▶ 1:01:40 Peter D. Mortimer: a force majeure if something terrible would have happened i won't go into i'll leave that to everybody's imagination the terrible things that can happen in the world today um but who covers the insurance is there insurance on this contract and what type of insurance i didn't see anything what type of insurance is in place to protect this right they so that yeah there's insurances on all the equipment and so forth obviously to you know make sure we don't not perform right okay you know yes it's a whole portfolio of insurance that we we keep on the project right we the developer owner right yes And it says that if there is a beef, that this gets arbitrated by a single member, and if we can't agree on an arbitrator, it goes to a selection purpose of the American Arbitration Association, if there's a problem.
▶ 1:02:37 Peter D. Mortimer: I think that's the way we set it up, right? That's right, yes. All right. And that was by the request of city solicitor. Right. Yeah, that's the standard, and I just wanted to make sure, because Robert's very good, and I just want to make sure he goes to arbitration all the time, as you know, and it's a good thing. And in section 3.7, you can tell this is the part that's not boilerplate, because it talks about performance, and the font is different. And when you're reading along in a contract and then suddenly you see different font it says, seller shall deliver to buy utility credits measured in kilowatt equivalents corresponding to not less than 85% of the estimated annual production. For each year of the initial term shown in exhibit E, parentheses,
▶ 1:03:34 Peter D. Mortimer: the minimum output guarantee, end parentheses, as measured in each year for the first two contract years. It goes back to regular font then. Thereafter, by the average of such utility credits for such year and the preceding year. So I imagine this has all been hammered out. Yes. This act, this performance. This is not the time or place, you've hammered it out on our behalf, Ryan? Yes, this actual paragraph, there was a lot of back and forth. Well, I can tell. I can see by the font change, I can see that's where all the changes were made. We were pushing for the industry standard or what? Right, what we've seen for the Massachusetts market is somewhere between an 85% performance guarantee and a 90% performance guarantee.
▶ 1:04:25 And a true up period, which is that two year, the first two contract years that are referenced, that not more than three years. So we've agreed on a two-year true-up period. We typically see the market in Massachusetts yields no more than three years for that. So in that instance, we're doing slightly better than the average net metering services agreement that we see, and we're right on par as far as the performance guarantee. And through part of those discussions and those negotiations, Revio also agreed to lower the starting rate. We had started at $0.11 per kilowatt hour, and through discussions about this section, and in particular, the starting rate, we were able to alter some of those terms.
▶ 1:05:28 Mary Beth McAteer-Margolis: Well, thank you very much, gentlemen and lady. I appreciate it, thank you for your testimony here this evening. That's all I have, Madam Chair, excuse me, Mr. Chairman. Thank you. Madam McAteer-Migolas. Thank you, Mr. Chairman. So I'm not a lawyer, just want to disclose that right away. But so what that means, maybe Ryan, you can explain that, the 85%, or maybe Martha can explain that, because she's just like your average bear like me. um except she's smarter the 85 so let's say it's we're supposed to have get five kilowatts whatever it is megawatts that's right um this language says that we only may get 85 of that in the first couple of years so um because of weather variations and and that sort of
▶ 1:06:24 a lot of factors outside of the control of the owner there's an expected output per year and with considerations to things like weather variation and simply so the resource the solar resource being available as in the Sun is shining as in the Sun let's speak let's speak language let's get away from the you know yeah okay as in the Sun is shining and it's not shining for a month in clips or something right yeah that's right the the idea of this performance guarantee is that Melrose wants to be able to count on some expected cost savings every year from this system and so that's what this performance guarantee is is really protecting against that if for whatever reason the system significantly
▶ 1:07:26 Mary Beth McAteer-Margolis: underperforms then Revio would pay damages or I for lack of a better it could be cure if there were cure options we obviously would you know if it's underperforming we could add from another site as an example so there's opportunity for cure all the time but then yes it would be if there were you know something was major and we we would have to then be liable for not performing so are there opportunities for instance to renegotiate the rate to a lower rate is that type of language in here I didn't see that no that language not included no they would not have agreed to that in order to get it built so um and one of the questions i had and you kind of touched on it with with this particular um section was how did
