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City 0/ Sy;r~JiCiUJ§e

Prepared by:

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City a/Syracuse

Feasibility Reporl

IEXlECUlfllVIE SUMMARY

Residents and businesses of the City of Syracuse have been voicing their concerns about the energy
services provided by National Grid (formerly Niagara Mohawk), including the high cost, reliability
and overall customer service. In 2005, the Central New York Public Power Coalition (CNYPPC)
formed a citizens group advocating for public power. In May 2008, The City of Syracuse i sued a
J
Request for Proposal for a firm to complete a Public Power Feasibility study. SourceOne was awarded
the contract.

The process to perform the feasibility; as agreed to between the City and SourceOne is to provide ~he
following distinct tasks.

I. Data Collection
2. Develop electric supply model options
- Report oui to the CifY, and gain feedback on prL ceeding 'with Tusk 3
3. Full development of Chosen Supply Option.

This report is the summary and findings of the data collection anci supply model option developml~nt
tasks I and 2.

During its data collection efforts, SourceOne met or discussed the: drivers with various stakeholders I
within the City, including the Central New York Power Coalition. In addition there was a complete
review of previous studies and data specific to Syracuse. a.s well as ther national studies conductee! on
this issue. Regulatory information was also reviewed, which included a discussion on the regulatory
implications \vith members of the New York Public Service Commission. Finally, during the ata
collection effort, dialogue was held with various representatives of municipals, publ ic associations,
and various stakeholders within New York or elsewhere in the United States that pursue similar
efforts or had knowledge on the topic.

In meetings \vith the local constituents, the following drivers/goals were identified on why 'this
initiative is being pursued:

Pursuit of a program that provides:

I. Public Control
2. Is Economically Beneficial
3. Is Environmentally Supportive
4. Reliability Betterment
5. Customer Service Improvements

Several operating models were identified and investigated that adJress the drivers that were out I i ed
by the stakeholders. The models/structures include Aggregation. Municipalization and in addi'tion,
Cooperative has been broken down further into additional operating structures.

The following is an overview of models presented within this report:

ourc One -2­

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Feasibilit5,' Report

I
Aggregatao Irn

Aggregation is the process in which energy is sold to consumers \\ ;1'0 have joined together as a group
to buy a product and in this case, electricity. By joining together, t~e members of the aggregation can
buy large blocks of energy thereby potentially reducing the Sl; plier's administrativ~ costs for
providing that energy,

A municipality is a public power company, which provides powei ,md related energy services to the
consumers within its territory. The city or county acquires the O\\nershjp of a utility's distribution
systems and assumes operating responsibility.

A utility Co-Operative is a private I} owned electric utility, ownd b tbe consumers it serves (its
members). Co-Ops have been established to provide re]iabl~ service at the lowest possible cost to (he
consumer. In doing so, there is no profit. Further break down of tt Co-Op structures include Rural,
Buying (Paper Generation & Transmission) and Generation & Transmission s (G&T Co-Op).

Assessment Against Key Drivers

EiH;h structure meets the stakeholder drivers with varying de.arc-es. The following matrix below
provides an assessment of the City's drivers behind this feasibi ity study. Detailed discussio IS
contained within the report.

SourceOne has relied upon certain information provided to us by sources ki'01!'/l to be familiar with the topics cojJered
within the report, to form recommendations, While we believe the use 0;' Slich information and assumptions 0 be
reasonable for the purpose of our assessment, we offer no other as,mrances thereto the accuracy, and some
assumptions may vary Significantly when applied within the Syracuse area c( Yell' York due to unforseen regulatary or
legal rulings II'hich Ivill impact the ability to implement the recommendatioll5,

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Positive 1m 'act )lcdiurn

Aggre aior Co·Operai;;·ve MuniciJ:lali

Prioritl Paper G&T I Distribution
------..,.---._-_._-----~-

Public

Control

Lower

Supply

Costs

Economic

1--_-----'-VI..::;.·abilipL_ _-+ t
Environment
If---=,,:: al Benefits-...:.;..:..:'-----!
'.
t"-/
~
Pow r - - -"
.alia illt! ,I i _ .
,
Customer • 1

Service _..._ ~,}.~.:...L.,-I_I~" """.

The matrix below provides an assessment of the City's diffiwlty In implementation. Detailed
discussion is contained within the report.

.!mll!Jemenzation 'f dium

Aggregatoi' Co-Operatin M
.......,~_Paper G~T I-------=-D-:-is-I-ib-u..,.--ti-on---+--------'c.--<------I

Complexity

Cost
Regulatory
Ease
Organizational
Requirements
Timeframe

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Feasibifi/, Report

Observations

A review of the key matrices shows that although highly aligned 1,\ ith the drivers, formation of a , or a
Municipal are 'iery difficult to implement. Consideration needs to be thought through for the cost a1'ld
difficulty to implement, in order to gauge if there is overall supporl to mo e forward with a particular
model. Consideration should also be given to an alternative that provides a starting point to gain a
foothold toward addressing the drivers and setting the stage for the ability to progress to another
model. By way of example, forming an aggregation or buying, and making progress toward addressing
cost drivers, ga:,ns the consumer's trust to proceed and evaluate a: a later date, moving forward with
developing a full Municipalization or G&T Co-Operative.

Next Steps

Upon review by the stakeholders. SourceOne will meet to pre5ent this material to the City f
Syracuse and the CNYPPC. F llo'Ning the discuss:on, SourceOne \\ilJ await direction from the Cit
to identify one specific model to be fuJly developed \vith further atul. sis per the scope of work.

Full J)evelop;r;{!I1! o/Chosen Electric Supply Option

Based upon the preferred Electric Supply Option, SourceOne \ ill complete its analysis that wi/II
include;

() Renewable Energy Option.s

o Regulatory issues that coincide with option
o Organizational and Institutional Requirements to implemen:
o NYISO Interaction and Generation Dispatch scenarios
o Perspective on Carbon emissions Tax and potential impacts
o Proposed next steps/timetable/cost for Phase Two

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Feasibility Report

HNlfROlThUClfrrON

Since 2004, residents and businesses of the City of Syracuse have ileen voicing their concerns about
the energy services provided by National Grid (formerly Niagam Moha'wk), including high cost,
reliability and overall customer service, NGRID's rates have been ,;ontinuously higher than that of the
national, regional and certainly local municipality rates. (Refer to 'hbLe J, 1l and 111 in the appendices
for a Rate Comparison of Each Customer CLass)

In 2005, the issue of public power became a focal point in the ma) oral race and shortly thereafter, t/1e
Central New York Public Power Coalition (CNYPPC) formed, a cit:.zens group advocating for public
power. By 2006, CNYPPC and the Common Council's Public W,xl<s Committee held public forums
to educate citizens about the benefits of public power

The Common Council issued a Request for Proposal for a firm to cc'mplete a Public Power Feasibil ty
Study in May 2008 and selected SourceOne Inc, to conduct this feasibilil' stud .

Project Scope

In Phase I of the study, SourceOne explores options and develops business models for providing m )re
affordable and reliable energy with responsive customer service. This will include an evaluation of
how well each model meets the following objectives, as described i" the RFP:

!. Provide optirn::tl electric service to municipal residents and busi;lesses at a minimal cost
2. Pursue local energy independence and renewable sources to imxove local environment
3. Reduce the carbon footprint and lessen the City of Syracuse' ccntribution to climate change.

Each Electric Supply Model will undergo an analysis, which wil.! <lttempt to accomplish the folloy ing
six goals;

I, Determine the relative magnitude of costs and risks of each alte:mative identified (presumably there
will be more than one), This will indude a discussion of the pros wd cons of each alternative,
2, Determine which of the alternatives appear to have potential ,:ost saving benefits to Syracuse. I,m
general, we will measure this against the status quo; i.e.. current aId futL re NGRlD power costs to ity
customers,
3, Determine how the potential cost-effective alternatives rank from best to worst.

4, Provide a pros and cons discussion to assist the City in assessing .t5 willingness to accept the costs and

risk associated with each alternative.

5, Provide an estimate of the time frame required for imp'lementatiol.
6, Provide any other relevant conclusions and recommendations.

SourceOne will present those models to the City of Syracuse. The presentation wiLl illustrate the pros/cons,
hurdles, barriers, and relative magnitude of costs and regulatory considerations of each option, ThelCity
will then identify one specific model to be fully developed, with further analysis, to be explored in ~hase
One,

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BACKGROUND

The following provides a history of the deregulation in the State Jr New York. It also provides
unforeseen issues that have arisen from the deregulated electrical markets.
,L
In 1994, the New York Public Service (NYPSC) commissic:.l bega a multi-party "generic'
proceeding to examine competitive opportunities in the electric in"lIstry. Electricity generation costs
of New York's largest utilities were high in relation to other stateSli'ld in relation to the marginal costs
of production of ne\-v gas-fired combined cycle power plant. I In ~,996, the NYPSC embarked 011 a
series of "rate/restructuring" settlement agreements. They creatd a vision and multi-year plan for
deregulation with the following key goals:

I. Lower rates for customers

2. Increase customer choice
3. Continuing reliabili. of ervice
4. ontit1uing programs that are in the public interest
5. All~ying concerns about market power
6. Continuing customer protections and the obligation to serve.

The mUlti-year plan was then applied to each individual electric ut:iity and placed on a short timet Ie
with wholesale deregulation beginning in early 1997 and full ret:J competition beginning in 1998.
Distribution, transmission and generation services were unbundled by way of utility divestiture oft eir
generating plants, selling them to non-affiliated unregulated com~uf1ies. It was thought that opening
generation up to competition would result in more effective contreJ· over rates than regulation could
provide. In support of a competitive infrastructure, utilities' tra smissions systems were no lo~ger
restricted, as authorized by the Federal Energy Policy Act of 1992.

The "vision" was that competitive, efficient spot markets for energy and capacity would be run by/the
New York ISO (Independent System Operator), formerly the Ne\' York Power Pool. All generaf.0rs
whose bids are accepted to meet the load at any given hour are p.lid the same market-clearing price.
Competition among owners of generation would, in theory, indue them to bid their energy supply at
their marginal operating cost. Those more efficient than the last and most expensive unit to run w0uld
reap the margin between their costs and the clearing price. Those whose marginal costs were higher
than the clearing price would not run.

There were early warnings from academic researchers that repetit;\e hourly auctions could be easily
"gamed" to the mutual benefit of the participants. However the warnings were ignored andl the
enthusiasm for deregu lation continued. Consequently, rates have increased and become much more
volatile largely because of the impact of volatile wholesale spot market rates being passed throu~h to
retail customers.

1 Electricity Deregulation in New York State 1996-2002, p1, Norlander, Gerlad

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Feasibility Report

Along with the above issues, deregulation of the generation marke~ made another serious issue corne
to the surface, capacity constraints on the transmission systems. efore deregulation, transmission
systems were operated such that the electricity traveled over the transmission systems in a mbre
localized fashion. Local Distribution Companies (LDC) utilized [heir own transmission facilities, to
transmit electricity from the generating plant owned by the LDC. Those generation facilities, could
have been very inefficient and expensive to run, however since thl: costs were regulated, the utilities
had no incentive to build or upgrade old inefficient plants. Wit:1 deregulation, the plants with ~:he
cheapest operating costs or "bid costs" are chosen to run regardt'ess of their location. Since the
transmission system was not created for such a system, certain are,,;s became bottle-necks for the flow
of electricity and have created problem areas on the transmission s) stem. With the competitive maiket
being what it is, the transmission facilities are built only if there willi be a payback. In most cases this
payback does not meet the criteria for an au to implement un less there is an increase in the rates to
fund the various upgrades or installations.

