2011 ANNUAL REPORT
C I T Y O F H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Commissioners: Francis J. Hoey, III Robert H. Griffin Raymond H. Feyre Manager: James M. Lavelle
To the Honorable Mayor, Members of the City Council, and our Valued Customers:
Submitted herewith is the One Hundred and Ninth Annual Report of the City of Holyoke Gas & Electric Department for the year ending December 31, 2011.
This year, 78% of the Department's electric supply came from clean renewable sources, and was delivered at rates that were significantly lower than those of utilities in neighboring communities. In an effort to keep rates low, the Department is constantly looking for new, clean and innovative utility solutions.
HG&E partnered with Constellation Energy to design and construct two ground mounted solar projects located on Mueller Road and Meadow Street for a total project size of 4.526 MW. This project began commercial operation in the end of December 2011. The Department signed a twenty (20) year Power Purchase Agreement to purchase 100% of the power output. The Mueller Road facility is currently the largest operating solar plant in New England.
The powerful combination of low-cost and renewable energy played a critical role in the attraction of a high performance computing center to Holyoke. Slated to open in late 2012, the $168 Million state-of-the-art, supercomputing center is being developed by a consortium of higher education institutions and private industry.
The Department continues to upgrade its fleet of hydroelectric generators while balancing purposeful environmental stewardship, including protecting natural, cultural, scenic resources, and providing public recreation facilities.
In 2011, HG&E partnered with Holyoke Community College (HCC) for the collection of data on the number of fish and species passed at the Robert E. Barrett Fishway. Activities included: biological sampling, trapping and loading of shad; trapping of Shortnose sturgeon and Atlantic salmon; and, observations of lift operations and eel passage.
The Telecom Division continued to grow sales in commercial network services. In response to needs of the business community, HG&E developed a business partnership with OTT Communications of Portland, ME to offer advanced phone services over the reliable, scalable, and local Fiber Network. These new services will be launched in 2012.
We thank City officials and Department employees for their continued faithful service to HG&E, and we will continue to work diligently to provide our customers with reliable utility services at competitive rates, backed by a dedication to customer service that is second to none.
Respectfully,
Francis J. Hoey III, Commission Chairman Robert H. Griffin, Commission Treasurer Raymond H. Feyre, Commission Secretary James M. Lavelle, Manager
City of Holyoke Gas & Electric Department Tel: 413.536.9300 • Fax: 413.536.9315
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T 1 gas New Services Leak Surveys In 2011, the Department installed 122 services lines The Department helps ensure the safety and to new customers - 74 in Holyoke and 48 in reliability of the gas distribution system through an Southampton. The Department also replaced a record extensive series of compulsory and voluntary 171 existing services in Holyoke by burying new comprehensive leak surveys. Each year the plastic pipe or inserting it through older existing steel Department conducts vegetation observation surveys, lines. The Department abandoned 58 service lines in special monthly winter patrols, and flame ionization Holyoke that were no longer needed. patrols (public building, mobile and walking).
New and Replacement Mains In 2011, the individual gas service full-length The Gas Division continued replacing cast and walking survey covered more than 3,800 lines, or wrought iron mains throughout Holyoke, with new about one-half of the service pipes in the system. small diameter, plastic pipes. The new plastic mains The combined surveys accounted for the detection of are generally four or six inches in diameter. In total, 120 underground leaks that were mostly minor in 3,900’ of piping was replaced on Bay State Rd, nature. All leaks were investigated and prioritized. A Berkshire St, Day Ave, Faille Ave, Grandview Ave, total of 85 underground leaks were repaired in Grover St, Peltiah St, and South Martin St. 2011, and the remainder were monitored throughout the year or scheduled for repair. The Department installed a new 4” plastic, high- pressure gas main on Bigelow St. to service the new High Performance Computing Center, which is under construction and anticipated for completion in 2012. Sales for Resale The Gas Division continued to expand in Southampton Municipal 4.3% by extending the gas main on Wallace Rd, Elm St, and 3.3% Gunn Rd preparing to connect a potential 15 customers. Industrial 15.8% The Holyoke/Southampton natural gas distribution system now consists of over 174 miles of mains, Residential 7,600 service lines, and 10,500 gas meters. Departmental 38.5% 0.2%
Commercial 37.9%
2011 Gas Division Revenues (by Customer Class)
2 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T gas Other Preventative Maintenance - Corrosion Mitigation The Gas Division continued its aggressive program to Gas Works mitigate corrosion on its coated steel piping systems. In 2011, professional inspections were made of all 74 The Department operated its two tar removal systems during the year. The cathodically protected systems, and the 26 coated tailrace system, which intercepts dense, steel services longer than 100’. At year's end 82% of non-aqueous phase liquid (DNAPL) coal the systems exceeded the federal requirements for tar before it can migrate beneath the corrosion control, with the rest requiring some river, collected 1,060 gallons of tar; remedial action in 2011. Additionally, 38 isolated bring the year-to-date total to 7,679 steel gas services (less than 100’ in length) were gallons. The tar is collected and then inspected and maintained, and appropriate repairs are sent offsite for disposal. The second scheduled for 2012, along with more inspections. system is on the site itself, and pumps The cathodic protection system on Fenton St. was DNAPL in a similar fashion to the tailrace replaced in full with a new rectifier and anode ground area recovery system. The onsite DNAPL bed. only collected 16 gallons of tar in 2011 bringing the total to 203 gallons. The Gas Supply and Flow Control steam injection that was previously used The Gas Division continues to operate its Liquefied was discontinued due to the poor Natural Gas (LNG) storage and vaporizing system, recovery rate. Tar recovery will be providing both the extra gas needed during the coldest monitored to determine if steam injection can be permanently discontinued. winter days and also serving as an emergency supply for the entire city in the event of a pipeline As required by permits from two interruption. remediation projects, raceway cap and tailrace bulkhead wall, plantings were The Department also provided peaking service to Bay completed in 2011. These plantings will State Gas as part of a LNG supply and vapor be monitored for survivability. displacement contract. This arrangement has enabled the Department to better utilize its LNG assets, and has provided benefits for both companies.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 3 Production - Hydroelectric Facilities In 2011, plans to upgrade Hadley Unit 1 were A number of projects were completed which improved or undertaken in consideration of alternatives to econtributel to futuree generation capacityc and reliability oft increasedr energy productionic in conjunction with the the Department's Hydroelectric facilities. These projects evaluation of the Hadley Station intake fish exclusion included: rack project, which is currently in progress. Alternatives for maximizing the operating efficiency of Harris Projects: As part of the Canal Optimization the existing units include installation of new turbine Plan, the hydro division is working to increase capacity runner, generator rewinds, and upgrading the station while reducing the number of generators. In 2011, the switchgear. Gill D Rehabilitation Project included re-location of controls and the generator from Gill A. Additionally, the Overflow #3 Control Building: In preparation for the Division prepared plans to surrender the FERC License addition of 2 future siphon generating units to add for the Gill Mill A Wheel and Crocker A/B and C units. capacity at this site, a water tight building was Decommission of the projects is pending final approval necessary. The pre-cast concrete building was sized from the State Historic Preservation Office. for the controls and other ancillary equipment to accommodate both additional generation and overflow Grant Award for Boatlock Station Unit 2 Runner: On gates. The Department has received two grants for a June 27, 2011, HG&E received a Notice of Award from total of $210,000 reimbursement towards the siphon the Massachusetts Clean Energy Center, in a grant generators. The purpose of the Overflow Siphon Unit amount not to exceed $300,000, towards the project is to make use of excess water that is spilled replacement of a turbine runner for Boatlock Station over Overflow #3 to feed Chemical Station. Unit 2. Plans are to acquire the runner in 2012. Riverside Station Planning Study: A hydraulic Hadley Station Unit 1: A major Dewatering Inspection analysis was undertaken in 2011 to evaluate the re- of Hadley Unit 1 was conducted in the summer of 2011 energizing of Riverside 6 and determine the scope of and included turbine runner and cavitation repairs. current headlosses between the supply canal and the existing forebay. City 4 J Wheel: Rehabilitation of City 4 J Wheel including a generator rewind and exciter upgrade was Other special projects included: completed in February 2011. It is estimated that the City 4 Station will generate approximately 997,000 Annual Spring and Fall Canal Inspections: additional kWh per year. The rehabilitation of this unit Assessment of canals and canal walls including: is important to increased efficiency of the water flow overflows, intakes, penstocks, powerhouses, and from the first level canal to the second level canal. tailraces.
Hadley Falls Unit 1 Modernizing Plans: HG&E is Station Service Water Upgrades: At both Hadley designing modifications for the Hadley Falls intake Falls Unit 1 and Boatlock Station, strainers were structure which will implement downstream fish replaced by Johnson Screens in an effort to more passage measures as required by the Comprehensive effectively use river/canal water as a means for Settlement. The revised Comprehensive Operations generator cooling and lubrication for the turbine guide Flow Plan (COFP) requires that additional flow be bearing. As part of the upgrade, water mains were diverted to the bypass reach during fish migration and upgraded at both facilities. other critical periods (e.g. upstream spawning runs, downstream post-spawning movements, rearing, and peak foraging).