▶ 1:08:24 we how did we arrive at the rate of of 10.57 or whatever it is right um well revio had proposed two options for payment the first was what we what ultimately was was decided on this fixed rate with an annual escalation the alternative was a essentially a discount revio would look at the price of electricity that uh or sorry the value of that net metering credit and guarantee a 20% discount on that net metering credit. And so in that instance, or to work with the numbers that we have, 15 cents per net metering credit, Melrose would be given a 20% discount, and that would be the price that's paid to Revio for each net metering credit. That option is essentially the less risky option you can end up upside down with net
▶ 1:09:35 metering prices dropping significantly. However, you also significantly lose out if electricity prices do rise because your costs are also increasing at that same clip. The way that we arrived at that price was 11 cents had been proposed originally by Revio based on Cadmus' experience working with communities on these type of agreements. We had previously seen deals right around the 10 to 11 cent mark. Given the scale of this project and the amount of capacity that Melrose is agreeing to, we felt that something slightly below 11 cents would really be fair given the market conditions. Okay. Could I add a comment for you? Sure. Real quick. So what we refer to the first option that we did come forth with is an indexed option where you're basically, we give you that 20% margin and it follows the trend upward. It's simple. It's easy for people to understand and it's widely used because of that.
▶ 1:10:47 But when you take the, if you look at the top of the market where it is now and you give a 20% discount, you would be paying probably more like 12.5 cents or 13. By setting a set rate, you're putting yourself already at a lower savings amount and you're sticking it there. So you're not just following the market and getting a 20, you have propensity of, and that's where we brought up the hedging aspect, hedging against, there's also the propensity as much as we looked at some of the things that you brought up, there's also the propensity for a major market spike, and you're here still, and you've really, you've got a significant benefit, as opposed to following that trend on the 20% margin. Right, right.
▶ 1:11:44 On the other hand, it is, as Alderman Medeiros said, if the market goes down, then it's to Revio's advantage that we've locked it in, basically, as opposed to tied it to the 20%. Would you say that's accurate, Ryan? I would also, well, as we discussed, there's not necessarily a downside to electricity prices dropping significantly. there simply isn't the upside alternatively with with the the discount or the indexed rate that we were talking about significant price increases are really more to the benefit of the owner of that system because a larger percentage of the cost increase is going is going back to them that's a good point so it was better for us if you're on that index thing because we
▶ 1:12:41 Mary Beth McAteer-Margolis: continue our margin would grow as you went up this is putting that's reversing that trend where you tend to be sitting in a better position so Martha have you talked to other communities that have negotiated this in our area and what you know what kind of rates are they settling on is that something that they're they disclose to you and are they indexing it or anything from 10 10 The project that we have on the high school is a very similar, it's a similar, it's actually net metered. Right. The same way. That it's not, that project is not behind the meter going right into the high school, middle school. We've got a net metered contract because the savings potential over the life of the contract
▶ 1:13:27 is just so much greater. And that's at eight, eight cents and that was negotiated two years ago. So this just shows where the market is today and how it's changed and what the developers and others are seeing and negotiating. Two years ago we would have been at more around nine cents, but we've had significant market change with especially legislation and things of that nature. So the models had to be retooled, the financial models. what we've done is actually with this 10.5 i believe we're pretty much right at you know right in there with everybody that i've and we're doing this a lot so i i i've seen a lot of them and i would say actually it's probably a little advantage it's on the lower side of market
▶ 1:14:15 Mary Beth McAteer-Margolis: standard market so can you what other communities has revio actually contracted with to do this Revio actually is a brand new company, but Solair, we funded, as I said, about 20 megawatts so far in Massachusetts over the last few years. They did a couple projects in Westboro. I talked to the town manager there. They had just finished up a couple big projects. I was sort of trying to get my head around who Revio actually is, because you said that you have a lot of lands like available to you or under your it's it's called land control okay essentially those are land lease agreements okay and but then other people are actually like building the solar farms you you like you don't actually what we're referred to you like a group of investors is that it yes okay
▶ 1:15:12 Yeah, so actually we are a group of, as I said, we have different technologies. One company has wind technologies. One company has solar technologies. We are partnered with groups that actually manufacture panels, manufacture racking, manufacture LED lighting, water technologies. These are all joint venture groups. You will find, and it's quite normal in this particular market, you'll find one two three maybe four different companies involve you have a funding company you may have the the actual installer you're gonna see several different names that go through the process because in some cases you might we match particular sites and projects with the criterion of different investors they all have different criteria if you're doing a rooftop you