Typical Supply structure

Figure I above illustrates the basic physical components ofa deregulated electr.'c supply system. 2

As noted, the above information is provided to describe unforeseen other than the local LDC pricing
that have impacted costs to Syracuse Consumers, since deregulation occurred. These factors need to
be considered \-vhen choosing supply options.

2 Electricity Deregulation in New York State 1996-2002, p1., Norlander, Gerlad

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Feasibi/fl Report

METHODOLOGY AND APPROACH

To develop viable solutions, SourceOne statted by considering the Cit '5 objectives and by defining
the possible utility business structures, which would support these cbjectiv'es. After the initial meetlng
with the City Officials and key stakeholders, SourceOne requested ~onfimlation of the top priorities or
drivers for this feasibility as a way to guide its research and energy supply model assessmdnt.
Responses have been summarized in Table I below.

City of Syracuse Proorlties

Table IT
I
Driverr lIkSCiro:ptoon -­
Public Control Ensure a higher level of accountability In whate er
system we create - so that .he system will continue in the
future to operate aceor ing to th~ eeds and priorities of
I the community it serves.
Economic Concerns Lower costs for residential consumers and commercial
customers; thereby retaini:lg existing businesses In the
City and stimulating economic development to attract
new business.
Environmentally Develop goals and objec:ives designed to protect the
conscious energy env ironment. Purs ue ener!,) initiatives that support our
""f-........ : ..... "" ....
'- ftU'~CJ environment and strive to reduce th_ Cilrhon footprint in
Syracllse.
Power Reliability Respond to power outag~s and restore services In a
timely manner.
Customer Service Provide a variety of com enient channels for customer
service inquiries and service order requests.

SourceOne then went on to identify the alternative utility business structures available to address those
drivers identified by key stakeholders. The definition and operational model for each alternative ~vas
identified and then evaluated against the above criteria. The opeLltional model was also assessed for
the following:

o Advantages and disadvantages

o Risk and complexity associated with forming the structure
o Financial and regulatory requirements

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 Cilyoj yraclIse

Fe lsibilily Reporl

OPJERAlrllNG MODJELS

SourceOne identified three utility business structures, or operating models, \vhich will address the
priorities of the City of Syracuse and the drivers, identified by the C ·YPPc. They include:

]. Aggregation
2. Municipalization
3. Co-Operative

This report describes these structures, the operational framework. implementation process, bendits
and risks, as well as the financing and regulatory implications. And finall ,each structure is evaluated
against the drivers. This report is intended to be high level, witi' higher level of analysis pending
feedback from stakeholders on the appropriate model to pursue.

Aggregation is the process in vvhich energy is sold to consumers \\ no have joined together as a grdup
to buy a product- in this case, electricity or natural gas.

Operational rrame'vvork

By joining together, the members of the aggregation can bu) large blocks of energy thereby
potentially reducing the supplier's administraJ.ivG costs for proviJ'!1g that energy. This places the
aggregated group in a better position to negotiate a lower price for its power supply. The lower price
can then be passed onto consumers in the aggregated group as savings on their energy bills. It sho'uld
be noted that this sav,ings peltains only to the supply portion of the ~:'1ergy bill. The delivery portio' of
the bill continues to be provided by the local investor-owned utility and is not eligible for aggregati9n.

In this model, the buying group would require the support of an agg~egator or broker. The aggregator
acts as an agent for the group and will review energy supply options offered by Energy Service
Companies (ESCOs). Agents also negotiate offers and make d~cisions about purchasing reliable
energy on behalfofthe buying group.

Implementation Process

Those interested can either contact the local Chamber of Commer<;e or usiness Development o(;fice
to find one or form a small group of your own. In addition to having a clear understanding of ,hat
you would like from your ESCO (supply, green power, energy e:'ficiency services, etc), your grfup
would also need to determine the following:

o Annual quantities used

o Peak times of use (daily, 'v'leekly, monthly and annuallyl
o Other interested parties to expand size of your group
o Pricing options and program you're insetted in.

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Feasibility Report

With this information available, the next step would be to forward J set of preliminary questions to a
list of certified ESCOs to determine who may be interested in your business. There are key questions
to ask the ESeOs, for example, are you accepting new customers, what pricing programs do ))Oll
have?, how will your products be billed? (Refer to Appendicn Table fV for a complete list of
questions). I
I
Benefits

There are many ESCOs providing a variety of price options as well as "non-traditional" energy-related
products and services. Price options can include long-term fixed, variable rates that change Jith
market conditions as well as options to lock-in a rate during pee:' months of energy use. (Refel' to
Appendix Attachment f and fifor electricity and natural gas ESCOe; in (he New York market today.)

The non-traditional energy-related products and services may inc.;ude purchasing ;'Green Power" to
support cleaner, sustainable energy solutions and ene gy efficl .c. programs. The ESCO 'lvil!
purchase renewable energy sources that are environmentally friend: such - solar, wind, biomas ,and
hydropower as part of their supply portfolio strategy and market i: as "green power". It s ould be
noted that Green Power can be purchased from ESCOs as well a~. your local investor-owned utility,
and it typicall; costs more than traditional energy supply sources.

For a v::lriety of reasons, it has been difficult for ESCOs to rrovide residential custom rs 'f'ith
significant savings. The cost of acquiring each customer is high and th amount of energy used by
each customer is small. ESCOs are therefore at a disadvantage in negotiating prices because tlleir
"bulk" load requirements are smaller compared to the IOU utilities. [n addition, the volatility ofl the
market impedes their ability to lock in low rates to pass on to their customers.

There are 45 ESCOs proving electric supply and 46 providing natural gas in New York. Twenty four
percent of the electric ESeOs and forty three percent of the gas ESeOs offer lo,ver prices in
comparing rate programs with NGRfD's.

A consumer must be careful to look thoroughly at the terms and conditions to ascertain true savings.
Fixed prices do not necessarily guarantee savings as ESCOs pay a premium for locking in which may
be passed onto the consumer. Also, there are "teaser" rates that ~:rtract consumers to sign on only to
learn the rate I,.vas offered for a limited time. Finally, ESCOs have b en kno,vn to impose cancellation
or switching fees should a consumer break the contract.

Financing and Regulatory Implications

There are benefits to forming an aggregation; most notab,ly its lov, complexity and minimal financial
requirements and risks beyond potentially having an attorney revieN the contract terms and condidons.
And reglil'atory requirements would include the need to contract wi:h a pre-approved ESCO.

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 City a/Syracuse
feasibility Report
I
Assessment A!luinst Drivers

There is the potential to lower costs for customers by signing on 'vI ith a ESCO for supply servicl~s,
however there has been mixed results with this arrangement. \i\i'ch the IOU continuing to provIde
distribution services, there ,is no impact on the pubic control, po,\,;:r reliability or customer service
drivers.

This option meets the City's desire to invest in the environmer,t and lower its carbon footprint,
indirectly through the green power supply options. It should be ,oted however a similar optioei is
available as an NGRID customer.

A municipality is a public power compan., " h'ch provides power. and r Jated n r~y se ices to he
consumers within its territory.

Operational Framework

The city or county acquires the ownership of a utility's distribut;cr.l systems and assumes opera~j g
responsibility. Decision-making remains at the local communit:. level, resulting in more efficient
utility management with local scrutiny over operations and service.

There are t\VO governance structures available to the municipality,

I. City Council governs the organization. Management c.f the operating entity report to the
Council. Management staff, engineers and craft workels are employed for field services.
2. An Independent Utility Board governs the organization and they are autonomous to ity
government and have an independent staff of managers. engineers and craft workers tolrun
day-to-day operations.

Implementation Process

As for the design, build and implementation effort for municipalities, the following high level steps
must be taken subsequent to a feasibility study:

I. Pursue a more detailed study (which are not funded by bonds; covered by current Icity
funds), to assess whether there are economic benefi:s of replacing the ownership and
operation of the incumbent uti,lity with municipal owr~ership and operations. 3 This study
will include:

a. Legal analysi3: review of state statues pertaining .0 the formation of a public power
utility

3 Ibid., pp, 2-3

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Feasibility Report

b. Valuation: estimating the value of the electric distrib'jtion system

c. Financing strategy: bond issuance
d. Referendum: if required by law, a referendum would be set to authorize t e
establishment of a public power utility; possibly an e:~ction
e. Assessment ofoperating & capital costs

2. Community education: to gain support of citizens, business lead rs and local official; gauge
opposition. NOTE, this step cannot be underestimated.
3. Price negotiationlcondemnation 4 ; may require hiring 0'- independent consultants if unable
to negotiate fair price
4. Evaluation of financing alternatives
5. Public service commission proceedings
6. Start-up operations: power supply & transmiSSion arrangements, system severan e
planning, organizational plan, personnel recruiting, plannin o for materials

There are a cOL'pL of other considerations Nhen designing an im91em I ation strategy. Fi t, a~ a
result of deregulation, exits fees were imposed to eliminate the lo~s associated 'vvith the local tility's
capital investments in generating an transmission facilities to provide service to its existing customers.
Should a customer choose to leave the fOU, this fee is designed to [-:lake the IOU "whole". Ov r time,
the exit fee does decrease in value and eventually expires. It is Llf1known at this point if it will be
reinstated.

Second, Rccordlng to the Public Service Commission, each cit:-, has a franchise agreement lith
National Grid and typically they are for a 25-year period. A franchise is a privilege granted by a 10 aJ
government body to a specific investor-owned utility that allows tljl~ utility to have facilities on public
property (FOR example, poles and wires in alley easements). The electric franchise contract allows
the IOU to operate exclusively within the boundaries of the lecal government and outlines ~he
conditions of service. s

Often times the local government does not fully leverage the frand:ise to bring about change with Ithe
local utility's overall performance- rates, reliability and customer s~rvice. An expiring franchise opens
the door for the local government to negotiate concessions for utility services just by way of
communicating that it plans to study municipalization. Or, a mtlre extreme approach would be to
pursue self-franchising - forming a public power utility. (Refer to rlppendix Table Vfor a complete list
ofOpportunities Upon Franchise Expiration).

Benefits

From a cost perspective, over time, lower electric rates are expect:d given its not-far-profit objective
and lack of dividends payouts. The American Public Power Association (APPA) reports that overall
consumers of municipalities pay 13% less than those served by IOUs (Refer to Appendices Tabl VI
for rate comparison of municipalities, Co-Operatives and inves.'or-owned utilities). Public power

4 Ibid., pp 5, "the condemnation process involves the hiring of legall counsel and expert witnes';8s by both parties to support their cases. jihis process
Is simil1ar to a court proceeding where there are phases that typically include discovery, depos tions, hearings, trails briefs, orders and appeals.
5 Renegotiating a Municipal Franchise During Electricity Restructuring and Deregulation., Env ronmental Services Inc, P. Hughes, July 2002

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uti lities keep costs do\vn through local scrutiny of operations as weil as sharing of resources within the
municipal operations (meter readers, billing, admin etc.) Their local presence also allows them tal be
more responsive to customers' needs.

Municipalities offer local employment opportunities and finarrcial tacking to support local community
goals. They:

(l) Create a return on investment for the city - money from utility stays in city for serviJ: s
provided locally;
o Paliicipate in strategic partnerships and joint actions \\ ith other public agencies to obtain
advantages of size; a local example would be to leveraJe the Water and Power entitid to
maximize savings on management, billing, metering and operations; and
o Leverage the APPA membership benefits that rang~ from a variety of information
documents to guide the process and describe the effort, a list of sample feasibility studies,
and a list of consultants who specialize in mUnlcipalizatic>n.

A public power utility spurs economic development in the community by meeting the interrela~ed
needs of residential, business and industrial customers, thereby making the community a more lea nt
place to live and allo\'iing it to compete more successfully in attract;ng business and employment.