4 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T Production - Hydroelectric Compliance Activities Flood Control Improvement Projects: The Division prepared applications for the Hazard Mitigation Grant The Department has a number of technical agreements Program offered through the Federal Emergency and environmentale requirementsl mandatede through thec tric Management Agency (FEMA). In 2011, the Federal Energy Regulatory Commission (FERC) and the Massachusetts Emergency Management Agency Massachusetts Department of Environmental Protection recommended the HG&E applications to FEMA. (MADEP). The Hydro Division mission includes Pending FEMA approval, funding for the proposed balancing hydroelectric generation with purposeful projects planned at the Holyoke Gatehouse and environmental stewardship that includes protecting Riverside Station will result in a Federal project share valuable natural, cultural, scenic resources, and cost of 75%, amounting to $152,700 at the providing public recreation facilities. The Division strives Gatehouse Project and $84,225 at Riverside Station. to have an economically viable project while fulfilling the Approval is anticipated by May 2012. The flood environmental mandates with which HG&E must comply. control improvement projects are essential to Major compliance issues addressed in 2011 included: protecting the Department's hydro electric generating assets. Hadley Station Intake Rack: Design and evaluation of and stakeholder consultation pertaining to downstream Updates to FERC Project 2004 Exhibits A, F and G: fish passage options for the Hadley Falls intake at the As part of a FERC permit order for the capping of the Holyoke Dam. In support of FERC, ACOE, and NMFS Beebe-Holbrook A-Wheel Penstock and the upgrade of consultation for construction of the intake rack, HG&E Boatlock Unit 1, in 2010, HG&E was required to was required to provide a Biological Assessment for update FERC exhibit drawings. endangered Shortnose sturgeon. 2011 Fish Passage Counts Potential Failure Mode Analysis (PFMA): Continued implementation of tasks associated with the 2007 The fish lift at the Robert E. Barrett Fishway assists PFMA, FERC Part 12 and FERC inspections including migrating fish to reach spawning areas above the Holyoke on-going efforts to update the FERC security plan. Dam. HG&E's fish passage facility was the first and most successful fish lift on the Atlantic coast. It is comprised Deformation Monitoring Surveys: Geodetic monitoring of two elevators which carry migrating fish up and in 2011 included a dam deformation survey beyond the dam. encompassing the main dam and appurtenant structures, the South Hadley canal gatehouse, and the Boatlock In 2011, the public viewing facility at the Barrett Fishway was open from May 4th through June 12th and Station powerhouse. In addition, this year's survey attracted 7,619 visitors.The passage of anadromous and included work to mitigate unexpected movements resident fish species that were observed and monitored in experienced by the reference network points at each of the lift system this year included: the four overflow structures. This is the fifth and final year of this annual monitoring effort for all structures, Atlantic Salmon 72 required by the FERC operating license. Future American Shad 244,189 monitoring is planned at 5 year intervals. Blueback Herring 138 Sea Lamprey 19,136 Run of River Operations (ROR): HG&E completed a 4th Striped Bass 183 year of monitoring under modified ROR operations. An Shortnose Sturgeon 4 extension for one additional year of monitoring was Gizzard Shad 423 requested for 2011, due to unusually wet conditions during the 3 prior monitoring years. Using the results of In addition to the fish passage facilities, there are the 4 years of monitoring under modified ROR, HG&E two eel ramp passage facilities on both the plans to submit operations recommendations to FERC in Holyoke and South Hadley shores below the dam. the spring of 2012 relative to the COFP. The number of American Eels counted at the eel ramps in 2011 was 9,734.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 5 Production- Additional Activities Operations - Electric Division electWorkr continued throughoutic the year on two capital Environmental Projects included: improvement transmission level substation projects. Monitoring of invasive plant species along the At Holyoke Substation, the Outdoor Switchgear impoundment; and, on-going efforts to battery and charger systems were replaced. The control water chestnut in Log Pond Cove capacity of the batteries were upgraded from 57Ah to 200Ah, which provides room for increasing DC loads On-going implementation of FERC recreation and in the station and also serves to more adequately land management objectives at Lower Riverside backup the Electric Station batteries. Park in South Hadley (final site landscaping planned in 2012); Gatehouse Park in South On the project to replace Prospect Substation, Hadley (construction completed; mitigation progress was made in multiple areas: (1) Site plantings planned for 2012); and, Slimshad Point Selection: it was determined that the most favorable in Holyoke (construction commenced in 2011 - location for the substation is the Riverside parcel, completion planned for June 2012) adjacent to the existing 1525 Line. The substation will be called North Canal Substation. (2) Annual Water Quality Monitoring of Project Permitting: the project was presented to ISO-NE and operations received I.3.9 approval. It also received local Partnership with Holyoke Community College (HCC): Conservation Commission approval. (3) In 2011, HG&E partnered with HCC for the collection Engineering: preliminary engineering was completed, of data on the number of fish and species passed at all major equipment specifications were issued for the Robert E. Barrett Fishway. Activities included: bid, and major equipment contracts were awarded biological sampling, trapping and loading of shad, for power transformers and metal clad switchgear trapping of Shortnose sturgeon and Atlantic salmon, assemblies. The project is on track to commence and, observations of lift operations and eel passage. construction in April 2012, with energization by end of year.
2011 HG&E Shad Derby The annual HG&E Shad Derby is one of the region's largest fishing events. The Derby offers both adult and youth fishing enthusiasts the opportunity to enjoy the recreational benefits of the Connecticut River. In 2011, the HG&E Shad Derby celebrated its 46th anniversary.
The 2011 Shad Derby was held on the weekend of May 21-22. The event attracted 103 registrants in the Senior Division and 28 registrants in the Junior Division. With registration required only at the time of weighing, many more boat and bank anglers participate in the event than the numbers reflected above. 46TH
David Bello of Springfield, Massachusetts and Larry Perreault of Chicopee, 2011 Massachusetts shared the first place award in the 2011 Senior Division with each catching a 5 lb. shad. Daniel Taylor of Easthampton, Massachusetts led the Junior Division with a 4 lb. 9 oz. shad. The John Dinapoli Award for the first shad caught by a youth went to Riley Baker.
6 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T Electrice Operations-ContinuedlecElectrict Distributionr ic Distribution level substation capital work included the Electric distribution system improvements in 2011 integration of SCADA to the Holyoke Substation included the replacement of three sections of primary Outdoor Switchgear. Nine multifunction meters cable: a 1,000' section of underground primary cable (MFM) were installed, and all breaker statuses were on upper Central Park Drive, an 800' section of brought into SCADA. At Walnut Substation, phase I of underground primary cable that serves as the backup the SCADA implementation was completed, with all feed to Providence Hospital, and a one mile section of preliminary engineering and material procurement overhead primary wire replaced with 35 kV rated completed. Installation and testing will occur in spacer cable for the 24B4 generation circuit to Hadley 2012. At West Holyoke Substation, the battery and Falls. One new above-grade termination cabinet was charger systems were replaced. installed on Lower Westfield Road which eliminated the use of feed-thru devices inside the manholes while As part of the Department's preventative maintenance providing sectionalizing and isolation capabilities (PM) plan, major maintenance and testing was should circuit issues arise. performed on various substation and plant equipment during the year. In summary, maintenance and/or This year began the first of two phases of testing was performed on 5 power transformers, 4 infrastructure improvements for our uptown network. (four) 15kV vacuum circuit breakers, 3 (three) 15kV A new conduit bank and network transformer air magnetic breakers, 7battery systems, 6 (six) 15kV modifications were completed for two of the four cables, 2 hydro generators, and 3 LTC controls. network circuits. A new 1,800' conduit bank with four Compliance related testing was also completed on the manholes extending from Maple Street on Hampshire 1657 line carrier system and under-frequency load Street to Chestnut Street then on Chestnut Street up to shedding systems. Cabot Street and from Essex Street to Suffolk Street was installed to alleviate underground congestion Support for Electric Distribution during the year along High Street and improve network reliability. Ten included the preparation of 71 switching orders with of the twenty network transformers were retrofitted 50 clearances issued for planned and emergency high with bushing wells to accommodate the new voltage work. Maintenance/repair operations were underground cable instead of the wiping sleeves that also performed as required on various distribution were used for lead cable terminations. equipment including monthly inspections of line recloser and capacitor switching controls. Support There were two areas in the Highlands in which was again provided for the City owned Flood Control backyard overhead infrastructure was addressed. Pumping Stations in the form of emergency Approximately 800' of new conduit bank was installed maintenance and pumping operations as required. at the end of George Street and Jefferson Street in Support was also provided in response to the October anticipation of extending existing underground primary snow storm, which included the emergency rebuilding cable to Vadnais Street and the EN White School in of eight sections of transmission line. the future. Primary wire on Yale Street and Pleasant Street was also relocated to the street. Four sections of primary wire were extended down Pleasant Street to Highland Avenue to eliminate the two sections of primary wire through the dingle, between Pleasant Street and Nonotuck Street. On Yale Street, all overhead facilities were relocated to the street.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 7 Electric Distribution-Continued eWork to eliminatel thee old paper insulatedc lead tThe firstr phase of thei Willimansettc Bridge was cable, (PILC) originating from Holyoke Substation, completed in 2011. The bridge, which connects continued in 2011. This is the third year of a multi- Chicopee and Holyoke on route 141, is being year project to replace all 50-60 year old PILC with replaced over a three year period. Overhead ethylene propylene rubber (EPR) insulated cable, infrastructure in the vicinity of the bridge was either which will improve reliability and eliminate the placed underground or removed. Three steel towers environmental issues associated with lead and the located around the bridge were also removed and asbestos tape covering on the PILC cables within replaced with new wood poles. Our fiber optic line manholes. The next circuits replaced were the serving Chicopee was temporarily relocated over the 17L12 and 17L14 circuits, which are two of the Connecticut River in order to accommodate four network circuits that services the downtown necessary work on the bridge. area. Approximately 6,500' of PILC on the 17L14 network circuit and approximately 3,500' of PILC on Twenty-four services on Arlington Street, Harvard the 17L12 network circuit was replaced with EPR Street, Lincoln Street, Laurel Street, Meadow Street, cable. In total, approximately two miles of PILC Myrtle Avenue, Nonotuck Street, Northampton was replaced and retired from service. New EPR Street, Parker Street, Pearl Street, Pleasant Street, cable was installed in preparation for transferring Sycamore Street, and Yale Street were relocated newly retrofitted network transformers onto each from heavily overgrown areas with difficult circuit in 2013. accessibility to the street. This will provide these customers with not only a more reliable electric Voltage conversion of both the O2 and O3 4.8 kV service but also protection from potential safety circuits originating from Oakdale Substation to 13.8 hazards and safety code violations which will, in kV was completed in 2011. The O2 circuit turn, reduce some of the tree trimming and outage conversion area, which had conversion ready costs of the Department. infrastructure already in place from 2010, included Beech Street between Sargeant Street and Cabot A number of preventative maintenance activities Street, and Cabot Street between Walnut Street and continued throughout the year. Three-C Electrical Pleasant Street including all connecting nearby was hired to perform testing of 113 new and used laterals. The O3 circuit conversion area included transformers. Osmose was also hired to perform Westfield Road between Northampton Street and 302 manhole inspections in the Oakdale, Elmwood, the Interstate 91 overpass, Hillside Avenue between and Highlands areas of the City and stray voltage Westfield Road and Cherry Street, Hitchcock Street, testing of approximately 30% of the City in the and Martin Street, including all connecting nearby downtown and Churchill areas. Infrared Analyzers laterals. Approximately three circuit miles of wire was hired to perform infrared inspections on all and 47 wood poles were replaced as part of the distribution circuits throughout the City. Annual project. This work also included other reliability visual inspections on all three transmission lines upgrades such as replacing all porcelain hardware were performed by in-house staff to meet ISO-NE with polymer and installing new crossarms, OP3 requirements. There were 145 padmount insulators, connectors, and fault indicators. transformers on various circuits inspected as well by in-house staff.