▶ 1:16:06 Mary Beth McAteer-Margolis: have different investor and wants rooftops so the we we lock in with so you're sort of the middleman we interface here between the money and the people that are actually producing that energy yes we're the facilitators we're the aggregators yeah okay so your role then in terms of our in ensuring our confidence in this program your role your your our go-to people yes if your guy who's building those out in the fields goes under that's your problem that's right at no point are we going to be having any kind of a risk that either your investors lose all their money or your solar panels get destroyed by a hail storm or none of that is on our no risk list correct and just to be clear is that you know if we go and invest and it's about three million dollars per
▶ 1:17:11 megawatt so this is a large-scale and but this is a pretty large-scale investment and once in the funding is done I mean this is a passive system is power wash it like quarterly and it's like good to go so that's not a major concern once so if you can if you can actually fund it get through the interconnection charges and all that goes along with this upfront cost the idea of sort of like going bankrupt I don't get it because we're we're just we've already created this money-making machine you know I could see a transfer and ownership that could happen but that doesn't really affect you somebody else is going to take over and it behooves the owner of this thing to make it be running you know we remotely every single panel is monitored remotely
▶ 1:17:56 because if it's not working we're not making money we want to maximize the money we want to turn over our investment in five years not seven we want to make money on this thing you know so it behooves us to be right on Johnny on the spot and make sure those things are clean running and we're all getting what we need to get out of it and again I think there could there's I've seen many examples of perhaps a transfer of ownership but that's addressed in your in your document and again that you probably wouldn't even know if that happened and if somebody didn't tell you because the panels keep going and making their harvesting ions nobody's gonna pull the plug on themselves I you see I'm saying does that answer does it help help you it
▶ 1:18:43 Mary Beth McAteer-Margolis: helps the one other thing I had a question about Martha in terms of what I'm alderman waterman was saying within the 30-day piece so we'll be basically like getting a bill just let's say it's a thousand dollars for the month from National Grid there'll be a credit on that of somebody do the math when are you smart guys just use nice easy numbers okay well have a credit of 200 $100,000 right so we'll have a credit and the credit will then it'll come off the national grid bill but it'll be paid to revio and that will be like they'll send us a separate will be paid off to them yes and the treasurer's office and all those people have basically signed off on this type of a billing okay well you've already done it right you're already doing that metering with your
▶ 1:19:40 other projects so you have it might be a smaller scale but they understand the mechanism i think for the billing right okay thank you that's it excellent i think president cohen might have the last word yeah i i wasn't going to talk about the funding but the city pays hundreds of bills every month we pass a budget money is allocated into accounts the money doesn't have to revolve it can be paid by a warrant we don't need to the last thing we need is more revolving accounts in the the city of Melrose. These bills can be paid like any other bill, so I don't think anybody needs to be concerned about that. One question I have is, if I wanted to call a community which has an agreement with you under this name
▶ 1:20:26 or any prior name, is there a community in eastern Massachusetts that has a net metering services agreement that's been in effect long enough that we could call up and say, how has it gone? You will probably find, let's see, I would say Westboro. Westboro's been probably on long enough. They're probably maybe two years up. Okay, and they have a net metering services agreement? See, what we have to, prior to the net metering agreements, people were actually signing what they called direct, their power purchase agreements, which were, they had some flaws in that it was public procurement. It required nearly an act of God to, because it was a 20 year term, so you had to go through town meeting
▶ 1:21:16 and it's a whole thing to get that to happen. But see, so what I'm trying to say is there was a different mechanism in place two and three years ago that was highly flawed and this has replaced it over the last year or so. So I'm actually, it's a little hard for me to say It's something that's been in place for three years because the mechanism is not necessarily three years old. We are using a different mechanism from the net metering agreements, the net metering regulations prior to this earlier in the state. Okay, but they're operating under a contract like this and have been for a couple of years? At least a year probably, yeah. Okay, and one of the things I'm sure you understand is You see great conservatism from municipalities because we aren't allowed to go 20 years on contracts.