There Rre "everal disadvantages that should not be overlooked. Fer one, a county or city take-over of
the IOUs distribution system can be a very time-consuming and complex process, ranging from 2 t~ 12
years to complete. The complexity along with potential opposition from the IOU can resulc in
significant costs associated with legal fees and regulatory proceedings. This can become so ove Iy
burdensome that the effort is terminated and that too has cost implications. 6 And another potential ~ost
could include stranded investment or transition charges. The argument here is that the remaining
system is of less value due to the buyer taking a part of the seller's property.?

Legal, Financial and Regulatory Implications

As previously stated, legal experts would be retained to navigate a city through the municipaliza,ion
process. There is no case in which the local distribution company willingly sold their assets all as
such, condemnation is likely. If this were the case, it would fall under New York State Law.

Regulatory oversight by the Public Service Commission would come into play if the proposed service
territory extended beyond the city limits. The exact area tru Iy depends on the infrastructure ofl the
existing system. It is rare that an existing IOU's electrical substal.ions and distribution coincide ell
with the municipal boundaries of a city or county. Therefore, tht: municipal woule! then have to I sk
the PSC to serve territory beyond its municipal boundaries.

6 From Considerations in Governmental Acquisitions of Utility System Properties, Black & Vec:ch, June 2005
7 Ibid, Severance Damages, p. t

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The Public Service Commission would also require the City to de the Public Convenience and
Necessity Certificate and the Public fnvolvement Program. The arplicant would need to dernonstra e
its ability to provide for reliable service in the territory and the staff I,.vould have a series of informatiqil1
requests to ascertain the City's ability to maintain the system, provide safe and reliable service, to
outline and describe its restoration and customer service plans. Once established, the municipali y
would be exposed to some "light" PSC regulation as related to it~ rate tariffs that are required to be
filed and approved by the PSC.

The financial commitment would materialize through price negor.iations of the value of the assets.
There is no rule of thumb on the valuation methodology and often times it is an uphill battle with t/'le
lOU. The negotiating effort could span several case proceedings and take quite some time. In New
York, the PSC has seen many inquiries none of which have reached the point of condemnation. One
of the more recent cases was with the Village of Lakewood, which :ost in t e Commission proc~edings
and the courts primarily because the exit fee was too costly and the economics could not be supported
through ra f' covery. A typical starting point fOf asses..;ing the exi):ing u iIi _ infrastruc ure is to rere!'
to the taxable records (Please refer to appendi~'es, Table VI!).

Typically a city would issue revenue bonds to tinance the purchase:. Part of the financial asscssm nt
would require a review of the loss in real estate tax revenue paid by the IOU to the city or cou~ty.
Generally speaking, the former tax revenues are compensated vi,) payments in lieu of taxes by the
municipal system.

Assessment Against Drivers

The municipal utility structure encompasses all the stakeholders' key drivers for change. With ity
ownership, local control and autonomy is available. And with local control, reliability and service has
been known to be better although comparable statistics are not available to contirm. We also note that
when comparing rate structures in a price comparison a lower cost for power and related ene1rgy
services for each customer class.

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Co-Operative

A utility Co-Operative is a privately owned electric utility, ovmcd by the consumers it serve",
established to provide reliable service at the lowest possible cost to the consumer. In doing so, there IS
no profit. 8 The low margins earned are reinvested into the infrastrJcture or distributed in the form of
"capital credits' to the members, which are essentially dividends paId on a member's investment in tHe
Co-Operati ve.

There are four different Co-Operative structures as described in the table below:

l'radiatuolDa~l1Rlistorical Non-lRulraG I
Rural Co-Operative: Paper G& T Co-Operative:

This is t'le traditional structure created by the This structure looks most like an a
N w Dea) in the 1930 to bring electri power aggregation model (acting Ii an
service to· rural areas where the nearest IOU ESCO) in that the Co-Operati e will
would not provide service, as it was not cost make power purchases in the wholesale
effective to do so. Rural Coops have the ability market on the behalf of its members.
to own their own generation whether be as a (also Buing Co-Operative). As Paper
Paper G&T or G&T Co-Operative with G&T, the Co-Operative has the ability I
generating fac ['I ities. to build/own its on generation.

Generatiun & Transmission (G& T) Co­

Operative:
Consumer owned utility, which came
This structure is comprised of many rural or about by purchasing the distribution
distribution Co-Operatives banding together to assets from the local provider, and
form a whole power coop to supply their formed its own utility. This model is
member-owners with electricity vIa owned uncommon and has never been pursui;d
generation assets. in New Yc'r~. I

Operational Framework

Each consumer is a member and owner of the Co-Operative \vith equal say as every other membel' of
the Co-Operative. They are democratic organizations controlled by their members, who acti Iy
participate in setting policies and making decisions. A member-elected Board of Directors, who ~ets
policies and procedures, governs a Co-Operative while the professional staff will implement poljces
and procedures as welt as run day-to-day operatjons.

8Historically, Co-Operatives came to be the service provider in rural areas where investor wmed utilities did not provide service because it was
believed that the revenues would be insufficient to justify the capital expenditure required. r- Jr this reason, Co-Operatives in a traditional sense of
serving rural areas have higher infrastructure costs, therefore causing power supply costs to t3 higher.

• 16­
 Ol)' a/Syracuse

Feasibilily Reparl

One of the more unique frameworks in place for a Co-Operative is the Seven Co-Operative Principle,
which are genera! statements of how a Co-Operative operates. In addition to open membership,
democratic control and autonomy, a key principle is focused 011 Ell/,cation, Training and Informatioh.
These resources are made available to members, elected memb.;rs and employees, to ensure they
contribute to the successful development of their Co-Operatives.

Another guiding principle of a Co-Operative is their Concern for the Community. While focusing on
their member needs, Co-Operatives work for the sustainable develop lent of their communities
through policies and programs accepted by their members. 9 (Refer tJ Table VIJI for a complete list ~)f
Seven Principles ofCo-Operatives).

There are two other noteworthy frameworks, which Co-Operativ~s subscribe to. First, the Electric
Consumer Bill of Rights- a series of policies geared to protecting tht: individual and economic interests
of all consumers. In particular. electric Co-Operatives want to pro~ect the right to determine th scope
of energy and other ser'/lce offer"r.gs in response to consumers ~Jld commu it:; needs. Th Bill/or
ights also supports the right to cooperat wit oth~r consumer-r\\'11 d e ,tities with common goal,
J

providing a countervailing balance of power in the market to the hU:,e inv'stor-owned utilities. (Refer
to Table IXfor a complete list a/the Electric Bill a/Righls)

Secondly, electric Co-Operatives are committed to the comnunity and the environment as
demonstrated by efforts to explore new technologies and fuel sources to control and reduce emissions.
Their efforts are discussed in more detail below.

Implementation Process

Paper G&T

The Paper G&T is essentially like an Energy Services Company Jnd therefore would need to submit
an application to the PSC to be qualified as an ESCO and cOJ"llply with other ESCO regulat/ons
(uniform business transactions and electronic business transactior capabilities requirements). At the
state level, New York laws governing the establishment and s:ructure of a Co-Operative prei,.ent
- I

another requirement.

The Paper G&T structure does allow for the opportunity to eventL:ally build or purchase gener~tion
- I
assets and become a true G&T Co-Operative. This model in the City'S instance would require th~ use
of the local IOU's distribution system. (NOTE: This is along the li;les of the Mathis Study suggestion)

Distribution Co-Operative

The implementation process described here speaks to the newer (o-Operative structure, which ~ould
require purchasing distribution assets from the existing provider. It requires a significant, vel/­
planned effolt beginning with a feasibility study suppOlted by a preliminary cost assessment. And

9An example of Community Concern is the operation Round-up program. Members can ele~t to have their electric bill round-up to the next highest
dollar with the difference being placed in a fund for distribution to a local charity

Ole - 17­
 City of Syracuse

Feasibility Report

equally important, a community education effort is necessary to g~li 1 support of citizens and business
leaders, to gauge opposition, and to establish the foundation for :; con incing plan/proposal to put
forth. 1O Like a municipality, this is followed by a more detailed StllJ.~:, vvhich would include:

1. Legal review of state statues pertaining to the formation cf a Co-Operative

2. Valuation of electric distribution system
3. Evaluation offinancing alternatives
4. Approval of a public referendum to authorize the establisnment of a public power utility
5. Assessment of start-up operations: power supply & [['ansmission arrangements, system
severance planning, organizational plan, personnel recn :ting, planning for materials

Engaging the investor-owned utility while conducting the in-depth s udy is critical to determi ing not
only the potential opposition, but also how the utility's assets '.vill be valued. An independent
consultant ma be required if unable to negotiate a fair price. UI j;-nately this could result in lengthy
hearings during Public Service Commi sion proceedings, increasing [he co tan '" lending the time to
implem nl. Oft~n times the incumbent au does not favor the pr'ess and ill then try to inf1at the
price of the existing infrastructure.

Benefits

Public control is considered the most significant benefit of a C)-Operative - they allow for local
control and autonomy. Each member has an equal say in the matcrs of the Co-Operative, creating a
fa~t.. efficient and flexible way for consumer's needs to be addressed. A second layer of 'scrutiny" is
provided by regulatory oversight, as Co-Operatives are subje:: to P blic Service Commission
regulations.

The not-for-profit structure has been known to yield power costs s,lVings for the consumers by way of
passing back low margins as "capital credits". As such, econorrically, they can be instrumental in
attracting nevv business while also providing 'local employment o~portunities bf their own. (NOTE:
There are Co-Operatives whose pricing are not below that of the ocet! distribution company because
they purchase supply from the same generators JOUs purchase from). II

According to our research, it appears the Co-Operatives have a \I ell-developed renewable energies
plan and many programs in place geared towards improving the em ironment, including;12

o Securing supply contracts for power generated by wind

o Own and operate a 40 MW waste-to-energy power plan:s

10.Press Release 9/7/02 The Kaua's Island Utility Co-op (KIUC) delivered over 500 letters frJm supporters of KIUC's purchase of KE to the Kaua'i
County Council' at its Thursday, September 5th meeting in the county building, In addition te the lelters, the Council received approximately 60 e­
mails and a dozen faxes in strong support of KIUC ... In addition to the letters submittej to the Council, over 400 people turned out in an
overwhelming show of support for KIUC at the PUC public hearing in May. The commission ~eard testimony late into the night with over 75% of the
in
testimonies support of KIUC. Last Spring, over 5,000 local residents signed a petition suppctng the formation of KlllC.
11 Per interview with rvlarketing Director of Kiui Co·Operative, a recently formed electric Co-O~erati"e in the state of Hawaii.; power costs are not less
than the former provider, their main drivers for take over of electric service was public control end economic improvements.
12 NRECA web-site

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Feasibility Report

(J Residential Fuel Cell Demonstration Program led by the o-Operative Research Network
() fnstallation of solar electric systems
Q Leveraging federal programs for example the Clean Rerewable Energy Bond, which offers
a "tax credit bond", an interest free loan to finance quali:~cd renewable energy projects.
() Participating in the 2006 Department of Energy's Natior!JI Renewable Energy Laboratory.

The Paper G&T benefits are much like that of an Aggregator ml,c1el because of its ability to make
large purchase for member-consumers in the wholesale market. A more attractive attribute is the
unique ability of creating an opportunity for the City to potentially become a true G&T Co-Operative.

It should be noted there are valuable resources available to assist the City in pursuing a Co-Operative
strategy, including the National Rural Electric Co-Operative f ssociation and the National Co­
Operative Business Development Office.