8 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T Electric Distribution-Continued In summary for 2011, HG&E set 180 poles and Reeliability statistics allowl the Deparetment to track itsc removedt 145. A netr 8,492 kVA iconnectedc load was service reliability and compare them from year to year installed on the distribution system. Some 15,733 with other municipal and private utilities. There are circuit feet of underground cable was installed while five statistics used to define the length and frequency 3,760 was removed. Similarly, 55,513 circuit feet of of interruptions to customers, system availability, and overhead wire was installed while 20,761 was the number of customers impacted by outages. removed. Approximately 5.5 miles of conduit was installed including 28,760 feet of PVC and 10 feet of Three new electric services, Mercy Care Prenatal steel. There was a net increase of 1 contract light in Center on Race Street, Gregory Manufacturing on the total number of contract lights and a net decrease Cabot Street, and CVS on Lower Westfield Road, of 1 in the total number of street lights on the resulted in a net additional connected load of 800 distribution system. kVA. There were also two solar projects placed online – one on County Road and the other on Meadow Metering Street – resulting in a 4 MVA connected load. There The metering group continued to make progress in its were also 4 new homes that required new electric gas and electric automatic meter reading (AMR) services resulting in a connected load of 25 kVA. The migration, as all residential and smaller commercial new homes were constructed on available lots on Elm customer meters can now be read remotely. On the Street, Chestnut Street, and Granville Street. electric side, the group installed 72 AMR meters in the field this year. There are now a total of 17,363 AMR electric meters installed, which represents approximately 99% of all electric meters. The Electric Distribution System Reliability Statistics remaining installations represent mostly larger
TYPICAL commercial and industrial customer meters. There MUNICIPAL PRIVATE were 6,005 meters retrofitted with a new register HG&E 2011 HG&E 2010 UTILITY UTILITIES board accommodating an increase in signal output for ASAI 99.993% 99.991% 99.989% 99.982% added reliability and future outage reporting. On the gas side, the metering group installed a total of 1,279 CAIDI 83.75 min 57.60 min 60 min 90 min AMR-enabled gas meter indexes. Along with SAIDI 35.89 min 44.95 min 60 min 102.32 min assistance from the gas service department, all but 3
SAIFI 0.43 outages 0.78 outages 1outage 1.02 outages gas meters installed (11,957 total) can be read remotely. MAIFI 1.18 events 1.43 events 2-4events 3.13 events
Average System Availability Index (ASAI) - A total of 44 transformer, station service, and represents how much of the time a customer generation meters were tested to meet ISO-NE's OP- actually has service available to them. 18 metering requirements which include meters at Customer Average Interruption Duration Index Ingleside, Prospect, and Holyoke substations, Cabot 8, (CAIDI) represents the average time expected to City 1-4, Riverside, Chemical, Hadley Falls, Beebe take to restore service after a sustained interruption. Holbrook, Harris, & Valley generation stations, and the System Average Interruption Duration Index (SAIDI) County Road and Meadow Street solar generation defines the average interruption duration per facilities. Two of these meters at Chemical & City 4 customer served. generating stations were upgraded to accommodate System Average Interruption Frequency Index Ethernet connectivity. These meters are tested by (SAIFI) defines the average number of times that a Electric Operations/Hydro personnel on a biannual customer's service is interrupted during a given year. basis through the use of the Department's own Momentary Average Interruption Frequency Index portable test unit. (MAIFI) - defines the average number of momentary outages a customer may experience in a year.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 9 Metering-Continued During 2011, the hydro preference power credits to our Testing of current transformers (CT) continued at various residential customers remained at 1.2¢/kWh throughout the customer locations. There were 154 CT rated services year which generated total savings of $1,140,503, $473,792 that were tested by both in-house meter personnel and from Department’s hydro and $666,711 from NYPA eThree-C Electrical.l eThis testing ensures cthat metering tentitlements.ric remains accurate and any issues found are addressed in a timely fashion. The Department submitted retirement requests to ISO New England for Cabot 6 & 8 steam turbine generators with an Throughout the year, the metering group continued to effective date of June 1, 2015. ISO-NE determined that there support the Credit Department performing delinquent is not a reliability need for these units and the requests were customer ons and offs, tagging notifications, meter reads, approved. and collections. In total, 6,226 credit related duties were performed in 2011. The Department made small incremental energy purchases each month in 2011 until meeting our desired hedge target of In summary, there were a net total of 16 electric meters 28,336 MWh for the summer period. In this manner, we installed, 5,589 electric meters replaced, and 201 electric progressively decreased our risk of rising prices and increased meters retired having an average age of 24.72 years. A the stability of our future energy cost. This approach achieved total of 10,968 electric meters were tested and calibrated, an average cost of power of $1.5M or $52.97/MWh. 89 voltage tests, 2,319 electric successions performed, Benchmarked against the Day-Ahead Mass Hub Locational and 123 no or low consumption reports investigated for Marginal Price (LMP) resulted in a net gain to the Department metering problems and/or theft of service. A net total of of $41,800. 85% of this energy was during on-peak hours 14 current transformers were installed and 34 current where the Department is most exposed due to the volatility of transformer rated services were tested. On the gas side, the energy markets. Throughout the year, the Department 1,725 meters were removed and tested, 1,892 meters purchased, under contract, 1,875 MWh of energy from the were installed, another 1,625 meters were sealed, and 86 Open Square canal hydro station. meters were retired. Constellation Energy worked with the Department to design, Wholesale Power build, own and operate two ground mounted solar projects A total of 286,117 MWh of net generation was produced located on Mueller Road (3.497 MW DC) and Meadow Street from the Department’s hydro resources which continued to (1.029 MW DC), for a total project size of 4.526 MW. This help drive down the overall cost of power. project went commercial in the end of December 2011. The expected annual production from this project is 5,500 MWh. Municipal The Department signed a 20 year Power Purchase Agreement 5.5% to purchase 100% of the power output. The Mueller Road facility became the largest operating solar plant in New England. Industrial 12.8% Residential The Forward Capacity Market (FCM) is an auction based approach to meeting New England's forecasted capacity 31.3% requirements for a future year. Resources clearing in the auction are paid the market clearing price and acquire a capacity supply obligation. This market was implemented on June 1, 2010 corresponding with the termination of the Commercial Forward Capacity Transition Period. HG&E's resources with a 50.4% capacity supply obligation that cleared an auction were paid a total of $432,365 during 2011. This total included any adjustments for Peak Energy Rents (PER) and resource performance. PER is a downward adjustment of FCM payments to reflect energy market revenues earned during 2011 Electric Division Revenues (by Customer Class) high priced hours.
10 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T Wholesale Power-Continued As a member of the Massachusetts Clean Energy Center, As a Load Serving Entity (LSE), the Department has a formerly Massachusetts Technology Collaborative, HG&E capacitye requirement thatl variede between 45.356MWc paid $153,648t in 2011r into the Rienewablec Energy Trust and 46.070 MW. This requirement was adjusted by (RET) through an added $0.00050/kWh Renewable Hydro-Quebec Installed Capacity Credits (HQICC) and any Energy Charge in each rate class. By joining the RET, Self Supply MWs. The Net Regional Clearing Price is the HG&E is eligible to receive grant money for renewable rate at which load pays for capacity. This rate varied energy projects. In 2011, through the Commonwealth throughout the year between $3.07/kW-Month and Hydro Initiative, HG&E received $300,000 for the $3.92/kW-Month. The Department's Capacity Load refurbishment of its Boatlock Unit 2 hydro generating Charge for the year was $1,504,198. The Department's wheel. annual net capacity position for 2011 was a charge of $1,071,833. The Department's average annual carbon dioxide emissions per MWh for 2011 is 82 lbs. The following The Department self-supplied 59.866 MW of its chart is a summary of the Department's carbon footprint. resources for the first five months and 49.091 MW of its resources for the balance of the year. This resulted in a $2,316,392 reduction in load charges for the Department. 2011 Annual Carbon Footprint CO2 EMISSIONS Transmission Regional Network Service (RNS) rates FUEL TYPE ENERGY (MWh) TONS lbs CO2 / MWh decreased 1.5% from $64.82884/kW-year to Oil 541 511 $63.87374/kW-year in June 2011. The Department's RNS annual charge of $3,903,359 was offset by 9.17 Renewable 299,997 0 circuit miles of Pool Transmission Facility (PTF) revenues Nuclear 55,736 0 of $1,511,828, reducing the Department's annual RNS System Power 28,336 15,301 charge to $2,391,530. Total 384,610 15,812 The Department executed several contracts for the sale of renewable certificates through the Nepool-GIS market system. These transactions brought in $9,364 of revenues through selling CT Class 2 and ME respective renewable portfolio standard market requirements. Remaining 2011 calendar year certificatesResidential were banked to allow for sale during 2012. 78.00% 31.6%of the IndustrialNuclear Department's 2011 generation is from renewable 12.0% 14.5% System Power resources (hydro) and 92.49% of its generation is carbon 7.4% free (renewable and nuclear). The following graph summarizes the Department's resource mix by energy type. Note that System Power represents short-term Oil/Gas 0.1% bilateral contracts that were procured duringCommercial the summer Renewable time frame. 49.8% 78.0%
Holyoke was designated a Green Community in July of 2010, and was awarded $321,000 for the upgrade of LED traffic lights, LED roadway lights, and insulation for the City Hall. The Department purchased six hundred and fifty LED roadway lights (cobra-head style) and began 2011 Sources of Annual Electric Supply replacement in the West Holyoke area of the city.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 11 supply 2 0 1 1 P O W E R S U P P L Y R E S O U R C E S
CONTRACT CAPACITY (kW) PROJECT CONTRACT PROJECT NAME FUEL TYPE START DATE WINTER SUMMER END DATE
BASE UNITS NYPA FIRM HYDRO 1985 2,662 2,662 9/1/25 MILLSTONE 3 - MIX 1 NUCLEAR 1986 1,334 1,334 11/25/45 * MILLSTONE 3 - PROJ 3 NUCLEAR 1986 2,325 2,325 11/25/45 * SEABROOK - MIX 1 NUCLEAR 1990 147 147 3/31/30 * SEABROOK - PROJ 4 NUCLEAR 1990 3,306 3,306 3/31/30 * SEABROOK - PROJ 5 NUCLEAR 1990 408 408 3/31/30 *
INTERMEDIATE UNITS HYDRO QUEBEC 1 N/A 1986 1,189 1,189LOU ** HYDRO QUEBEC 2 N/A 1989 1,938 1,938LOU ** W.F. WYMAN 4 #2 OIL 1978 4,199 4,152 LOU * *** - Unit offline pending retirement PEAKING UNITS HOLYOKE #6 & #8 #2 OIL, #6 OIL, GAS 1951 18,605 18,605 OWNED * NYPA PEAK HYDRO 1985 578 578 9/1/25 STONYBROOK GT 2A #2 OIL 1982 2,476 1,910 LOU * STONYBROOK GT 2B #2 OIL 1982 2,413 1,850 LOU * capacity entitlement which continues for life of unit * - Investments continue for the life of unit (LOU)
HYDRO UNITS ** - After 8/31/01 there is no firm energy contract, only HADLEY FALLS 1&2 HYDRO 1949 33,400 33,400 OWNED * RIVERSIDE 8 HYDRO 1931 4,500 4,500 OWNED * RIVERSIDE 4-7 HYDRO 1921 3,435 3,435 OWNED * BOATLOCK HYDRO 1924 3,094 3,094 OWNED * (All capacity contracts follow the ISO New England calendar system) HOLYOKE HYDRO / CABOT 1-4 HYDRO 1923 2,590 2,590 OWNED * CHEMICAL HYDRO 1935 1,480 1,480 OWNED * BEEBE HOLBROOK HYDRO 1948 205 205 OWNED * SKINNER HYDRO 1924 280 280 OWNED * VALLEY HYDRO HYDRO 2004 790 790 OWNED * ALBION A HYDRO 2004 281 281 OWNED * ALBION D HYDRO 2004 395 395 OWNED * GILL D HYDRO 2004 330 330 OWNED * OPEN SQUARE HYDRO 2004 525 525 YR TO YR CROCKER AB HYDRO 2004 370 370 OWNED * *** CROCKER C HYDRO 2004 230 230 OWNED * *** GILL A HYDRO 2004 450 450 OWNED * *** MT. TOM HYDRO 2004 473 473 OWNED * *** NONOTUCK HYDRO 2004 472 472 OWNED * ***
12 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T Telecom Division The Division functionally completed its two year initiative of In 2011, the Telecom Division continued sales growth in auditing and electronically mapping the fiber optic cable plant commercial network services. In an effort to bring business throughout the City. While approximately 80% of the electronic customers advanced phone services over the HG&E Fiber mapping input is complete, the Division is now using this GIS tNetwork,e Telecom formed al businesse development partnershipc informationo on a daily basis for cablem plant design and with OTT Communications of Portland, ME. These new planning. services will be launched in 2012. Network Upgrades - Enterprise Network In support of evolving electric and gas information intelligence The Division continued its support for the design, operation and interconnectivity, the Division completed a major utility and maintenance of the Department's internal operations operations network overhaul. The Division also continued its network and information intelligence needs. support for the City of Holyoke information technology operations. 2011 major accomplishments include: Major overhauls to the core and distribution elements of the operations network were completed in February 2011. This Network Expansion - Service Provider Network included 4 core switches and 9 distribution switches at various In 2011 the Telecom Division continued to provide support to HG&E facilities throughout the City. Understanding that the the Green High Performance Computing Center (GHPCC) fiber utility operations network carries all of HG&E's operational optic plant design. Throughout this process, HG&E has information applications is critical to HG&E's daily operations. worked closely with MIT to secure the role as incumbent dark This required lab staging, configuring, testing and verifying all optical fiber plant provider. of the new gear, developing a migration and cutover plan and performing the required cutovers at times of lower network Additionally, the Division began working with the activity so as to limit the amount of disruption to HG&E Massachusetts Broadband Institute (MBI) to assist in the operations. implementation of the 1,300 route mile fiber optic network throughout Western Massachusetts. The Division is The Telecom Division continued its support for the Electric negotiating a partnerships agreement with MBI, which may Division's NERC regulatory compliance efforts, SCADA include providing dark optical fiber plant services. information intelligence, and distribution system automation projects in 2011. The entire Electric SCADA application system The Division continued to grow the network services portfolio, (servers, workstations and application software) was upgraded and now supports a total 190 business customers. and replaced. This involved lab staging, migration planning, regression testing, etc to ensure the Electric Division had Network Upgrades - Service Provider Network access to intelligence systems. This commercial network, now in its fourteenth year of . operation, provides high-speed network connectivity via fiber Consulting Services - City Network optic lines to business-class customers located in Holyoke, The Division has responsibility for ongoing maintenance, Chicopee and Downtown Springfield. Both the Department installation and operation of applications for the City's network. itself and the City receive services from this same network. In 2011, the Division supported the City on the Cisco Smart The platforms in service are industry standard MetroE Connected Communities IPICs (IP Interoperability and (Metropolitan Ethernet) and IP (Internet Protocol) supporting Collaboration System) pilot program to interconnect two radio speeds in excess of 1Gbps (Gigabit per second). Investment in system channels over the network. The Division worked hand this network continues as customer needs grow and in hand with Cisco Systems and managed the implementation applications requirements evolve. In 2011 two key MetroE of the required servers, routers and software located at HG&E, aggregation switches, 91 Walnut Street, Holyoke and 1500 the Police Dept. and the Fire Dept. Main Street, Springfield, were upgraded and replaced. The Division also completed an overhaul to the Holyoke Public The Division continued its business development with OTT Schools Websense Internet Content Filtering System to a more Communications and completed major planning, connectivity robust and flexible platform to support HPS's evolving Internet and operational milestones. A technical project plan detailing application and connectivity requirements. major aspects of the relational, operational and engineering aspects required to deliver quality business telephone services Telecom Help Desk - Service Summary was developed and agreed upon. All dedicated network The Telecom Division administers a centralized help desk, connectivity requirements were completed and tested between accepting support calls from Department, City and Commercial HG&E and OTT. network customers. In 2011, the help desk closed 2,462 Helpdesk tickets, solving 1,112 issues for Department employees, 1,103 for the City of Holyoke, and 247 for Internet and Networking customers.