▶ 1:22:07 This is not something that we generally do. There are only certain types of contracts that you're given special permission under state law to go 20 years. So a 20 year commitment is a long commitment for us to make. It's not something that we routinely do. So this is a little bit out of the ordinary for us. And that's what gives us pause and to cycle back to where I started. I wonder whether anything that is in existence now is going to be viable over the same 20 years from now. So the technology, and I have full confidence that the team negotiating for the city negotiated good terms for us. I certainly don't know anything about what appropriate rates per kilowatt hour are or what the market is paying.
▶ 1:22:56 So I don't think that's within our purview. I'm concerned about the length of the contract. I would like to have some feedback from some community that's working with you that has an agreement that can tell us that, yeah, things are going great. But those are my concerns, Mr. Chairman. May I rebut? So I understand your concern there, and also the length of contract. I mean, I do want to point out, though, that this is not a procurement, you know, as a, it's exempt from 30B. I understand that you're funding very expensive projects and you need commitments that fit your business model, I understand. And also that, in fact, if it fails, you know, like you said, will something like this be even in place 20 years from now?
▶ 1:23:48 again i think the the main factor is if there were say a complete legislation change or you know the the something happens you just cease to benefit from the arrangement that's i think the the best part is not the best part but i think it's important that there if the system or the mechanism or the document fails you just go back to business as usual and you don't benefit we're And we're the ones that actually will probably take it on the chin if something tanks here. No, I understand that there's no downside financial risk where we would ever have to come up with money or go out of pocket. And I do understand that the major harm here to us would be just not realizing savings, which is different than a loss.
▶ 1:24:39 Peter D. Mortimer: That's all. Okay, very good. I think Alderman Mortimer wanted to- I wanted to address the point of the revolving account. I would respectfully suggest that this is probably would be a perfect set up for revolving accounts such as we have with the rec department and the BB estate, just to name a couple. Where there are entities that take in money and the amount is nebulous. And then the bills are nebulous that come and go with the rec department. They take in a lot of money, it comes and goes. It's true that with a lot of departments, we allocate a certain amount at budget time. And then at the end of the year, as we all know, in April and May, we play the appropriations and transfer game to balance everyone's books for the people who are ahead and the people who are behind.
▶ 1:25:26 John N. Tramontozzi: But with the 30 day window, I think this is something that probably will set up a revolving account. But if we do accept this contract, which I'm inclined to think we are going to, we will see. we will see whether patrick asks for revolving account or not only the future will be able to tell thank you very good i can predict my future we should wager it let's wager it all right then i think um i think that's is is there any further discussion all right seeing none uh we we want to thank you for your presentation we appreciate you coming for tonight uh is there a motion on the floor motion to recommend for passage all right we do have now a motion to recommend for passage second by alderman mortimer it's a second by alderman
▶ 1:26:16 John N. Tramontozzi: bird any further discussion seeing none on the motion all in favor any opposed seeing none thank you this uh will be uh recommended to the full board uh for our next meeting for a final vote vote and we appreciate your presence thank you and I don't see anything else on the agenda this evening so we have a motion by alderman a bird for adjournment in the seconded by Alderman Mortimer on the motion all in favor any opposing none we are adjourned thank you good evening