Paper G&T

The Paper G&T may be challenged with regards to realizing pol,ver supply savings to pass onto
member-consumers. SoufceOne knows of one Paper G&T, f="irst Rochdale, a Co-Operative
established to purchase power on the behalf of the Housing Co-Operative in New York City 200 0 ­
200 I. According to the National Co-Operative Business development Office iri \Vashington DC, this
Co-Opt:rative h<id atteiT"ipted to rnany strategies at the S3rne time- ~hat being making purchases on the
wholesale market and pursuing generation ownership. And it lo~t a critical resource that was the
catalyst and main thrust for the effort

Distribution Co-Operative

The main risk in this model is the ability to develop a comprehensive strategic plan and re ain
significant local support for a public referendum to move it forward successfully. Other risks include
the ability to take over the local providers distribution systems cost effectively and then once up and
running, the ability to provide 10\v cost power given the existing wholesale market constraints.

LegaL Financial and Regulatory Implications

The rural electric Co-Operative is subject to "light" Public Service Com ission regulations. It has the
benefit of attractive government financing through the Rural Ltility Services (RUS) progr<!.ms,
providing financial resources for capital investment. Again. these utilities were formed when there
was no other provider and so it is not an available structure for the City of Syracuse.

Paper G&T

As previollsly stated, the City would need to establish a business in the form of a Co-Operative
abiding by New York State laws as well as comply with PSC requirements for ESCOs. The financial
requirement is expected to be insignificant.

So 'ceC - /9­
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Feasibili,y Report

Distribution Co-Operative

An electric Co-Operative in an urban area has yet to be a utility stn:cture pursued in the state of New
York. This unchartered territory \-"'ould come under close scrutiny 2.nd SourceOne believes it poses a
significant challenge. First and foremost would be the difficulty of securing financing. RUS is not an
option because Syracuse would not qualify as being a "rural" territory. Secondly, it is unlikely the
City would be able to solicit complete suppry from citizens to move forward in a public referendum.
Finally, as the first a attempt, Syracuse can expect significant PSC involvement and lack of support.

As with a municipality, under the New York Public Serice Law (PSL) 99, the City would need to file a
Public Convenience and Necssity certitificate. The city must also file a tariff containing the terms,
conditions, and provisions of the services to be offered for approval prior to providing that service.
Finally, if a Co-Operative is fonned, it means becoming a local distribution company and would
therefore be subject to the same regulatory requirements applied to the existing IOU once operational.

Another regulatory requirement prescribed by Article X of the FSL is the ne d to submit a Public
Involvement Program (PIP). The PIP proves that the City is fully ..lware of the stakeholders concerns.
The applicant actively sought public participating througout its planning, pre-application certification
compliance, and implementation process. The City must demorstrate its efforts in encouraging
stakeho [deI'S to partic ipate at the earl iest opportunity in the proposeJ project.' 3

Implementing the Co-Operative model, the members would need to assess the value of the distribution
assets, negotiati.t1g the price with the IOU which could be a ler,g~hy process and no guarantee of
success. A typical statting point for assessing the existing utility infrastructure is to refer to the
taxable records (Please refer to Table VIi). This utility structure is not el'gible for federal government
low-cost financing through RUS. SourceOne knows of two organizations that could assist in the
financing of the Co-Operative option: National Rural Utility Co-Operative Financing Cooperation and
CoBank.

As in the case of a Municipality, the implementation strategy should assess and consider the
implications of the exit fee and franchise agreement.

Assessment AQainst Drivers

The distribution Co-Operative model appears to align itself quite \-'ell with the City's key drivers. As a
consumer-owned utility, public control is maximized. Co-Opera(ives have a history of meeting the
economic needs of the community it serves and is active in securing renewable energy sources. And
where it is operated locally by the very people its services, it has naturally led to improved power
reliability and customer service. However, it is un-chartered territut·y and the probability of success is
unknown, as it has never been pursued in the State of New York and therefore poses significant risk.

13 From State of New York Bared on Electric Generation Siting and the Environment, Case 9J.F·0809

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Feasibi/i.'y Report

In the table below each utility structure has been described in terms of the key drivers as defined by
the key stakeholders.

l
Priority Aggregator Co­ MmnfidiPa!ity
OperaHve
Public Control Does not allow the As member-o\' ners As an entity operated
publ ic to ensure with regulator) and/or owned by the city,
accountability over oversight, citizenry oversight and
utility operations. accountability ~= accountabi I ity exist
maximized
lower Power Opportunities exist Price compariSi):ls Price comparisons show
Supply Costs to lower the supply show customers of C0­ customer of
portion of the Operatives pa) I m'o municipaliti s' pw:\..7?o
consumers bid; less than !uU I 55 than cusom rs of
mixed results in customers; 10\\ lOUs
marketplace margins passec: by via
capital credits
Economic No impact Lower power ccsts Lower power costs help to
Viability help to retain ar:d retain and attract business
attract busines~ customers to area, thereby
Cilstomers to area, creating job opportunities
thereby creating job
opportunities
Environmental Limited impact Active industr; Low margins can be re-
benefits through he offering renewable initia.ives; investment to suppo
of "green" power under Can builc[t"own community goals for
renewable energy energy sustainability
plants
Power No impact Local control 2cnd Local control and
Reliability accountability: no accountability; no
competition with other competition wi other
corporate obje.::tives­ corporate objectives-can
can prioritize prioritize reliability
reliability improvements;
improvements: T&0 T&D suPPOtt agreement
support agreement vvith other coops
with other coops
Customer No Impact I
Flexibility in creating Flexibility in creating
Service programs most programs most desired by
desired by consumers consumers

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Feasibilily Report

In compari ng the three power supply models above, aggregation :,s least effective in meeting key
stakeholder priorities. Under aggregation, there is no public contrel and savings are minimal as they
are solery related to the supply portion of the consumer's bill.

Both Co-Operatives and municipalities are similar in terms of local ownership and control- providing
closer scrutiny on operations and keeping costs low. These modeis. otfer the benefit of having local
dollars being spent locally. Relatively smaller public power utili !es have done an outstanding job
with reliability. price and service during the recent turbulent time~ in the electricity industry. They
have been able to adjust quickfy to changes in the marketplace whi,·; keeping their focus on their core
utility mission - providing low-cost, reliable service to their consum;;r-owners.

These utility structures also have their challenges in terms of ('verall complexity and financial
implications. It can be a long drawn out process that requires signl icant planning, citizenry support,
and negotiating expertise. Co-Operatives have a slight edge over Ir nicipalities in the area of public
control beca jse the consumers or members ovvn the Co-' pemti' e.~'t th~ same time, ther is [! added
layer of oversight with t 1e regulatory requirements of Distri uric. Co-Op (. istribt rion assets are
purchased from the local utility), the Co-Operative model is met \,\ ;·th some significant challenges: I)
total consumer support for public referendum; 2) increased lik~lihood of SC scrutiny due to
unfamiliarity; and 3) securing private financing. Note, the Paper G&T has fewer and less complex
hurdles to overcome.

The matrix below provides a high level assessment of comple:~ity and costs, which should be
considered in addition to the key drivers.

Positive 1m 1 lium

A re atol' ~~unici'DaIi
Prior
Pubfie
Control
LOblJer
Sujoply
Costs
conomic
Viabilit
Environment
al Benefits
Power
Reliability

So c - 22 ­
 City oIS)!rac/lse

Feasihifity Report

..
~~ ..... .­

The matrix behw provides an assessment of the City's difficu ty In implementation. Detailed
discussion is contained within the report.

:\1 c-cliu m

Aggregator

Complexity

Cost

Timeframe

One final note, whether a municipality or Co-Operative is pursued. it is imperative the City consider
the appropriate time given both the exit fee and the franchise agreelllcnt.

CONC!LlUSrrONS AND NEXT STEPS

Having identified three L!tility structures for the City to consider, SGurceOne wei omes the opportunity
to discuss further with you and answer any questions you may have.

Full Development ofChosen Electric Supply Option

The City and key stakeholders will review the evaluation matrix and determine which alternative to
pursue for completion of Phase I. SourceOne will fuHy analyze ar.d develop the preferred structure for
the City of Syracuse and will complete its analysis that will inGiude:

o Rene\.vable Energy Options

o Regulatoly issues that coincide with opt,ion(s)
o Organizational and Institut,ional Requirements to impleme, t

() NYISO Interaction and Generation Dispatch scenarios

() Perspective on Carbon emissions Tax and potei1tial impac:s

o Proposed next steps/timetable/cost for Phase T"vo

So e . 23 ­
 City a/Syracuse

Feasibifity Report

Consistent with the identified supply model, SourceOne will outline tl:e preferred operating structure for a
Syracuse rr:unicipalutility or a utility integrated or owning generating. emits but not an electric distribution
system.

SourceOne, Inc. will develop a general description and estimated com of the facilities to be acquired or
constructed to support a municipal electric supply. Annual operating costs will be developed and shall
include, but not 'limited to:
o Staffing
o Maintenance and repairs
o Periodic Capital Improvements
o Working Capital
o Required Inventory
o Fleet and associated expenses (e.g. fuel, specialized testin&~1
o Consumables

If it is determin d that the crea ion of a municipal electric ~llppl' is a practical option, then
recom endations for the structure of a supplemental study(s) will te included to create a larger se Ice
territory with neighboring municipals.

SourceOne will provide a written report and will present its findings to a public meeting with the Mayor
and Common Council.

CONSrr][)lERA'nONS

It should be noted that there are other opportunities that warrant consideration. and that the City may
want to investigate further. These opportunities align themselves with some of the key drivers but
may offer a less time consuming, and less expensive path for m,):;e public control, lower costs and
improved service. Below is a brief description of each opportunit we identified.

Partnerships with Existing Generatinll Facilities

In nearby communities there are generation plants, Project Orange and Onondaga Plant, which may be
willing to discuss a partnership for power supply for either co-generation conversion or capacity
expansion.

Distributed Generation

Leverage existing or build additional generation for own use and retain NGRfD as a stand-by
customer. This \vould result in a smaller IOU fee.

Renewable Energv Project

The State has grant money available for alternative energy source projects. Consider a wind, biomass
or solar project \vithin the City. Partner with an ESea to purchase power and realize revenue to offset
existing power cost.

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Feasibility Report

New Co-generation Plant

Leverage the existing steam and water chilled plant; possibly cOIT.. bine with the University plant to
create a municipal zone to feed downtown buildings.

Leeislative Strateev

Provide Legislature support for moving forward on the bill introduced last rna th requesting that the
state Public Service Commission to tighten its regulation of electric utilities and change the way
wholesale electricity is sold in New York. The bill would also fo:bid NYISO from using its current
auction system, Linder which utilities buy power on the open marke:. The highest bid accepted under
the auction, kno'vvn as the market-clearing price, sets the price of wholesale electricity at that time.

This bill supports the position made in the Mathis Study and could be sup orted as one of several key
initiatives pursu d by the City.

It is also necessary to evaluate these options in the context resou:ces and effort. The table below
provides high-level estimate of effort requires.

o - 25 ­
 City ofSyracuse

Feasibility ,Report

Appeuullix
lI'aMeIT

JResadell1l tiaa !Rates Comparason l-i

0.180000 ~
0.160000 ----,­

0.140000 -- -.--­
--­
~
0.120000 1--------------------­ --­
~
i
~
O.IOOOUO
0,0800
r­ --.-National
Regional

NGRID I
ClI
)(- Lo(;~l f\lunicipal
o 0.060000­
~ ,
0.040000 -
'{ x X >.: X x >< ><
0.020000 1
0.000000 J'-------, -~--__,

i>dte Rang e

o All rates are for full-service (bundled) sales.

o Rate comparison does not include sales in retail choice state, to customers that are served by
alternative suppliers.