H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T 13
Community Goodwill Economic Development gCommunity involvemento is a central beliefo of In 2011, dthe Department providedw $21,909 ill the public power philosophy, and the in additional discounts to businesses that Department is proud of the role it takes in have relocated or expanded within the City making Holyoke a better place to call home. under the Economic Development Discount Program. This program provides an In 2011, HG&E offered support to several additional 10 percent off their gas and major community events including the electric bills for a 3 year period. Hispanic Family Festival, the St. Patrick's Day Parade, and the Holyoke Fireworks, which is The Department also offers a similar underwritten by the department. In total, over program for residential customers, under $100,042 in sponsorships, and over $9,506 which first-time Holyoke homebuyers can in labor was provided for nonprofit causes. receive 10 percent off their first three years of gas and electricity bills. In 2011, the Neil J. Moriarty, Jr. Scholarship Department provided $69,189 in additional for Cadet Engineers discounts under this program. The Cadet Engineer program is dedicated in memory of our late Commission Chairperson, HG&E also promotes economic growth Neil J. Moriarty, Jr. He often noted that the through our Commercial and Residential admission of new students into the program Energy Conservation Programs. These plans was one of most rewarding actions that the offer interest-free financial assistance to our Commission made each year. customers, thus helping them make their homes or businesses more energy efficient. The program offered aid to 3 Holyoke students In 2011, the Department paid out over in 2011 who are pursuing a Bachelor of $1,160,930 in zero-interest assistance to Science in Engineering. The Commission voted Holyoke home and business owners. to admit Adam P. Dunne, Emmit J. Joyal, and Michael A. Trudell as new participants to this Municipal Benefits program in 2011. The Department contributed $1,058,320 to the City of Holyoke's General Fund during Summary of Community Support 2011 as an in-lieu of tax payment. Payment discounts of $331,738 were provided on the Nonprofit Sponsorships $100,042 Nonprofit Labor $9,506 City's utility accounts. Cadet Engineer Program $63,750 Beyond these direct financial benefits, HG&E Payment in Lieu of Taxes $1,058,320 continues to provide other valuable services Municipal Payment Discounts 331,738* to the City including: offering low-cost street Discounted Street Lighting 528,860 lighting, low-cost maintenance on city- owned gas and electric equipment, and low Economic Dev. Discounts $21,909 municipal rates to City departments on their New Homeowner Discounts 69,189 gas and electric accounts.
* Based on market average of 22.5¢/kWh vs. 10.66¢/kWh billed Energy Conservation ** Programs that encourage conservation and economic development, Assistance Programs $1,160,930 ** assistance is paid back at zero interest over a number of years
Total Community Support $3,344,244
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16 H O L Y O K E G A S & E L E C T R I C — 2 0 1 1 A N N U A L R E P O R T H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A1 This page intentionally left blank.
A2 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Balance Sheets — December 31, 2011 and 2010
ASSETS 2011 2010 Plant, Property and Equipment: Plant, property and equipment in service $159,331,292 $169,463,325 Construction in progress 6,808,735 3,671,706 166,140,027 173,135,031 Less accumulated depreciation 70,948,906 75,188,764 Total Plant, Property and Equipment 95,191,121 97,946,267 Restricted Assets: Funds required under bond indenture 12,906,139 12,803,318 Collateral required under note payable 5,134,876 Customers' deposits 590,284 576,237 Total Restricted Assets 18,631,299 13,379,555
Other Fund Reserves: Purchased Power Funds 2,598,602 2,729,765 Rate Stabilization Funds 29,933,036 30,644,699 Post employment benefit funds 2,682,214 2,013,458 Total Other Funded Reserves 35,213,852 35,387,922
Current Assets: Cash 65,977 20,170 Operating Cash Invested 1,830,665 1,066,947 Accounts receivable net of reserve for uncollectible accounts of $515,024 in 2011 and 2010 6,059,292 7,075,463 Accounts receivable - City of Holyoke 346,183 435,615 Note receivable - current portion 319,195 Materials and supplies 2,292,204 2,120,630 Fuel for electric generation and gas in storage 1,377,466 1,181,012 Prepaid expense 693,079 455,558 Other receivables 3,516,980 3,570,924 Total Current Assets 16,501,041 15,926,319
Other Assets: Other investments 214,646 222,772 Preliminary investigation charges 2,837,561 2,529,285 Intangible assets 2,616,881 3,344,803 Note receivable - after one year 10,680,805 Other receivables - after one year 2,426,076 2,694,391 Total Other Assets 18,775,969 8,791,251 TOTAL ASSETS $ 184,313,282 $ 171,431,314
LIABILITIES AND NET ASSETS 2011 2010 Long-Term Liabilities: Bonds payable - long-term $36,501,667 $37,770,000 Notes payable - long-term 11,799,761 1,828,030 Leases payable - long-term 78,006 86,862 Accrued compensated absences 2,456,702 2,400,382 Accrued other post employment benefits 2,615,089 1,304,711 Deferred rate stabilization costs 38,853,290 37,353,290 Total Long-Term Liabilities 92,304,515 80,743,275 Current Liabilities: Due to other funds 4,490,700 271,956 Accounts payable 7,160,126 7,402,898 Current portion bonds, notes and leases payable 2,304,946 1,863,357 Customers' deposits 526,643 523,625 Accrued liabilities 554,498 1,436,568 Accrued interest 156,772 161,232 Accrued environmental costs 169,627 Current portion - accrued compensated absences 168,804 203,896 Current portion - deferred rate stabilization costs 3,300,000 4,800,000 Deferred credits - current 241,503 227,412 Total Current Liabilities 18,903,992 17,060,571 Total Liabilities: 111,208,507 97,803,846 Net Assets: Invested in plant, property and equipment - net of related debt 55,445,540 56,398,018 Restricted for debt service 18,041,015 12,803,318 Unrestricted -381,780 4,426,132 Total Net Assets 73,104,775 73,627,468 See accompanying notes. TOTAL LIABILITIES AND NET ASSETS $ 184,313,282 $171,431,314
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A4 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Statement of Revenues, Expenses and Changes in Retained Earnings December 31, 2011 and 2010
See accompanying notes.
Total 63,193 -81,793 714,740 -154,235 -147,876 -503,770 -973,312 6,968,099 1,023,252 4,844,039 1,337,266 1,608,563
-1,925,850 10,617,934 -1,909,906 65,246,421 -1,457,463 -1,079,746 -3,536,877 38,659,720 -1,058,320 $68,868,306 85,008 74,600,780 $ 73,627,468 3,133,377 $ 3,621,885
686,190 4,390,876 23,734,783 7,471,010 3,844,865 43,261,101 $46,108,933 Electric / Steam $ 2,847,832 3,133,377 Telecommunications
Gas 337,062 2,577,223 $ 774,053 14,924,937 $22,759,373 2010 3,146,924 21,985,320 999,174
Total -79,765 105,057 -400,606 -187,958 -130,522 -597,399
-1,910,201 -7,064,383 -7,928,241 -1,058,320 -522,693 29,791,358
$ 66,641,142 886,201 3,570,046 7,911,309 1,195,604 10,736,092 4,972,865 58,177,274 $ 73,104,775 535,627 $ 8,463,868 1,451,335
73,627,468
15,838,807 Electric / Steam $ 7,120,465 870,629 $ 44,060,291 3,570,046 5,224,596 36,939,826 7,515,186 3,920,562 Telecommunications
Gas 13,952,551 $ 1,343,403 324,975 2011 $ 22,580,851 2,686,713 21,237,448 1,052,303 3,220,906
Cost of power, gas water and steam sold Transmission Distribution Customer accounts General and administrative Depreciation plant and equipment Total Operating Expenses Investment income Net gain (loss) on investments Bond interest expense Other interest expense Miscellaneous income - net Amortization Impairment loss - Harris water rights Net loss - plant retirements Boiler demolition expense Net gain - merchandise jobbing Mt. Tom property assessment expenses Taxes - others Total Other Revenues (Expenses) Payment in lieu of taxes - City Holyoke
Net Assets - Beginning of Year
Operating Revenues Operating Expenses: Operating Income Other Revenues (Expenses):
Change in Net Assets Before Operating Transfers Change in Net Assets Net Assests - End of Year
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A6 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Statement of Cash Flows — December 31, 2011 and 2010
2011 2010 Cash Flows from Operating Activities: Cash received from customers $ 68,409,983 $ 67,787,392 Cash paid to suppliers -43,217,853 -43,969,467 Cash paid to employees -11,221,571 -11,079,918 In lieu of taxes paid -1,058,320 -1,058,320 Interest paid -78,756 -17,260 Net Cash Provided by Operating Activities 12,833,483 11,662,427
Cash Flows from Investing Activities: Proceeds from sale of investments 6,637,877 24,925,021 Purchase of investments -14,095,727 -18,404,409 Net transfer to restricted assets and other fund reserves 22,601 2,665,604 Investment income - net of fees 1,367,701 1,320,951 Decrease (increase) in invested cash 1,201,378 -1,698,613 Advance of note receivable -11,000,000 Net payments received from (advanced to) customers 188,315 -841,282 Net Cash Provided by (Used in) Investing Activities -15,677,855 7,967,272
Net Cash Provided by Noncapital Financing Activities Decrease (increase) in due to other funds 4,218,744 -4,823,151
Cash Flows from Capital and Related Financing Activities: Investment in plant, property and equipment -9,218,186 -10,489,423 Proceeds from sale of plant, property and equipment 460,476 Proceeds from notes payable 11,000,000 Payments on bonds, notes and leases payable -1,956,629 -1,812,783 Interest paid on bonds, notes and leases payable -2,023,863 -2,067,757 Increase in preliminary investigation charges -279,432 252,522 Investment in MGPHCC building project 1,149,545 -1,149,545 Net Cash Used in Capital and Related Financing Activities -1,328,565 -14,806,510
Increase in Cash 45,807 38
Cash - beginning of year 20,170 20,132
Cash - End of Year $65,977 $20,170 See accompanying notes.
Supplemental Cash Flow Information: Total interest paid $ 2,102,619 $ 2,085,017
Supplemental Noncash Financing Activity: Equipment acquired under capital lease $ 92,760 $ 96,763
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A8 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Schedule of Reconciliation of Operating Income to Net Cash Provided by Operating Activities — December 31, 2011 and 2010
2011 2010
Operating Income $ 8,463,868 $ 3,621,885
Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Deprecation 4,972,865 4,844,039 Other interest expense -78,756 -17,260 Other income 1,296,336 887,433 Boiler demolition expense -1,457,463 Mt. Tom property assessment expense -1,079,746 Payment in lieu of taxes and other property taxes -1,138,085 -1,140,113 Changes in operating assets and liabilities (Increase) decrease - accounts receivable 1,105,603 -422,049 - materials and supplies -171,574 457,913 - fuel for electric generation and gas in storage -196,454 411,276 - prepaid expense -237,521 12,614 - other receivables -1,237,045 76,758 Increase (decrease) - accounts payable -242,772 2,428,018 - customers’ deposits 3,018 -32,037 - accrued liabilities -882,070 24,831 - accrued compensated absences 21,228 -119,095 - accrued other post employment benefits 1,310,378 1,304,711 - deferred rate stabilization costs 3,096,000 - accrued environmental costs -169,627 -942,875 See accompanying notes. - deferred credits 14,091 -292,413
Total Adjustments 4,369,615 8,040,542
Net Cash Provided by Operating Activities $ 12,833,483 $ 11,662,427
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A10 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
1.0 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Consolidation - These consolidated financial statements include the City of Holyoke, Massachusetts Gas and Electric Department and its wholly owned subsidiary, Holyoke Solar Cooperative. All intercompany transactions have been eliminated in consolidation. All intercompany receivables, payables and equity have also been eliminated.
Nature of Business - The consolidated financial statements present information on the activities of the Gas and Electric Department (the Department), an Enterprise Fund of the City of Holyoke, Massachusetts (the City). The Department provides gas, electric, water, and telecommunications services to its customers, substantially all of whom are local residents and commercial and industrial businesses. The Department also provided steam services through September 30, 2010. Approximately 63% of the Department's revenues are derived from its electric division. The Department is subject to regulation by the Federal Energy Regulatory Commission (FERC), the Massachusetts Department of Public Utilities (DPU), and the Massachusetts Department of Telecommunication & Cable (DTC).
The Holyoke Solar Cooperative (the Cooperative) is a cooperative organized in Massachusetts, in December, 2010, and is owned by the Department (its original Member). The Cooperative will engage in transactions associated with the purchase, acquisition, distribution, sale, resale, supply and disposition of energy or energy-related services to wholesale or retail customers. The Cooperative is subject to the same federal and state laws and regulations applicable to municipal lighting plants or other public entities that provide those services.
Accounting Method - The consolidated financial statements are prepared on the accrual basis. The Department and the Cooperative apply all Governmental Accounting Standards Board (GASB) pronouncements as well as the Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements.
Net Assets - The difference between assets and liabilities is net assets. There are three components of net assets: invested in property, plant and equipment - net of related debt, restricted for debt service, and unrestricted.
Net assets invested in property, plant and equipment - net of related debt, consists of capital assets, less accumulated depreciation, reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.
Net assets are restricted when constraints placed on net asset use are either (1) externally imposed by creditors [such as through debt covenants], grantors, contributors, or laws or regulations of other governments or (2) imposed by law through constitutional provisions or enabling legislation. The Entities' restricted net assets as of December 31, 2011 and 20 l 0 are related to the bond debt reserve funds and collateral required under note payable.
Unrestricted net assets are those that are not "invested in property, plant and equipment - net of related debt" or "restricted for debt service".
Expense Allocation - Expenses associated with a particular division of the Department are charged to that division. For the years ended December 31, 2011 and 2010, shared expenses including administrative and supporting costs are allocated to each division as follows:
Gas 35.0% Electric, Steam and Telecommunications 65.0%
Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principals generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Plant, Property and Equipment - Additions to and replacements of plant, property and equipment are recorded at cost. The cost of plant, property and equipment retired, less accumulated depreciation and salvage, is charged against revenue in the year retired. The cost of repairs and minor renewals is charged to maintenance expense.
Depreciation - Depreciation of $4,972,865 in 2011 and $4,844,039 in 2010 is computed using the straight line method. The composite rate for 2011 and 2010 is 3% of depreciable property in service. The composite rate is in accordance with Massachusetts Department of Public Utilities regulations.
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A11 Notes to Financial Statements — December 31, 2011 and 2010
1.0 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED) Preliminary Investigation Charges - This account represents expenditures for preliminary surveys, plans, investigations, etc. made for the purpose of determining the feasibility of utility projects under contemplation. At December 31, 2011 and 2010 the balance included costs associated with the Mt. Tom wind pre-permitting phase.
Materials, Supplies and Fuel - Materials, supplies and fuel are valued at average cost.
Revenue Recognition - Operating revenues are recognized on the basis of cycle billings rendered monthly, net of discounts. Revenues are not accrued for services delivered beyond such cycle billing dates. Discounts reported for the years ended December 31, 2011 and 2010 are as follows:
2011 2010 Gas $ 1,912,968 $ 1,892,894 Electric 3,604,935 3,599,184 Steam 12,861 Total $ 5,517,903 $ 5,504,939
Income Taxes - Income of the Department is excluded from taxation by Section 115 of the United States Internal Revenue Code.
Investments - Investments totaling $46,646 and $54,772 in 2011 and 2010, respectively, represent the Department's equity in New England Hydro-Transmission Corporation and New England Hydro-Transmission Electric Company. These investments represent .2653 percent of the issued common stock of these untraded companies.
In addition, the Department has invested $168,000 with the Public Utility Mutual Insurance Company (PUMIC). PUMIC was formed to provide general insurance to members of the Public Utility Risk Management Association (PURMA).
These investments are carried at original cost on the balance sheets. It was not practicable to estimate the fair value of these investments.
Investments in debt and equity securities are recorded at fair market value (See Note 5).
Interest Capitalized - The Department follows the policy of capitalizing interest as a component of the cost of plant, property and equipment in service constructed for its own use. During the years ended December 31, 2011 and 2010, the Department capitalized interest of $-0- and $34,721, respectively.
Intangible Assets - Intangible assets are recorded at cost. Intangible assets subject to amortization include debt issue costs, customer contracts, the franchise area fee associated with the December, 2001 hydroelectric project purchase, and the FERC licenses associated with the hydroelectric generating facilities purchased in November, 2004. Debt issue costs are being amortized on a straight-line basis over the term of the issue. Customer contracts, franchise and FERC licenses are being amortized on a straight-line basis over the remaining lives of the respective licenses. Intangible assets not subject to amortization include water rights acquired with the hydroelectric generating facilities purchased in November, 2004. These costs are evaluated annually for impairment.
Cash - For purposes of the statement of cash flows, cash includes cash on hand and cash in the Department's checking and money market accounts..
Environmental Matters - Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenues are expensed. Liabilities are recognized for remedial activities when the cleanup is probable and the cost can be reasonably estimated. Estimated liabilities are not discounted to present value.
Accounts Receivable - Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the valuation allowance based on its collection history and its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Advertising - The Department expenses the cost of advertising as incurred. Advertising expense was $36,765 and $45,609 for the years ended December 31, 2011 and 2010, respectively.
Energy Tax - The Department is required to collect, on behalf of the State of Massachusetts, an energy tax based on 6.25% of gross sales to its commercial customers. The Department's policy is to exclude these energy taxes from revenue when collected and expenses when paid, and instead, record the collection and payment of energy taxes through a liability account.
A12 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
2.0 PLANT, PROPERTY AND EQUIPMENT IN SERVICE:
Plant, property and equipment in service consists of the following:
2011 Electric/ Telecommunications Gas Total
Land $ 3,423,554 $ 288,804 $ 3,712,358 Plant Investment 112,226,556 33,995,591 146,222,147 Office Furniture and Equip. 2,563,585 1,211,063 3,774,648 Transportation Equip. 3,536,859 1,062,420 4,599,279 Other 723,556 299,304 1,022,860 Total $ 122,474,110 $ 36,857,182 $ 159,331,292
2010 Electric/ Telecommunications Gas Total
Land $ 3,412,358 $ 288,804 $ 3,701,162 Plant Investment 124,511,721 32,330,920 156,842,641 Office Furniture and Equip. 2,473,466 1,186,231 3,659,697 Transportation Equip. 3,271,606 998,959 4,270,565 Other 704,689 284,571 989,260 Total $ 134,373,840 $ 35,089,485 $ 169,463,325
3.0 CASH AND RESTRICTED ASSETS:
The Department participates in a cash and investment pool maintained by the City. In addition, the Department holds certain cash separately from the pool.
Custody and use of restricted assets are subject to requirements and restrictions imposed under contractual agreements, bond indentures, and the General Laws of the Commonwealth of Massachusetts, and are not available for normal operating purposes. Purchased power funds are on deposit with Massachusetts Municipal Wholesale Electric Company (MMWEC) to pay for energy and related services as required under existing agreements. Rate stabilization funds are amounts set aside to be used to stabilize current and future power costs. Post-employment benefit funds have been segregated by the Department to cover certain healthcare and life insurance benefits (See Note 17).
4.0 DUE TO / FROM OTHER FUNDS:
"Due to/from other funds" represents the amount by which the Department's equity in pooled cash differs from the expenditures paid and receipts collected by the City.