14 Information gathered from NIII "Ia d f; Qu" (Department of Energy), National Grid Rate DeJartment and Solvay Electric,

Sou- en - 26 ­
 Citya/Syraclise

Feasibility Report

']faMe ITll
CommclI"ciaa Rates Com;P21Il"~so!IDl:

0.200000 1

0.180000 - "'- --. - - . - - - - - ---_.---- -----­

0.160000 ~-- - - - - --- .. _--- -- ----- ---- - - . - ­

~ 0.140000 - .--_.- .. --.------------- - - - - - - - - . - - - - . - - ­

.:: _National
:; 0.120000 - - - - - -_.-­
,,:;c
~ O. I00000 .. .­
=-
I
Regional I
I GRlD
VI

~ 0.080000-' -x Local ivlunicipal,

~ 0.060000 1-­
0.040000 ­

0.020000 l'

'v x
0.000000 +-----......------,-------,----,---------­
x x x x x

\;)\;)'? \;)~; f"\\;)"'''>. AS''.>. ,,\;)\;)~ ~\;)c:;") ~Io \;)",10 ~'" \;)",'" ~!:: ",,,,'b

, V; 0v 0v
0' ",\' v'V ",\'\' 0'
\v \\-
",,,,, ,~ ",\' 0'
(11 (II
",\' ,\'
(1;
/,~
I

Date Range

o All rates are for full-service (bundled) sales.

o Rate comparison does not include sales in retail choice states to customers that are served by
alternative suppliers.

15 Information gathered from •. ala.••ae. J (Department of Energy), National Grid Rate DeJartment and Solvay Electric,

- 27 ­
 Cilya/Syraclise
Feasibi/ily Reporl

AppellHHx

'1f21Me nil
IImiliusa!l"daD lRates COTilUparnso!lill6

0.180000
0.160000 --------- ---------- .--- ------------------­

0.140000 - ---­ ------- ­ ----------­

~ 0.120000,------·---------­
It: I _ , ational
~ O. 1 0 0 0 0 0 - - - - - - - - --.-- - ------ ­
... Regional

:- 11GR!D
... 0.080000
«:
X Local [I,[unicipal
~ 0.060000 -'
,
'/
.,,­
',/

0.040000 -r
0.020000
,/
c;' x x /x
0.000000 J ---, ~-~----

Date R ge

o All rates are for full-service (bundled) sales.

o Rate comparison does not include sales in retail choice states to customers that are served by
alternative suppliers.

16 Information gathered from I I I do j ~ .. o'I(Department of Energy), National Grid Rate DeBrtment and Solvay Electric.

-- 28 -­
 Citya/SyraclIse
Feasibifit} Report

T2Me llV
Key QuestiollDs to Ask !ESOOs 17

I. Are you currently accepting new customers in our util ity area?

2. Do you provide both electricity and natural gas?

3. What are you current pricing programs? (Get specific answers here. F r example, fixed rates for
XX months; variable rates that charge by hour/day/month; variab~ rates that have a price not-to­
exceed X, and so on)

4. How will your products be billed? Will I receive one consolidated bill from the utility, or s pal"ate
bills from utilit) (delivery) ancl ESeQ (supply)?

5. Will each m~mber of our group receive a bill?

6. Wilt there be any other charges by the ESCO (for example, sign-ip fee, monthly billing fee?)

7. Do you have any cancellation fees?

8. Do you guarantee savings or any other conditions?

9. Do you provide any other energy-related products or services'?

10. How long have you been in business

I I. 'Where do you operate beside New York State?

17 Aggregation Guidelines, New York State Public Service Commission

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Feasibility Report

ApiPendi.'
TaMe V
IL 2~ Goverrnment OppOil"tU!l1luties V1Pm~ 1FTa!l1ldvis~ !Expjra~ftoa_18

As franchise expiration approaches, it is wise to identify alternative iiays to achieve the community's
goals for electricity service. Potential options for achieving these ge,als are:

I. Adopting a municipal government energy budget and audit program geared toward making
investments in appropriate energy saving improvements identified 1.1 the audit.

2. Renegotiating the franchise with the investor-owned franchisee with provisions to i prove the
price, quality, and reliability of electric service or to achieve other community goals, such as
undergrounding of portions of the power distribution system.

3. Contracting for the electric power suppiy panion of the eXI:)~:ng rranchiset:'s re p nsibiJiti s
through a cOlTipe itive bidding process, w'hile retaining tl e fnmchi~ce for loc 5 i ution services
only.

4. Aggregating electricity demand among two or more local governments using bilateral or regional
Co-Operative purchasing arrangements and contracting for a ne,." power supply provider, wh.ile
retaining the existing franchisee for local distribution service.

5, fnitiating a "community choice" market aggregation program thlt consolidates the demand of the
municipal government, residential, institutional, small business, and possibly industrial electricity
users, and arranges for power supply.

6. Performing a preliminary or comprehensive feasibility study for creati,ng a municipal electric

utility that would be owned and operated by the local government. Other options related to a new
municipal utility might inc.lude:

o Creating a new "muni-lite" municipal utility (with little or no distribution system and no
generation capacity) that purchases electricity from wholesJlers and then resells it to citizens
and businesses using the existing franchisee's local distributlon system.
o Purchasing or condemning the current franchisee's distribtion facilities and arranging f I'
wholesale power supply from the franchisee or another po\\er suppl provider.
o Constructing a new electric distribution system to replace that of the existing investor-ownl~d
franchisee.
o Building or buying a generating facility to serve the community's electric load with the
power to be delivered by the new municipal utility.
o Contracting with a neighboring utility or an engineering and management company to
manage the new municipal utility.

18 RENEGOTIA TlNGAMUNICIPAL FRANCHISE DURING ELECTRICITY RESTRUCTURING AND DEREGULA TlON" ENVIRONMENTAL
SERVICES INC, P HUGHES, JULY 2002

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City a/Syracuse
Feasibility Report

1fab~e vrr
Retana !Rates COfmparisoll l9

~C.5 i
/ 9.2 9.5 9.3 I
. _.....
~

...
/
/~.- - l'".
I'
~
8.5 -=---n
:J..
8.1
I I
/­ I'

~
II
v­ 6 S:S-5.8
vI-­ . ...
t--
rr!:
:Ail

v·f-­
vf-­ I
/i-­
/­ I ):
~ '.
:.~ ,I
~f
/­

o National average for residential, commercial and industrial custJiTIers. 2006

o All rates are for full-service (bundled) sales.
o Rates comparison do not include sales in retail choice states to customers that are served by
alternative suppliers

19 From • I r'P e~ Jflj Based on Department of Energy, Energy Information Administratn 's dat2 from Form EIA-861, "Annual Ele·~tric Utility
Report" (2,010 publicly owned utilities, 217 IOUs, and 862 cooperatives

- 31 ­
 City afSyracuse

Feasibility Nepal'I

T ~eVllH

lUst 0 Taxable Assets inl G!l:r' 0 Syrocuse

(N@tio!l1l21~ Grad &. l'\I'agam Mo!lilal'j .,}O

20 Information obtained from ~lL~m=~~=::<..:...:.=

- 32 ­
 Cilya/Syraclise
Feasibility l1eporl

Property Listed Owner Property Class Land Assessment Total Assessment FuU Marl<et Value
1020 Hiawatha Blvd E NiMo Elec Dist Out $11ECOO $405,675 $455,815
620 Park St NiMo Elec Trans Imp $86000 $200,035 $224,758
912 Burnet Ave NiMo Elec Trans Imp $7(,000 $608,610 $683,831
110 Devine St NiMo Elec Trans Imp $14: 500 $142,500 $160,112
129 Kidd Ave To Lvnch St NiMo Elec Trans Imp $9E 700 $870,635 $978,242
656 Thompson Rd Rear NiMo Elec Trans Imp $14E,000 $423,765 $476,140
654 Thompson Rd To Thompson R NiMo Elec Trans Imp $3' 300 $31,300 $35,169
631 Midler Ave S NiMo Elec Trans Imp $18~, ,),50 $525,420 $590,360
430 BriQhton Ave E NiMo Elec Trans Imp $63 DOO $589,160 $661,978
580 BriQhton Ave E NiMo Elec Trans Imp $43o.DOO $1,225,385 $1,37'6,837
1055 Glenwood Ave NiMo Elec Trans Imp $17S'VOO $283,760 $318,831
401 Velasko Rd & Onondaqa St NiMo Elec Trans Imp $95,800 $168,110 $HI8,888
I
219-23 Van Buren St & Mcbride St NiMo Elec Trans Imp $80,500 $419,410 $471,247
900-40 ClirilJon St S & Tavlor St NiMo Elec Trans Imp $1,219500 $5,227,450 $5,873,539
807-11 Fayette St W NiMo Elec Trans Imp $16500 5782,970 $8 7 9,742
431 Genant Dr & Division St \f\j NiMo Elec Trans Imp $63.', 000 $8,105,000 $9,106,742
- NiMo Flec Trans Imp $0 $414,550 $465,787
- !NiMo Elec Trans Imp $0 $33.127 $37,22'1
Teail P,lJe & Burnet Ave NiMo Elec Trans Imp I $0 1 $6,981 $7,844
Teall Ave & Burnet Ave NiMo Elec Trans Imp $0 $46710 $52,483
Burnet Ave & Headson NiMo Elec Trans Imp $0 $148,390 $166,730
Ash St - Teall NiMo Elec Trans Imp $0 $48,530 $54,528
Woodward - Teall NiMo Elec Trans Imp $0 $300,920 $338,112
Woodward - Free St NiMo Elec Trans Imp $0 $26,975 $30,309
Ash-Teall Ave NiMo Elec Trans Imp $0 $96,375 $108,287
Ash-Teall Ave NiMo Elec Trans Imp $0 $3,313 $3,722
Woodward - Ash NiMo Elec Trans Imp $0 $6,595 $7,410
Ash- Woodward NiMo Elec Trans Imp $0 $163,495 $183,702
"."' ......... .c ... "

Brighton - Headson NiMo Elec Trans Imp $U $i79,Oi5 ~~~~

BriQhton • Tilden NiMo Elec Trans Imp $0 $17,490 519,652
- NiMo Elec Trans Imp $0 $11,104,276 $12,476,715
- NiMo Elec Trans Imp $0 $2,545,092 $2,859,654
Harris - Tilden NiMo Elec Trans Imp $0 $1,723 $1,936
BriQhton - Tilden NiMo Elec Trans Imp $0 $2,392 $2,688
Brighton - Tilden NiMo Elec Trans Imp $0 $13,511 $15,181
- NiMo Elec Trans Imp $0 $27,279 $30,651
Ash - Teall NiMo Elec Trans Imp $0 $2,416 $2,715
409 Genesee St W To Crk NiMo Office Building $21)400 $591,700 $664,831
300-20 Erie Blvd W & Franklin St NiMo Office Building $6C5 'JOO $13,856,000 $15,568,539
304-16 Herald PI NiMo Parking Lot $22J JOO $245,000 $275,281
440 Genesee St W NiMo Parkinq Lot $S4JJOO $103,400 $116,180
300-24 Willow St W & Franklin St NilVlo Parking Lot $3E5000 $399,000 $448,315
301 Genesee St W & Franklin S NiMo Parking Lot $9ED 000 $1,029,840 $1,157,124
2201 Park St Rear NiMo Vacant Comm $17400 $77,400 $86,966
1900 Sprinq St & City Line NiMo Vacant Comm $71.175 $71,175 $79,972
1054 Hiawatha Blvd E & Seventh NiMo Vacant Comm ~100 $100 $112
312 Peat St NiMo Vacant Comm $2:<2400 $222,400 $249,888
498 Brighton Ave E NiMo Vacant Comm $E-, 000 $81,000 $91,011
222 Fillmore Ave NiMo Vacant Comm 57500 $7,500 $8,427
400 Barnes Ave NiMo Vacant Comm 53000 $3,000 $3,371
108 OsweQo St NiMo Vacant comm 59800 $9,800 $11,011
324 Water St W & Franklin St NiMo Vacant Comm $4Q,OOO $444,000 $498,876
800 Emerson Ave & Harbor St NiMo Warehouse $5E3700 $600,000 $674,157
SpeCIal Franchise NGRID 86" • EJec & Gas W,A 15 31J, lJ SI29,565,Jl~
Totais $7,6~ i7,925 $158,252,785 $189,048,074

• Denotes assessment of National Grid listed property under "Special Franchise" a:1d does not exclude gas utility

eC - 33 ­
 oJy ofSyracuse
FeasibiliJy Report

Table VRITrr
Seven IPrfrncipQes of Co-Operatuves cI

Several Co-Operatives list on their respective websites the Seven Co-Operative Principles (also
known as the Rochdale Principles) listed below, which are a feneral statement of how a Co­
Operative operates (as opposed to traditional investor owned utilities):

1. Voluntary and Open Membership

Co-Operatives are voluntary organizations, open to all persons able to use their services and willing
to accept the responsibilities of membership, without gender, so~ia!. racial, political or religious
discrimination.