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A13 Notes to Financial Statements — December 31, 2011 and 2010
5.0 INVESTMENTS IN DEBT AND EQUITY SECURITIES
The Department invests various funds in debt and equity securities which are held in the Department's name by Flynn Financial Partners Ltd. All investments must be made in securities or deposits as authorized by Massachusetts General Laws, Chapters 54 and 55.
Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices.
Net unrealized gain on investments at December 31, 2011 and 2010 is $1,017,768 and $1,620,911, respectively.
Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Entities do not have a formal investment policy that limits investment maturities.
At December 31, 2011, the Department's and the Cooperative's investments were as follows:
Maturity in Years Fair Value 1-5 6-10 Over 10 Debt Securities: U.S. Government Mortgage- Backed Bonds $8,507,275 $1,534,810 $6,007,324 $965,141 Corporate Bonds 8,671,956 4,970,119 3,701,837 Municipal Bonds 362,328 362,328 Preferred Securities 469,200 469,200 $18,010,759 $6,504,929 $9,709,161 $1,796,669
Other Investments: Equity Mutual Funds 9,261,206 Fixed Income Mutual Funds 12,929,258 Cash and Cash Equivalents 619,754 $40,820,977
At December 31, 2010, the Department's investments were as follows:
Maturity in Years Fair Value 1-5 6-10 Over 10 Debt Securities: U.S. Government Mortgage- Backed Bonds $4,071,438 $1,020,084 $2,375,854 $675,500 Corporate Bonds 9,603,790 4,346,690 5,257,100 Municipal Bonds 337,195 99,709 237,486 Preferred Securities 483,300 483,300 14,495,723 $5,466,483 $7,870,440 $1,158,800
Other Investments: Equity Mutual Funds 7,310,616 Fixed Income Mutual Funds 11,474,393 Cash and Cash Equivalents 1,693,299 $34,974,031
A14 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
5.0 INVESTMENTS IN DEBT AND EQUITY SECURITIES (CONTINUED)
Credit Risk - Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Department does not have a separate formal policy regarding credit risk.
As of December 31, 2011 and 2010, the Department's investments were rated as follows:
2011 2010 Standard & Moody’s Standard & Moody’s Poor’s Investment Service Poor’s Investment Service
U.S. Gov’t and Agency Bonds AA+ AAA AAA to A AAA to AA2 Corporate Bonds and Notes AAA to BBB AAA to BAA2 AAA to BBB- AAA to BAA2 Municipal Bonds AA to AA- AA2 to AA3 AA to AA+ AA2 to AA3 Preferred Securities A- to BB+ BAA1 to BAA2 A- to BB+ BAA2
Custodial Credit Risk
Deposits - Custodial credit risk is the risk that the Department's deposits may not be returned to the Department. As of December 31, 2011 and 2010, $585,162 and $1,693,299, respectively, were uninsured and uncollateralized and subject to custodial credit risk.
Investments - For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Entities will not be able to recover the value of their investments or collateral securities that are in the possession of an outside party. The Entities' investment policy addresses credit risk by defining allowable investments.
Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the Entities' investment in a single issuer. There were no investments in any one issuer that represented greater than 5% of total investments at December 31, 2011 or 2010.
The investments are included on the Balance Sheet as follows: 2011 2010
Funds required under bond indenture $3,000,000 $3,000,000 Collateral required under note payable 5,134,876 Customers' deposits 577,659 564,408 Rate stabilization funds 27,595,563 28,329,218 Post employment benefit funds 2,682,214 2,013,458 Operating cash invested 1,830,665 1,066,947 $40,820,977 $34,974,031
In addition, rate stabilization funds of $2,337,473 at December 31,2011 and $2,315,481 at December 31, 2010 are on deposit with and are invested through the Massachusetts Municipal Wholesale Electric Company (MMWEC). These funds are reported on the consolidated Balance Sheets at fair value.
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A15 Notes to Financial Statements — December 31, 2011 and 2010
6.0 NOTE RECEIVABLES
Note receivable from Holyoke Solar, LLC due to the Cooperative 2011 in monthly installments of $74,191 including interest at 5.25%, secured by the Solar Installation Property, matures December, 2031. $11,000,000
Less - amount due within one year 319,195
Note Receivable - Due After One Year $ 10,680,805
7.0 OTHER RECEIVABLES
Other receivables consist of the following:
Hi-Lite Program - receivable from customers for loans 2011 2010 used to make energy efficient improvements to the customers property, secured by municipal liens $3,577,827 $3,766,142 Accrued interest receivable 259,545 175,911 MGPHCC building project 1,149,545 Miscellaneous other receivables 2,105,684 1,173,717 5,943,056 6,265,315 Less - amount due in one year 3,516,980 3,570,924
Other Receivables - After One Year (Hi-Lite Program) $ 2,426,076 $ 2,694,391
8.0 INTANGIBLE ASSETS
Amortized Intangibles: 2011 2010 Life in Gross Carrying Accumulated Gross Carrying Accumulated Years Amount Amortization Amount Amortization
Debt issue costs 30 $1,297,211 $434,566 $1,297,211 $391,326 Customer contracts and franchise fees 30 2,000,000 670,000 2,000,000 603,333 License fees 8 90,000 69,385 90,000 48,769 $3,387,211 $1,173,951 $3,387,211 $1,043,428
Unamortized Intangibles: 2011 2010 Fair Value Fair Value
Water rights $ 467,024 $1,001,020
Aggregate amortization expense was $130,522 and $147,876 for the years ended December 31, 2011 and 2010, respectively. Estimated aggregate amortization expense is $130,522 for 2012 and $109,907 for the following three years.
In accordance with generally accepted accounting principles, water rights were tested for impairment by comparing their fair value to their carrying value. The fair value was established based upon a combination of the discounted cash flows, projected output, and projected market value of output. Using this procedure, the carrying value of the water rights exceeded its fair value creating an impairment loss of $533,996 and $503,770 for the years ended December 31, 2011 and 2010, respectively, which is shown separately on the consolidated Statement of Revenues, Expenses and Changes in Retained Earnings.
A16 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
8.09.0 DEFERREDELECTRIC POWER RATE STABILIZATION PURCHASES COSTS
Electric Power Purchases were as follows: 2011 2010
Masspower $88,090 $416,958 MWEC NYPA 166,849 164,359 MWEC Wyman No. 4 246,343 274,031 MWEC -Nuclear Mix No. 1 2,566,418 2,828,587 MWEC -Nuclear Project No. 3 2,716,844 2,804,811 MWEC - Stony Brook/Peaking 138,376 98,593 MWEC- Special Project 2006A 4,570 34,455 NEPEX - net of sales 673,697 2,067,139 Open Square 86,731 75,554 Holyoke Solar, LLC 3,703 Short-term power supply - net of Hydro sales 2,563,406 3,001,415 $9,255,027 $11,765,902
8.010.0 DEFERRED DEFERRED RATE RATE STABILIZATION STABILIZATION COSTS COSTS
The Department established a rate stabilization reserve which will be used for rate stabilization in the development of future rates and allow the Department to remain competitive when (if) deregulation goes into effect. Each year the Department determines the amount to be charged or credited to the reserve. The Department has set aside funds which will be used to offset these reserves.
The reserve balances at December 31, 2011 and 2010 are as follows:
Amounts set aside are as follows: 2011 2010
Balance - beginning of year $42,153,290 $39,057,290 Current year increase 3,096,000
Balance - end of year $42,153,290 $42,153,290
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A17 Notes to Financial Statements — December 31, 2011 and 2010
11.0 BONDS PAYABLE:
Revenue Bonds- Bond payable - 2001 Series A 2011 2010 Date of issue: December 13, 2001 Interest rates: 2002-2008 4.00% 2009-2010 5.00% 2011-2018 5.375% 2019-2031 5.00% $35,895,000 $36,905,000 Clean Renewable Energy Bond Boatlock Hydroelectric Station Project - 2009 Series A Date of issue: January 15, 2009 Interest rate: 1.5% Secured by revenues of the Department (subject to existing pledge of revenues under the Revenue Bonds 2001 Series A) 1,875,000 2,083,333 37,770,000 38,988,333 Less - amount due within one year 1,268,333 1,218,333 Bonds Payable - Due After One Year $ 36,501,667 $ 37,770,000
Principal maturing and interest payments are anticipated to be as follows:
Principal Interest Total
2012 1,268,333 1,851,409 3,119,742 2013 1,328,333 1,790,918 3,119,251 2014 1,388,333 1,727,282 3,115,615 2015 1,453,333 1,660,396 3,113,729 2016 1,518,333 1,590,061 3,108,394 2017-2021 8,503,335 6,781,686 15,285,021 2022-2026 9,805,000 4,603,646 14,408,646 2027-2031 12,505,000 1,884,396 14,389,396 $37,770,000 $21,889,794 $59,659,794
A18 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
11.0 BONDS PAYABLE (CONTINUED)
The Department is required to satisfy certain bond covenant requirements in connection with the bonds payable. The following funds are required as part of the Bond agreements:
2011 2010
2001 Series A -
Debt Service Fund: The debt service fund represents amounts held by a trustee to provide for debt service payments. $ 544,504 $ 535,992
Debt Service Reserve Fund: The debt service reserve fund represents amounts held by a trustee in order to provide a reserve for the payment of the principal or redemption price and interest on the Bonds. 2,892,400 2,900,913
Operating Expense Fund: The operating expense fund is held by the City of Holyoke and represents an amount sufficient to pay only the operating expenses of the Department for the next succeeding month. 6,216,484 6,115,046
Operation and Maintenance Reserve Fund: The operation and maintenance reserve fund is invested with other funds as described in Note 5. 3,000,000 3,000,000
2009 Series A -
Debt Service Fund: The debt service reserve fund represents amounts held by the Bond owner in an amount equal to one year's principal and interest payment. 252,751 251,367
$12,906,139 $12,803,318
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A19 Notes to Financial Statements — December 31, 2011 and 2010
12.0 NOTES PAYABLE
Note payable to bank, secured by revenues of the Department 2011 2010 (subject to existing pledge of revenues under the Revenue Bonds 2001 Series A), monthly payments of $20,587 including interest at 5.25% for the period November, 2008 through March, 2013, monthly payments and interest rate to be adjusted thereafter to $20,868 and 5.75%, through maturity date of matures October, 2018 $1,412,389 $1,579,409 Note payable to bank, secured by revenues of the Department (subject to existing pledge of revenues under the Revenue Bonds 2001 Series A), monthly payments of $39,123 including interest at 4.39%, matures November, 2012 415,641 855,936
Note payable to bank, secured by all assets of the Cooperative, monthly payments of $6,346 including interest at 4.47%, matures September, 2021 with a balloon payment due. 994,874
Note payable to bank, secured by all assets of the Cooperative, monthly payments of $29,820 including interest at 4.00%, matures September, 2021 with a balloon payment due. 4,869,501
Note payable to bank, secured by all assets of the Cooperative, monthly payments of $29,470 including interest at 3.40%, matures September, 2021 with a balloon payment due. A pledge of securities as collateral, with a value of $5,134,876 at December 31, 2011, is also required under this note. 5,074,424 12,766,829 2,435,345 Less -Amount due within one year 967,068 607,315 Notes Payable - Due After One Year $11,799,761 $1,828,030
Principal maturing and interest payments are anticipated to be as follows:
Principal Interest Total 2012 $967,068 $492,498 $1,459,566 2013 575,326 461,581 1,036,907 2014 600,524 437,494 1,038,018 2015 627,888 410,131 1,038,019 2016 655,462 382,556 1,038,018 2017-2021 9,340,561 2,801,786 12,142,347 $12,766,829 $4,986,046 $17,752,875
13.0- CAPITAL LEASES PAYABLE
Capital lease payable to John Deere Credit in annual 2011 2010 installments of $20,908 including interest at 3.95%, secured by equipment, matures April, 2014 $ 57,998 $75,855 Capital lease payable to First Capital Equipment Leasing Corp. in annual installments of$32,421 including interest at 4.5%, secured by equipment, matures May, 2013 60,690 0 Capital lease payable to Municipal Services Group, Inc. in monthly installments of $18,140 including interest at 4.42%, secured by equipment, matures December, 2012 17,372 34,009 Capital lease payable to Neopost in quarterly installments of $1,496 including interest at 20.43%, secured by equipment, matures June, 2014 11,491 14,707 147,551 124,571 Less - amount due within one year 69,545 37,709 Lease Payable - Due After One Year $78,006 $86,862
A20 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
13.0 CAPITAL LEASES PAYABLE (CONTINUED)
The following is a schedule of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2011: 2012 $ 76,958 2013 58,798 2014 23,365 159,121 Less - amount representing interest 11,570
Present value of future minimum lease payments $147,551
Leased assets recorded under plant, property and equipment include: Mail Machine $ 19,000 Dump truck 92,760 Dump truck 79,813 Backhoe 96,763 288,336 Less - accumulated depreciation 93,289 $195,047
14.0 OPERATING LEASES
In March, 2006, the Department entered into a four year lease on a copier. Monthly payments are $329. The lease expires February, 2010 and has a fair market value purchase option.
In January, 2009, the Department entered into a five year lease for three copiers. Monthly payments are $537. The lease expires December, 2013 and has a fair market value purchase option.
In December, 2009, the Department entered into a four year equipment lease which begins February, 2010. Monthly payments to be made in accordance with the rental agreement. The lease expires January, 2014 and may be extended for additional one year periods. The Department has the option to purchase the equipment at any time for the net book value of the equipment.
Lease expense for the years ended December 31, 2011 and 2010 was $82,831 and $78,371, respectively. Future minimum lease payments are as follows:
2012 $81,325 2013 79,836 2014 6,106 $167,267
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A21 Notes to Financial Statements — December 31, 2011 and 2010
15.0 DISCONTINUED OPERATIONS
As of September, 2010, the Department discontinued providing steam services to its customers. The Department provided assistance to its customers to obtain replacement heating systems. Through September 30, 2010, the steam division had revenue of $2,146,751 and a loss of $986,135 from operations. Plant, property and equipment, net of accumulated depreciation, which was written off as part of the discontinued operations totaled $7,007,524 and $1,822,748 for the years ended December 31, 2011 and 2010, respectively. Expenses associated with the plant removal were $1,457,463 for the year ended December 31, 2010.
16.0 RETIREMENT PLANS
Contributory Plan - Substantially all full-time employees participate in the Holyoke Contributory Retirement System, a cost sharing multiple employer public employee retirement system. The system is partially funded by employee contributions.
The plan provides pension benefits, deferred allowances and death and disability benefits. A member may retire after reaching age 55 with 10 years of creditable service, or with no age requirement after 20 years of service. Members become vested after ten full years of creditable service.
Retirement allowance is based on the following factors: age, length of creditable service, level of salary, and group classification. Age at retirement and group classification determine a benefit rate. This rate, multiplied by the length of creditable service, is multiplied by the average of the three highest (consecutive) years' compensation. Percentages are specified in Chapter 32 of the Massachusetts General Laws. Participants may elect to receive their retirement in one of three optional forms of payment.
Member employers are required by state statutes to make contributions to the plan. Contributions are determined by the Commonwealth of Massachusetts Division of Public Employee Retirement Administration (PERA). The Department's contributions charged to expense for the years ended December 31, 2011, 2010 and 2009 are $3,215,298, $2,731,102 and $2,678,264, respectively. The total contribution figure represents approximately 27%, 23% and 23% of covered payroll for the years ended December 31, 2011, 2010 and 2009, respectively. Total payroll for the same periods was approximately $11,854,930, $11,904,003 and $11,536,866, respectively. The Department's contributions for the years ended December 31, 2011, 2010 and 2009 was 20.09%, 19.4% and 19.9%, respectively, of the total contributions for all employers covered by the plan.
Covered employees are required by state statute to contribute a fixed percentage of their earnings into the plan. The percentage varies from 5 to 9 percent depending upon date of hire. All employees hired after January 1, 1979 contribute an additional 2% on all gross regular earnings over $30,000 per year. Employee contributions for the years ended December 31, 2011, 2010 and 2009 are $833,016, $829,237 and $936,942, respectively.
The plan issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing or calling the plan as follows:
Attn: Cheryl Dugre, Executive Director Holyoke Retirement Board City Hall Annex - Room 207 Holyoke, Massachusetts 01040 (413) 534-2179
Noncontributory Plan -Employees hired prior to January 1, 1938, participate in the noncontributory pension plan. The Department is required by state statutes to pay benefits as the obligation arises. Benefits are established by state statutes. The Department's contributions for the years ended December 31, 2011, 2010 and 2009 are $21,787, $21,427 and $21,081, respectively.
A22 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
17.0 OTHER POST-EMPLOYMENT BENEFITS
GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions, requires that other postemployment benefits (OPEB), primarily healthcare, be accounted for on an accrual basis rather than on a pay-as-you-go basis. The effect is the recognition of an actuarially required contribution as an expense on the consolidated statement of revenues, expenses and change in net assets when a future retiree earns their postemployment benefits, rather than when they use their postemployment benefit. To the extent that an entity does not fund their actuarially required contribution, a postemployment benefit liability is recognized on the consolidated balance sheets over time.
Plan Description - The Department's policy is to provide certain healthcare and life insurance benefits to eligible retirees, their dependents, or their survivors through the City of Holyoke's cost-sharing multiple employer postemployment welfare benefit plan.
Funding Policy - The Department is not required to provide funding for OPEB, other than the pay-as-you go amount necessary to provide current benefits to retirees and eligible beneficiaries/dependents. The cost of providing these benefits was $584,714 for 126 retirees in 2011 and $583,014 for 112 retirees in 2010.
Annual OPEB Cost and Net OPEB Obligation - The Department's annual OPEB cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount that was actuarially determined in accordance with the parameters of GASB Statement No. 45. The projected unit credit method was used in the actuarial valuation prepared as of June 30, 2009, which is the basis for the 2011 and 2010 ARC calculation.
The following table shows the elements of the Department's annual OPEB cost as of the City of Holyoke's fiscal 2011 and 2010 years, the amounts actually contributed, and changes in the Department's net OPEB obligation as of June 30, 2011 and 2010:
2011 2010 Annual OPEB cost $1,895,092 $1,887,725 Payments -584,714 -583,014 Net OPEB obligation - beginning 1,304,711 Net OPEB obligation - ending $2,615,089 $1,304,711
The Department's annual OPEB cost, the percentage of annual OPEB cost contributed, and the net OPEB obligation for the City of Holyoke's fiscal years ended June 30, 2011 and 2010 were as follows:
Annual % of Annual OPEB Net OPEB OPEB Cost Cost Contirbuted Obligation June 30, 2011 $1,895,092 30.85% $2,615,089 June 30, 2010 $1,887,725 30.88% $1,304,711
Funded Status and Funding Progress - As of June 30, 2009, the most recent actuarial valuation date, the cost was 0.0% funded. The actuarial accrued liability for benefits was $27,377,623, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $27,377,623.
As of December 31, 2011 and 2010, the Department has earmarked funds totaling $2,682,214 and $2,013,458, respectively, for its other postemployment benefit obligation, however, because these funds have not been irrevocably transferred to a trust they are not considered contributions in relation to the Department's annual required contribution (ARC). In 2012, the Department will establish an irrevocable trust to which the earmarked funds will be transferred.
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A23 Notes to Financial Statements — December 31, 2011 and 2010
17.0 OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future, such as assumptions about future employment, mortality and the healthcare cost trend. Amounts determined regarding the funded status of the Plan and the annual required contributions of the Department are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Projections of benefits for financial reporting purposes are based on the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the employees to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations.
The actuarial methods and significant assumptions used to determine the annual required contribution are detailed in the City of Holyoke Actuarial Valuation and Review of Other Postemployment Benefits (OPEB) Report as of June 30, 2009. The report is available in the City Auditor's office, City Hall Annex Room 101, Holyoke, MA 01040.
The schedule of funding progress, shown as required supplementary information below, presents the results of OPEB valuations as of June 30, 2009, and looking forward, the schedule will eventually provide multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Required Supplementary Information (unaudited)
Schedule of Funding Progress
Actuarial Percentage Valuation Value of Accrued Unfunded AAL Funded Covered of Covered Date Assets Liability (AAL) (UAAL) Ratio Payroll Payroll
June 30, 2009 $ -0- $27,377,623 $27,377,623 $ -0- N/A N/A
18.0 CONCENTRATIONS OF CREDIT RISKS:
At December 31, 2011 and 2010, the Department had amounts on deposit with a bank which exceeded FDIC insurance limits by $2,472,072 and $5,880,843, respectively.
In the ordinary course of business, the Department extends unsecured credit to its regular customers. Amounts outstanding at December 31, 2011 and 2010 were $6,920,679 and $8,026,282, respectively.
Sources of Labor Supply - Fifty-eight percent of the Department's labor force is covered under a collective bargaining agreement between the City of Holyoke Gas and Electric Department and the Holyoke Municipal Gas, Light & Power Guild, Inc. The agreement was extended through March 31, 2013.
The Department had one customer that accounted for 73% of steam sales in 2010.
A24 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
19.0 RELATED PARTY TRANSACTIONS The Department provides gas, electric and steam sales and service, as well as, telecommunication services to the City of Holyoke. Total sales were $3,837,302 and $3,779,393 for the years ending December 31, 2011 and 2010, respectively. Amounts due from the City totaled $346,183 and $435,615 at December 31, 2011 and 2010, respectively.
The Department has also recorded contributions in lieu of taxes to the City of Holyoke of $1,058,320 for the years ended December 31, 2011 and 2010.