2. Demo ratic. ember ontral

Co-Operatives are democratic organizations co tiOlIed b" tlleir me:Tkers vho actively participate in
setting policies and making decisions. The elected represennives are accountable to the
membership. In primary Co-Operatives, members have equal voti"g rights (one member, one vote)
and Co-Operatives at other levels are organized in a democratic maimer.

3. Members' Economic Participation

Members contribute equitably to, and democratically control, the capital of their Co-Operative. At
le(l'~:;t r::lrt of that capital is usually the common property of the Co-Operative. Members usually
receive limited compensation, if any, on capital subscribed as a conditio of membership. lembers
allocate surpluses for any or all of the following purposes: develop~r.g the Co-Operative, possibly by
setting up reserves, part of which at [east would be indivisible; bel~etiting members in proportion to
their transactions with the Co-Operative; and supporting other activities approved by the
membership.

4. Autonomv and Independence

Co-Operatives are autonomous, self-help organizations controlled by their members. If they enter
into agreements with other organizations, including governments. or raise capital from external
sources, they do so on terms that ensure democratic control hy thei, members and maintain their Co­
Operative autonomy.

5. Education. Truinjrlg. and Information -­

Co-Operatives provide education and training for their members, elected representatives, managers
and employees so they can contribute effectively to the development of their Co-Operatives. They
inform the general public, particularly young people and opinic n leaders, about the nature and
benefits of cooperation,

21 From NRECA web-site

- 34 ­
 City a/Syracuse
Feasibifity h'eparl

TaMe van (Corrnt)

Seven lP'lruITldjpUes of Co-Openlltfives COD1'

6. Cooperation Among Co-Operatives

Co-Operatives serve their members most effectively and strengthel1 the Co-Operative movement by
working together through local, national, regional and international structures.

7. Concern for Community

While focusing on member needs, Co-Operatives work for the :illstainable development of their
communities through policies accepted by their members. (One of ~he ways that Co-Operatives and
their member-owners participate is through Operation Roundup, "\i':",reby a member can voluntarily
have their electric bill rounded up to the next highest dollar with th<: difference placed in a fund to be
distributed to local charities[L]. For example, a customer particiating in the plan with a bill of
$lO5.37 would see a bill lor $106.00; and tI e remaining $0.63 cred ~;;d to th f nd.)

- 35 ­
 Cify o/Syraclise

Feasibility i?eporf

TaMe rrx

lEuectrk Cons~meil' 18m of lRigMs::

Electric Co-Operative utilities are unique in that they are owned Dd controlled by the consumer~
they serve. In an evolving restructuring of the entire electric ind Istry, electric Co-Operatives are
vigorously pursuing policies that will protect the individual and eccr()mic interests of all consumers;
included among these interests are:

I. The riQJ:.t to have access to reliable, affordable and safe electric p:wer.
The availability of reliable, affordable and safe electric power is a ;'~ecessity for life issue, as well as
an important factor that drives the country's economic engine. C i)!lsumers have a right to expect
reliable, affordable, and safe electric power. Consumers have a rigJ!,t to expect uniform standards of
electric p weI' across the country as they tra el or move. Each sect ,. of the electric utility industr., is
differen : each is structured iff r ntly fi anced differentl and, a~:rle from t pp vision of electric
service, organiz d for d'ffcr nt purposes, The obligation of lawmakers is to recoil iz the
differences among electric utilities and to treat them differently in l:gislation.

2. The right to join together to establish and operate a consumer-o'v\:led n t-for-profit electric utilitv~
Current consumer protection depends on government regulaticn. local ser ice territories, and
voluntary cooperation among thousands of utility systems with i cal :;ervice obligations. If that
system is to be replaced with competition, where "big dogs eat ~irst," where utility systems are
a!!mved to become huge cornhines remote from local consumers. and \vhere energy providers are
free to choose the customer class that provides them the most profIt. consumers must have a way to
protect themselves.

3. The right of consumer-owned not-for-profit systems to be trcz:.ted fairly and recognized as a

unique form of business.
Electric Co-Operatives (co-ops) are independently owned business enterprises incorporated under
the laws of the state in which they operate. Electric Co-Operative~ are owned and controlled by the
consumers they serve. The co-op difference resides in consumer ownership and control. Thus, for
co-ops to be treated fairly by government regulation, they must be rec gnized as a unique form of
business, different from investor-owned or community-owned systems.

4. The right to elect representatives to manage their consumer-o'vv:led form of business to best meet
their needs,
Electric Co-Operative consumers (members) participate in the op~ration of the co-op by electing a
board of directors from among its co-op consumers to establish th~ co-op's basic policies, goals and
strategies, as well as to determine the rates and types of 5ervice(s) they wish to receive.

22 From NRECA web-site

- 36 ­
 Cily ofSyracuse
Feasibi/ilY Report

1I'ab~e UX (Coni)
JEa~ctuic Consumer IBm of iRugllnt~

5. The individual ri2:ht to privacy that assures information about consumers "ill not be released
without their prior express consent.
Historically, consumer-owned Co-Operatives have advocated I~\els of information disclosure
beyond industry standards but necessary for judging the performonce of utility systems. Recently,
however, discussions on energy policy have included the idea that utility systems should be required
to collect and divulge extraordinary consumer specific information. Consumers should have the right
to determine how information collected about them is used. ConsllJr r-ow led Co-Operatives should
not be required to collect or to divulge consumer specific informati0:~,

7. The ri2:ht to use consumer-owned not-for-profit utilities to pro\ :je additional services that meet

the needs of their consumers and communities.

All electric consumers must have the right to join together to e5:ablish and operate a consumer­

owned electric system, if they so choose. In addition, consumers ,'lust retain the right to use their

Co-Operativp. as a means to meet their needs and expectations over t~me,

8. The right to work in cooperation with other consumer-owned entJ ie with common goals.

Consumer-owned Co-Operatives should be able to work together to provide a countervailing balance

of power in the marketplace to the huge investor-owned combir:es that are likely to result from

deregulation. Consumer-owned Co-Operatives should be able to "ork together to provide an open

window into tr.e operation of a competitive electric market for all consumers, Consumer-owned, not­

for-profit Co-Operatives should be able to work together to provide a "yardstick" by which all

consumers can measure the performance of the market and market ~articipants,

So ce - 37 ­
 ily ojSyraclise
Feasibility Reporl

App illoHx

~. ~I
ESCO Price Comparison

Electric Rates: www.energyguide.com

Janus 23, 2009

In erm

Provider
Mos. Comments
National Grid - Central 1 This is the basis lor comparison. SO.G686/k\ Yh
Januarj 2009 View Historical RatES The ESCO's in bold have signed the
/
Utility Rate Statement of Principles
Accent Energy $73 Participates in the New Choices prJg'am. 7% less the National Grid energy SO 0638/kWh

rate. New ChOices price for first tw, r-1onths of service. GoAccent '" contains

2x the amount of renewable energ\ cJmpared to ConEd's electricity.

Accent Energy New Choices

Accent Energy 596 12 Your rate stays constan!. making it ,,~sier to plan your energy costs SO.10801!,Wh

GoAccent TO.. contains 2x lhe ammr't .:;:.; reneo.vable energy compared to

IAccent Fixed Rate

IAgway Energy Services. LLC S87
ConEd's electncily.

Participates in the New Choices program. Pa tial sales tax savings. Green 50.0900/k·,Vh

IMarket Based Variable Pricing

power offered. Call fer delails. Prices 3re SUbject to change.

I
Ambit Energy. '_P.
I ESCO Referral Progr"rn
~13 SWItch now and rec-a-11ie 7~1 uff N.a or 31 Gnc.l's 3tandard prices ior ihe ilrstlwo SO.0638i:(I/'/h

months and our compeiifive 'lariat e "ate ~her:)aner.

community Energy $93 Naticnai Grid customers can support "ollulion-free wind energy by adding a SlS/mo

I
2.5 cent premium per kWh on all ulage. Rate based on 600 kWh usage +50.0686,k'Nh
100% New Wind Energy Contact Ccmmunity Energy for spEcifrc pricing and options.

Community Energy $86 Nalional Grid customers can 3uppal pollulion';ree wtnd/small-hydro energy by S8/mo

adding 3 13 cent premium per k"\ 1 0n all usage Rate b3sed on 600 !<\Nh +$O.0686,'i,Wh

usage. Contact Community Energ' fer specific pricing alld oplions.

60% New Wind Energy

community Energy $88 Purchase 100 kWh blocks of New (>!'1d Energy. Each block costs 52.50 per 51O/mo

I New Wind Energy

COnEdison Solutions 573 12
month. Rate is based on the 4 blcCk, (400 kWh). Contact Community Energy +$0.0686/kWh

for specific pricing and options.

Choose l:ont:dlson ::,olurrons 3no i3 fa 7~o iUl ~ rllullii,:;. YUdldlli~e'U"

, ,.,· •• 1 .• ;\0"

,,;Iv.UU ~ ... ,:I.

4 ililonth Fixed
COnEdison So/uVons 573 Participates in the New Choices ppgram. 7% ess the National Grid energy $0.0638MNh

rate. New Choices price for first tw) months of service.

/
ESCO Referral Program

I
Direct Energy S92 12 Fixed rate lor 12 months. SO.09991!,Wh
Direct Energy Fixed .~ate Plan
Direct Energy $73 First 2 Months - 7% discount off N,tional Grid's electric supply cost. variable SO.063811<'Nh

I Direct New Choices Rate

Dominion Retail. Inc. 589 12
rate after the first ~"o months.

so .0930f<Wh
I Dominion 2008 Find Rate Plan
Dominion Retail. Inc. $88 24 SO. 09 lS/kWh

/
Dominion 2009 Fixed Rate Plan
Dominion Reiail. Inc. 588 S00911JI,Wh

I Dominion Electricity' Offer

Dominion Retail. Inc. 573 Participates in the New Choices p'"(; am. 7% less the National Grid energy 0.0638/kWh

I ESCO Referral Program

Energelix. Inc. 578
rate. New Choices price for first MO months of service

.Approximately 2%·4% savings vs !ha Naiional Gnd rate. cnergetix provides SO 072Sd(\Nh

electric supply at a mar-,el prica v, lh shared savings from Ihe N Gnd provided

Relail Access Credit. ESCO cuslene' lax savings ond monthly biiling credit

add to total savings.

Markel Price Elec/ric Supply Offer

Energetix. Ino. 586 100% Clean Energy Option suppll:s all of customer's annual usage from wind SO.088S/kWh

and hydropower resources. En"rg~!ix provides suppty service at current

market rates plus a fixed adder fa' C ean Erergy ESCO ctlstemer tax saVings

Market Price Electric Supply Offer

and monthly billing credit add to te31 savings.
with 100% Clean Energy
Energetix. Inc. 582 SO% Ctean Energy Option suppliei half of c.lstomer·s annual usage from wind SO 080S/kWh

and hydropcwer resources. Energ ~II' proviCes supply service al curreni

Market Price Electrc Supply Offer market rates plus a i1xed adder foe Clean Energy. ESCO customer lax savings
and monthly billing credit add to I' s savin,s.
with 50% Clean E/:<irgy

23 Information obtained www.energyguide.com

- 38 ­

Energy Cooperati',e of New York, Inc,
Renewable Energy
Energy Cooperatl fa of NevI '{crt< Inc
lIariable Rale ~/an
Energy Service P'ovide,s. I~c
I
Eleclricily Supply
EnergyPLUS
EJ1ergy Plus j\'SW ChOlC3S
EnvircGen
Think Green
Gateway Energy Services ':orpor3tion
(formerly Econn orgy Energy)
I compehiwe '1anable rate thereaiter ::i us at 1·800-805~8586 far details
ESCO Refe,-ral Program
Gateway Energy Services Corporation
(formerly Econnergy Energy)
Galeway Energy Fixed Rale Plan
Gateway Energy' Servic.s Corporation
(formerly Econnargy Erergy)
Gateway Ene!'gy Fixed Rale Plan
Gateway Energy Services Corporation
(formerly Econnergy Energy)
Galeway Energy Variable Rale Plan
Green MountaIn Energy - NY
IPollution Free
H"dson Energy Serlices LLC
Hudson Fixed Offer
I
Hudson Energy Service,. LLC
Hudson Variable Of'e,­
loT Energy, Inc.
IEleClricily
24 Information obtained www.energyguide.com
Sou en
(ily ofSyraclise
Feasibility Reporl
Cont) 24
ESCO Price Comparison
Elec:lric Rates: www.energyguide.com
January 23. 2009
S82 Renewable program (Green Power 1::J1fJ) avaIlable at 1 I cent per kv'lh SO.0800IkWr
premium.
$76 Average savings 5% One-Bill Mode .. lh '5 53 bIll cred,t per mcnrh SO.0690/KWh
$76 At ESPI, we partner With our custOI1l;rs to 8 sure that in additIon to cur ~007001KWh
competitive rates, customers learn r ... ','1 to lower their overall energy
consumption With programs like ou' .':cwnt Accuracy Analysis and our
'373 At Energy Plus, Ne want all Or .)Ur Cl ~'Jmers 10 save mone'! If fOU war.! to SO G638/I<VVI1
benefIt iTom lOW ,wlngs In lne ~n~rg 'dJltr::l, d1 C5e ,~ur hIghly .::ompetlilve
vaffable rate plan ""lin no 3:gn~Jp or :-3:"'.cellaClon :ees no minimUm term, ::3na
no penalties Best Cr" a/!, gGt ;Q<, o.-f ,"~ Utlh1y R,He rer :.he lsi 2 months l
.$83 Use renewaofl:l nergy fOf 3 dealler ·•. ~Jre fJj adding a 1 Q cellt pratolum per $5;mo
k'llJh on aU usage. Rate based on 5::': . . INh sage. Contact viroGen for +$00686/kWh
specific pncing and options.
573 Gateway Energy partiCIpates In the', =\' ChOlC6S program 7% oif National SO 0638/kWh
Gnd's standard pnces ior !he i,rsl b; .onlhs and Gatewa\' Energy's
S88 12 Choose Gateway Energy's ixed,rat,,, actnc pl3n and protect yourself against SO 0916/K'iVh
nsing energy prices and market '101" Iy By switching to Gateway Energy.
yodll benefit fron' highly competItivE- Crlces our .v'nolesale buying capabillt!dS
and supenor customer service. To 8m mcre about our pACIng plans and
speCial promotions, call (800) 313·8)33
$89 24 Choose Gateway Energy', i1xed-rat; ",.cinc plan ar.d pret.cl yourself against SO 09481k'J"h
rising energy prices and market volE. rf By sWitching to Ga.eway Energy
you'll benefit from highly competitiVE- ,;:r'ces our wholesale bUying capabilIties
and supenor CUSiomer servIce. To -::'::4" mere lcoUt our prtClng plans and
speCial promo~ons, call (80CI 313-E233
585 12 Choose Gateway Energy's ',anable··2'.e eleClr~: plan Take advantage of OC" SO.0864/k't'1h
competitive prices and wholesale Cloy;. capab~ltlt" To I am mO're abo tour
pricing plans and special promotion!. sail (600)313-8333.
S86 By chOOSing Pollution Free at a 1 5 ;enls per k\Nh premium on allLJsage, you S8/mo
can help clean ihe a" we breathe F "'0
based on 500 kWr. usage Conlact +SO 0686/KWh
S89 12
Green Mountain Energy for specifiC ;.r ;:Iog and opllon3
Customers can "blend and extend' .... 3 fixed prloe at an time SO 0930/k1JVh
Hudson Energy partlclpales In Ine F:, Isr~lio....e prcgram n~ off NIMO's pnce
S81 SO.Ol90/kWh
for the firs\ 2 months and Hudson E-z'g,/3 CD pellllVe ale [hereafter
$76 Cr.oose our Flexible Vanable Rate, 3aneflt from Decltnl~g Markel Prices" $0.0689/kWh
FREE enrollment, No Termlnatlor Fees .Green Prodt.lcts Available. We
- 39­
 Cit)' ajSyraclise

Feasibility Report

AppeandHx
']faMe X Coni) 25
ESCOPrica Comparison

Electric Rates: www.energyguide.com

January 23, 2009

Mirabilo Gas and Electric clo Gateway S89 12 Mirabito otfers both variable and fixe·} :ffars. Call us at 1-800-934-9480 tor $00930/1,""'11
Energy Services Can delails.

Mirabito Variable Rate

MXenergy Electric 573 Participates in Ihe New Choices pro~wn. 7'.10 le'3S Ihe National Grid energy $0.0638/I,ljllh
rale. New Choices price for first two ',cnths of service.

ESCO Referral Program

NaCO Energy Corp 578 12 Guaranieed Savings - Call ior addilic . al,niorm~tion. SO.073Iik'tlh

NaCO Variable ,~ate Plan

rYSEG Solutions. Inc. $78 Approximately 2%-4% saVings 'Is. Ir, :-Iational ",rid rate. NYSEG Solutions SO.0725rkWh
provides electric supply at a market ,n:a with shared savings from Ihe N,Grid
pruvitJeu Retail Access Credit. c-sec ::Jstcmer 1.1:< ~Vings and ,onfhly
I
IMarket Price Electric Supply Offer billing credit add to fotal savIngs.

NYSEG Solutions, Inc.
Markel Price Electric Supply Offer
,,86 100% Clean Energy Option supplies =. of customer's annlIal usage ,'rom wind 50.0885il,Wh
and hydropower reSOUrces. NYSEG ocluiions provides supply ser,ice al
current marl,al rates plus a iixed adu·· lor '~Iean Energy ESCO customer tax
savlJlgs and monthly billing credil ad'.o 10ial sa'iings.

with 100% Cleaf1 Energy

NYSEG Solutions, Inc. 582 50% Clean Energy Option supplies r= I of customer's annual usage from wind $0.0805/kWh
and hydropower reSOurces. NYSEG SClutions provides supply service al
current markel rates plus a fixed adur for Cle"n Energy ESCO customer tax
Market Price Electric Supply Offer
savings and monthly billing credit aci ;0 total savings.
with 50% Clean Energy
A soecial nsk,free Introductory discu,'1 offer for new cuslomers 10 Iry supply 50.0638/k'Nh
service through and Energy S"rVlce: ~omp"ny (ESCO). Cuslomers are
guaranieed a 7% discount over NalLc31 Gnd ute on eleclflc and/or gas
supply service ior iwo full months.

New Choices 7% Discount vs,

Nation31 Grid Rate for Two Months

Pro-Energy Development S74 Variable Price Model- no contracts, Ie cancell3tion fees. Even in times where $0.0654IkWh
the energy market prices are high, yO_ are still, aving money every month in
PED's variable-price model. One bii odel and budget billing available. Learn
more about how you save with PED 31 www.proenergydevelopment.com and
Pro-Energy Development Variable
enroll on line and start saving.

Rate

Slerling Planei, Inc. 585 Offset 100% of your regUlar eleclric • use Nilh renewables. Rate based on S8/mo
500 kWh monthly usage. Contacl S,<, ing Pia let for speci"c pncing. +$0.068E/:,Wh

Sterling Green
U.S. Energy Savings $92 60 USES ',s one of the largest energy r;;:arlers in North America. We give SO.0990~<Wh
customers peace of mind from vola' e energy prices with our Price Protection
Program. Program consists of a fiXe: 'ale plus a small adjuslment that may
vary slightly from month to month. E,jllee. lor residential customers are
capped at $5.50 for each month lei n the Te"m (per location)

Fixed Rate Plan

U.S. Energy Savings 397 60 USES is one 01 Ihe largest energy r; 'S,iers in North Amenca. 'No give SO.1090.I,Wh
customers peace of mind [rom vola '.: anergy prices Wlttl our Price Protection
Program, Term 48 or 60 months. E , 'ees for residential cuSiomers are
capped at 55.50 ior each monih leil "he Term (per loc3110n)
Fixed Rate Plan
IU'S' Energy Savings 597 60 USES is one of the largest energy r~iailers in North America. We give 50.1090/kWh
Fixed Rate Plan customers peace of mind Irom vola 'a energy prices with our Price Protection
'" ­ ,..,.. . ...... .... ". ,- '. ..
.~ ~

25 Information obtained w'Nw,energyguide,com

- 40 ­
 City 0/ yracl/se

Feasibility Report

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I
I

26 Information obtained from Energy Automation, Inc. for Municipal data, residential data assur~es average monthly residential usage of 600 kWh
and 59,500 Residences in the City of Syracuse - US Census Data as of 2000. Data represer:ed is non-coincidental demand. Coincidental
values are assuredly much lower than those listed

qce
"-'v,... e - 4/ ­
 Cilyo/Syracuse

Feasibilily Reporl

TaMe xrrrr
Av~rage MO!l1ltMy !D>ay-Aheacl iPrud o 27
e

$120

/IOt\v g caPita,/
OAvg Central
Cl
l: $100
lJ
.;:
ll.
~
~ f'"
1 $80 ,­ -­
c<l:

~
•
>­
I ri'
530
._­ -II - r-­
I "'"

, II
-
$40

I:

$20
I~

I'
$0 I I I 1 I I I I I J
0112007 03/2007 OS/2007 07/2007 09/2007 11/2007 01/2008 0312008 05/2006 07/2008 09/2008 11/2008

The NY-ISO holds daily auctions for each of the transmission zones \vithin the state. In general,
electricity prices get higher in the Southern and Eastern portions 0f the stat, where the generat,ion
mix is dominated by natural gas-fired assets and electricity demand is higher. In the central portion
of the state, there is a higher portion of hydro-power and coal-tired asset in the generation mix.
However, due to the auction structure, when even a single MW of expensive generation successfully
bids into the marketplace, every power-purchaser pays the more expensive price.

SourceOne created generation cost models of a new pulverized coal plant, an efficient natural gas­
fired plant, and an inefficient natural gas-fired plant. These cost models were created using
assumptions from the National Energy Modeling System (NEMSJ 2008 Electricity Market Mod Ie
(EMM) as published by t'he Energy Information Administration (EtA). hese cost models were
applied over the 2007-2008 period with market commodity prices tor Natural Gas and Coal and th~n
compared with the actual NYISO Central Zone day-ahead pricing.

The minimum daily pricing was typically at or lower than the modeled cost of generation from a
coal resource, which means that during lo\v-demand periods, coal. hydro, or even nuclear resources

27 Zonal Day-Ahead price data published by the NYISO - ..!.!'l~'.!1ll~~.&mThQj~;E~~~!illQ~§!i~~!Q!!:<Q..1ill!!:JII~SP

- 42 ­
 Cityo/Syraclise

Feasibility Report

set the purchase price. The maximum daily price was more vc'tmile, but it often exceeded the
modeled cost of an efficient natural gas plant, and occasionally e\ceeded the modeled cost of the
inefficient gas plant. SourceOne concluded that the price history is vvithin expectations for the
generation mixture that exists in the NY1SO Central Zone given the auction structure and recent
energy commodity prices. The

- 43 •
 City ofSyracuse

Feasibility Report

Appe!l1lrllh

Table XilHn
Monah y !Olay-AIh.ead !Pricing Com ail"ison {Ce!l1tll"a~ Versus. Capito 1)28

250

200

E
,~ 150 I
~
.
£:s
o
:I:
GI
§ 100
N

''...0.."
u

50

o+1--------------------------------,--­
o 50 100 150 200 250
Central Zone Hourly IUlaximum StM Ih

2B Zonal Day-Ahead price data published by the NYISO ­ ~ll~tp~!!:!.i:.!..!.!.!.::~~~~~~~==_~~~:-.=~=...:.=

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City a/Syracuse

Feasibility Report

The Electric tility Department began serving retail electric custorrers on June I of2005 as the City
of Winter Park established its own municipal electric utility. The 30 year franchise agreement was
expiring and the City saw an opportunity to purchase the assets from progress Energy.

In a referendum election of September 9, 2003, the citizens of Win:er Park voted overwhelmingly to
exercise the buy-out option in the city's franchise agreement with f?rogress Energy Florida and to
have the city own and operate its own utility.

To facilitate this transition, the city is built two electric substation5 and purchased Progress Energy
Florida's electric distribution facilities within the city. A utility sen~ces contractor has been hired to
perfonn the operations and maintenance of the electric systelL The City has established the
customer service, met r r ading, billi g, vegeta ion managemt:nt ar d all ~ poli"ics and peed re"
necessary to operate a utility.

The city has committed to its future customers that it will undertake a strong program to improve th~
reliability of electric service. This will include, but not be limited. to putting significant portion of
the power Iines underground.

Otihleif Facts about Wi:mter lPark's M~mnci~alli71atilo!lU efforts

9 The City established rusto.rnex service, meter reading and vegetation management
organizations. The City also handles all policies and procedures../\ utility services
contractor handles field operations and maintenance.
o Key Driver: Reliability; momentary outages were the biggest pain point and to a lesser
extent, outages for a longer duration.
o Progress Energy fought the buy-out, which resulted in a long arbitration that cost

approximately $3.5 million.

o The City ..vas required to pay approximately $50 million for the assets winch included

stranded costs. The financing was handled through revenue bonds.

o Today the rates are the same as the former provider, Progress Energy. This was a
requirement of the purchase. After three years of service, "'-'inter Park wilt "decouple" from
progress Energy rates, conduct its own rate study, and establish new rates. The Public
Service Commission will have no involvement in the rate structure.
o The long duration outages have reduced by more than 50% and m mentary outages have
come down significantly primarily through a proactive tree trimming program.
o Winter Park solicited support from the Florida Municipal Electric System vvhile planning and
imptementing their municipal'ization strategy.

Website Information:

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City a/Syracuse
Feasibility Report

Appell1ldlh.

Amail1ce fOJr Mllmidpal Power, Ne," York

The Alliance for Municipal Power (AMP) is an inter-municipal comnission created by 24 towns and
villages in St. Lawrence and Franklin Counties in NY State. The 2:' to\vns and villages of the Alliance
for Municipal Power have given the AMP Commission the mission of investigating, evaluating,
planning and developing a regional public power electric utility for ::~e benefit of the public.

The core value of AMP is the principle that the public is best servec when the electrical system is owned
and operated by a non-profit public utility for the benefit of the publ:~.

AMP's Goa~s

~ Own an operate the e!e trica! transmission and ist"ibution s: _tem set" ing the AMP

communities- North Country Power Authority

o Provide for local control of the utility.

o Provide electrical power at a lower cost.
o Provide reliable electrical service.
o Provide for future investment in renewable and alternative energy.

() Advance NY State's clean energy and conservation goals.

AMP plans to pursuer through Ne\v York Legislature the passing at' an act to authorize the North
Country Power Authority (NYPP). NYPP will be a regional utility pwviding electric service for the
member communities.

Other Facts aboillt AMP's efrortr

o AMP is mainta1ining a high level of confidentiality and expe~ts that s they are successful, the will
set precedence and make it easier for those to follow.
o AMP has more than 90 formalized letters providing evidence of the vast amount of support they
have.
o AMP has completed their feasibility study and is coming u~ on a major deliverable in the next
couple of months.
o Their finance strategy requires financing in the municipal bond market, which will be paid for
with rate revenue. The Towns and Villages will not be responsible for the bind debt.
o AMP is designing their municipalization efforts with efficiency to kee legal, financing and
start-up/operational costs low.
o The municipality will be accountable to the communities it 5erves..
o The governance structure wi,li indude a Board of Directors l1ade up 7 to 9 directors who wi It be
designated by AMP towns and villages and reside in the service territory
o AMP's plans also include pursuing opportunities to add alternative, clean, renewable energy as
part of the power portfolio

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 CityojSy,'aclIse

Feasibility Report

AiYfP.s Member Communities

Town f Bombay Town of Fort Covington I Town of Potsdam

Town of Brasher Town of Louisville Village of Potsdam
Town of Canton Town of Madrid Town of Russell
Village of Canton Town of Moira Town of Stockholm
Town of Colton Town of Norfolk Town of Waddington
Town of Edwards Town of Norwood To\- n of Westville
To\-\n of DeKalb Town of Pierrepont

Key COintact Hnf, rmmtion

Charirman - Robert Best Vice Chair ­ ad Davis Legal E pen - Ken nder n
315-347-4996 315-323-7961 410-342-2352
RobtBest.g,g,m ial.com Dav is_wade_a@yahoo.com K~ande@aol.co

- 47 ­
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City a/Syracuse

Feasibility Report

AUaclhmelnt [IT
lRJEFJERlENC!E§

Municipalization: Understanding the Risks, Alliant Energy, web-site e:-t:'act

Municipalization in a New Energy Environment: It Doesn't Work, J. KJufman and AI Solem of Solem &
Associates and Edison Electric Institute

Renegotiating A Alunicipal Franchise During Electricity Restructuring and Deregulation, Paul Hughes
of Environmental Service, Inc, July 2002

Considerations in Governmental Acquisitions of Utility System Propei·ties, L. Loos and T. Sullivan,

A ril 2003 (Updated June 2005)

Resolution Supporting East Bay Municipal Utility District's Furthu Srl/a)1 of Three Public Power
Options Identified in its Report entitled Potential Roles as an Electric Uti/iN, ity of Oakland Agenda
Report, June 18,2002

Economic Benefits ofa Municipal Electric Utility in Syracuse, New YOi'k, M. :vtathis, April 24, 2007
th
San Francisco's Utilities in the 2 F' centwy: Issues related to Public Power and the 1Vovember 6 , 2001
Ballot, A SPUR Report, NoveJJ:lh~r I,. 200 I

Preliminary Municipalization Feasibility Study: City of Boulder, Colonldo, RW Beck, October 2005

Municipal Electric Utilities - Analysis and Case Studies, R. Johnson, July 2006

City of Davis: Municipal Electric Utility Options Analysis, Phase I Report, . avigant Consulting, May
2002

The Economics of Electric System Municipalization, Bay Area Economic Forum, October 200 I

Electricity Deregulation in New York State 1996 - 2002, G. Norlander. ESQ., Public Utility Law Project
( __ ,\ 2lW1.LL November 8, 2002

New York State Laws Re; Co-Operatives Article 2, Formation and Dissolution of Co-Operative
Corporations; Classes: Powers: By-Laws

Case 99-E-0681 Petition of Niagara j\;[ohawk Power Corporation for a Declaratory Ruling Approving
Niagara Lakewood's Transition Cost Obligation Under Rule 52 of "'-iagam j'vfohawk's P.s.e. No. 207
Electricity Tar{jj; State of New York Public Service Commission, February 23 2000

Case 97-F-0809 In the iYlatter of the rules and Regulations of the B(ul'd 0/1 Electric Generation Siting
and the Environment, contained in 16 NYCCR - Addition ofa new Chopta ..'(, Subchapter A, to

Sou e - 48­
 , .

ily ofSyracuse
FeasihililY Report

Appendh
AUachme!l1it HI (COJ'lt)

IRlEfIE lRJE NCIES

Implement Article X or the Public Service Law, State of New York Board on Electric Siting and the
Environment, December 16, 1997

Case 98-E-1670, Carr Street Generating Station, L.P. - petition for cUI Ol'i inal Certificate of Public
Convenience and Necessity ad for a Declaratory Ruling on Regularury Regime State of New York
Public Service Commission, April 23, 1999

"Energy Deals Can be Costly- HomeOlvners Rarely see a Decline in their Utility Bill after Changing
Supplier ", T. Knauss The Post-Standard, February 23, 2009 Syracuse ews article

• Power Deregulation Endangered: Bill new in Assembly wOl£id Chailge (he va' Ele tricily is sold in
State", L. Rulison, Alba y Times nian, February 25, 2009

"Project Orange Provided Cheap Steam as Byproduct ofElectricity Generation, but now it's Generating
Lawsuits", T. Knauss The Post-Standard, November 30, 2008

Aggregation Guidelines, New York State Public Service Commission

The Benefits ofPublic Power, American Public Poww Association,

Q&A for Communities Considering the Public Power Option, American ublic power Association,
__ \_'1 IIl<1

10 Common Folse Charges, American Public power Association,

History of Co-ops and related articles (About Co-ops, Co-ops Bill of Rights, Co-ops and Renewabfe
Energy. Electric Co-Operative Financing, Co-Operatives by Numb.:rs & Other Related Stats. etc).
National Rural Electric Co-Operatives Association web-site, I I I. _!'

Alliance for Municipal Power, New York, '-.:...;\"':":"':'~'L",-,..;;...:.c..~

"Power to Choose", ~-'-'--='-'.=..;:;,;..0;;;

"Public Power Costs Pubic Power Association, 200 -09 Annual Directory &
Statistical Report, """"\\_\'----'-'-'-=-~'-==~

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 City a/Syraclise
Feasibility Report

Appeiflclux
Attac!lnm£nt HH
H~te:rview List

Ken Anderson James Gladziszewski

Legal Advisor
Energy Automation, Inc.

Alliance for Municipal

Telephone: (315) 487-9372

Power, New York

410-342-2352

Ann Barnes Honor Kennedy

Communications Director
Public Service Commission

Kauai Electric Co­

518-473-0272
Operative
. 808-246-4383
John Calcagni Joh Montone Debbie Warn r

Chief Econom ic Director

Chairman ~yracuse Chamber of

Public Service Commission

Municipal Power Agency Commerce

518-473-6060
Auburn, NY 3 15-470-1485

315-255-4146

Kevin Callather
Chuck Penry Jerry Warren - Director

Program Director of
National Rural Electric Co­ Winter Park Electric

h rJ, t: n

TI"'l"} 11
L...rU,,"-I""U.~I'Jti Operativ p Assoc13tiCH:l 407- -99-3233

American Public Power

703-907-5815 I I ' .l,". I" ,,,-ur!.!
Association
PrevioLlsly employed by the National Rural Terry Hotard - Asst Director
Electric Co-Operalive Associations for t5

years
407-599-3233

202-467-2984
I 1\ I II dlh:':IT!:Jfh.\)["·

James Driver

Exec Vice President

South Plains Electric Co-OP

Lubbock, TX 79424

806-775-7825

- 50­