20.0 RESTATEMENT OF NET ASSETS: A prior period adjustment was recorded as of December 31, 2011 to comply with GASB Statement No. 45, Accounting and Financial Reporting by Employers for PostEmployment Benefits Other Than Pensions. Management determined that a liability should have been recorded for the difference between its annual required contribution and the payments actually made relating to other postemployment benefits. The previously issued financial statements as of and for the year ended December 31, 2010, have accordingly been restated from amounts previously reported as indicated below: Consolidated Balance Sheets as of December 31, 2010 As Previously Adjustment As Restated Reported Total Assets $171,431,314 $ 0 $171,431,314 Accrued other postemployment benefits 0 -1,304,711 1,304,711 Other liabilities 96,499,135 96,499,135 Total Liabilities 96,499,135 1,304,711 97,803,846
Unrestricted 5,730,843 -1,304,711 4,426,132 Other net assets 69,201,336 69,201,336 Total net assets 74,932,179 -1,304,711 73,627,468
Total Liabilities and Net Assets $171,431,314 $ 0 $171,431,314
Consolidated Statement of Revenues, Expenses & Change in Net Assets As Previously Adjustment As Restated Reported Operating Revenues $ 68,868,306 $0 $ 68,868,306
General and administrative expense 9,313,223 1,304,711 10,617,934 Other operating expenses 54,628,487 54,628,487 Total Operating Expenses 63,941,710 1,304,711 65,246,421
Operating Income 4,926,596 -1,304,711 3,621,885 Other Revenues (Expenses) -3,536,877 -3,536,877 Change in Net Assets Before Operating Transfers 1,389,719 -1,304,711 85,008 Payment in lieu of taxes- City of Holyoke -1,058,320 -1,058,320 Change in Net Assets 331,399 -1,304,711 -973,312
Net assets - beginning of year 74,600,780 74,600,780 Net Assets- End of Year $ 74,932,179 $ -1,304,711 $ 73,627,468
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A25 Notes to Financial Statements — December 31, 2011 and 2010
21.0 COMMITMENTS AND CONTINGENCIES: Purchased Power Contracts:
Masspower -During 1989, a contract was signed with Masspower, through MMWEC. Annual charges were to be approximately $5 million depending on level of dispatch of the facility. During 2005, MMWEC filed a civil action against Masspower. During the years subsequent to 2005, several court rulings and appeals were issued. In March, 2012, a settlement was reached between Masspower and MMWEC in the amount of $3,000,000. As part of this settlement, both parties have waived, released and discarded each other from any and all existing claims and hence all appeals have been dropped. The Department's contract share is 43.2309% of MMWEC's entitlement in Masspower, therefore the Department's portion of the settlement is $1,296,927. MMWEC had held in reserve some amounts from a 2007 billing, which reduces the Department's amount owed under settlement to $855,145.
Short-term power - On a continuing basis, the Department also enters into several short-term power supply contracts for either the purchase or sale of capacity, energy, renewable certificates or ancillary services with various suppliers. This includes bilateral purchases to meet the Department's shortfall position during the summer months of 2012 and 2013, where commitments were made by the end of 2011 for $1,469,987 and $738,386, respectively.
MMWEC Special Project 2006A - In August, 2006, the Department executed a Participation Acknowledgment Certificate and Project Development Agreement (PDA) with MMWEC for all pre- development costs associated with its share of a new generating facility to meet a projected future need of baseload energy and capacity. Under the PDA, the Department's share of project development costs was $453,100.
In December, 2010, the Department signed a 20 year solar power purchase agreement (PPA) with Holyoke Solar, LLC (the Seller). The Department has agreed to purchase the electricity produced by the grid connected solar power facility to be built, owned, operated and maintained by the Seller at 2.65 cents/kWh, which rate shall increase at a rate of 2.5% per year beginning after the first year. After the initial term, this agreement can be renewed for two consecutive five year terms. In conjunction with this PPA, the Department is leasing, to Holyoke Solar, LLC, the property on which the solar power facility is to be located at $100 per usable acre per year for the first 20 years. After the initial term under the PPA, the rate shall be $3,000 per usable acre per year subject to a 2.5% annual escalation.
In June, 2011, the Department signed a 20 year solar power sales agreement with Rivermoor-Citizens Holyoke LLC (the Seller). The Department has agreed to purchase the electricity produced by the photovoltaic solar electric generation system to be installed and operated by the Seller at 4.76 cents/kWh in year one and 6.10 cents/kWh in year eleven with an annual escalation factor of 1.5% applied for years two through ten and twelve through 20. After the initial term, this agreement shall automatically renew for successive one year terms, up to a maximum of ten such renewal terms.
In December, 2011, the Department signed a ten year contract with Nextera Energy Power Marketing to purchase 10 MW of on-peak physical energy each year at $59.90 per MWh.
Telecommunications Contracts - The Department has entered into long-term contracts for dedicated point to-point data lines and Internet Access services from several companies. These contracts have five to ten year terms. In addition the Department has entered into one-year contracts with two companies for frame relay lines, dialup help desk support and dedicated line monitoring services.
In 2006, the Department entered into an agreement with the City of Chicopee Electric Light Department (CEL) to offer and provide telecommunication services to Chicopee residents and businesses. This agreement is for an initial term of six years.
In 2002, the Department entered into a lease with Fiber Technologies Networks, LLC (Fibertech) for use of the Department's fiber optic lines. The lease provides for an annual payment per route mile for 20 years with an option to renew for an additional five years.
A26 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
21.0 COMMITMENTS AND CONTINGENCIES: (CONTINUED)
MMWEC - General -The Department is a Participant in certain Projects of the Massachusetts Municipal Wholesale Electric Company (MMWEC), a public corporation and a political subdivision of the Commonwealth of Massachusetts. Currently, the Department is a member of MMWEC on a month to month basis. Any decision regarding membership status will have no effect on the Department's commitments and contingencies on MMWEC projects in existence prior to the Department's membership termination.
MMWEC was created as a means to develop bulk power supply for its Members and Project Participants. MMWEC is authorized to construct, own or purchase ownership interests in and to issue revenue bonds to finance electric facilities (Projects). MMWEC has acquired ownership interests in electric facilities operated by other utilities and also operates its own electric facilities. MMWEC sells all of the capability of each of its Projects to its Members and other utilities (Project Participants) under Power Sales Agreements (PSAs). Among other things, the PSAs require each Project Participant to pay its pro rata share of MMWEC's costs related to the Project, which costs include debt service on bonds issued by MMWEC to finance the Project, plus 10% o fMMWEC's debt service to be paid into a Reserve and Contingency Fund. In addition, should any Project Participant fail to make any payment, other Project Participants may be required to increase (step-up) their payments and correspondingly their Participants' share of Project Capability to an additional amount not to exceed 25% of their original Participants' share of the Project Capability. Project Participants have covenanted to fix, revise and collect rates at least sufficient to meet their obligations under the PSAs.
The Department has entered into Power Sales Agreements (PSAs) and Power Purchase Agreements (PPAs) with MMWEC. Under both the PSAs and PPAs, the Department is required to make certain payments to MMWEC payable solely from the Department's revenues. Under the PSAs, each participant is unconditionally obligated to make payments due to MMWEC whether or not the Project(s) is completed or operating and notwithstanding the suspension or interruption of the output of the Project(s).
MMWEC operates the Stony Brook Intennediate Project and Stony Brook Peaking Project fossil-fueled power plants, (the latter which the Department has a 4.818 MW share). In addition, MMWEC has a 3.7% interest in the W.F. Wyman Unit No. 4 plant owned and operated by FPL Energy Wyman N, LLC, subsidiary of NextEra Energy Resources LLC and a 4.8% ownership interest in the Millstone Unit 3 nuclear unit operated by Dominion Nuclear Connecticut, Inc. (DNCI) an indirect subsidiary of Dominion Resources, Inc. In addition to Millstone Unit 3, DNCI also is the owner of Millstone Unit 2. The operating license for Unit 3 was extended to November 25, 2045.
A substantial portion of MMWEC's plant investment and financing program is an 11.6% ownership interest in the Seabrook Station nuclear generating unit operated by NextEra Energy Seabrook, LLC, the majority owner and an indirect subsidiary of NextEra Energy Resources LLC. In December, 2005, the NRC issued an amendment to the operating license that extends the expiration date from October, 2026 to March, 2030 to recapture the period from 1986 to 1990 during which time Seabrook Station had an operating license but did not operate. NextEra Energy Seabrook, LLC has submitted an application to extend the Seabrook Station operating license for an additional 20 years. Pursuant to the PSAs, the MMWEC Seabrook and Millstone Project Participants are liable for their proportionate share of the costs associated with decommissioning the plants, which is being funded through monthly Project billings. The Project Participants are also liable for their proportionate share of the uninsured costs of a nuclear incident that might be imposed under the Price-Anderson Act. In July, 2005, as part of the Energy Policy Act of 2005, Congress extended the Price-Anderson Act through the end of 2025.
As of December 31, 2011, total capital expenditures by MMWEC amounted to $1,581,599,000 of which $45,539,000 represents the amount associated with the Department's Project Capability. MMWEC's debt outstanding for the Projects includes Power Supply System Revenue Bonds totaling $358,420,000 of which $10,969,000 is associated with the Department's share of Project Capability. As of December 31, 2011, MMWEC's total future debt service requirement on outstanding Bonds issued for the Projects is $380,165,000, of which $11,220,000 is anticipated to be billed to the Department in the future.
The estimated aggregate amount of the Department's required payments under the PSAs and PPAs, exclusive of the Reserve and Contingency Fund billings, to MMWEC at December 31, 2011 and estimated for future years is shown below:
For the years ended December 31, 2012 $2,740,000 2013 2,501,000 2014 2,103,000 2015 1,864,000 2016 1,364,000 2017-2020 648,000 11,220,000
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A27 Notes to Financial Statements — December 31, 2011 and 2010
21.0 COMMITMENTS AND CONTINGENCIES: (CONTINUED)
In addition, the Department is required to pay its share of the operation and maintenance (O&M) costs of the Projects in which they participate. The Department's total O&M costs including debt service under the PSAs were $6,334,000 and $6,326,000 for the years ended December 31, 2011 and 2010, respectively.
Deregulation- In 1997, legislation was passed mandating retail wheeling of electricity for private electric utilities. If the Department opts to open its borders, it will no longer have a franchise area and all utilities may have the ability to enter into contracts to provide electricity generation to any customer. The potential impact on the Department's revenue from retail competition cannot be reasonably estimated at this time.
Hydroelectric Facility - As part of the Department's purchase of hydroelectric generating assets and a distribution franchise in 2001, FERC required certain modifications to the hydroelectric facility. The cost of these modifications over the next several years is likely to exceed ten million dollars.
Self Insurance - For general liability purposes, the Department is self-insured up to $50,000, has self-insurance trust coverage in the amount of $400,000 and general liability insurance for $50,000 to $10,000,000 per occurrence. The Department is also self insured for workers compensation up to $250,000 per occurrence. A policy is in effect for excess workers compensation.
Environmental Protection and Other Issues - In 1990, the Massachusetts Department of Environmental Protection (MDEP) sent a notice of responsibility to the Department and other parties regarding the presence of coal tar on property known as the gas works, adjacent to the Connecticut River. An investigation of the site has revealed concentrations of contaminants on the site and MDEP classified the area as a priority site. A second notice of responsibility was issued in September, 1993 for gas tar deposits in the Connecticut River, effectively separating the gas works into a land site and a river site.
Effective February, 2003, the Department increased the gas rates in order to collect additional dollars for clean-up of the gas works site and is accruing amounts, based on management's best estimate of the probable and reasonably estimable costs related to this clean-up. The current estimate for the remaining clean-up of the land site is approximately $402,000. No estimate is currently available for the river site. The measurement of the accrual for remediation costs is subject to uncertainty, including the evolving nature of environmental regulations and the difficulty in estimating the extent and type of remediation activity that will be utilized.
During 2009, a Department contractor brought suit in federal and state court alleging civil rights and discrimination violations. In addition, an individual is alleging injuries incurred during 2010 while working as a Department contractor. The Department denies liability and is vigorously defending these suits.
In July, 2009, a "preliminary non-public investigation" was initiated by the Office of Enforcement, Division of Investigations of the Federal Energy Regulatory Comission. The investigation concerns the reporting by the Department to ISO New England, Inc. of certain unit outages during 2008. During 2011, the investigation was resolved. In a "Stipulation and Consent Agreement", which FERC approved on November 29, 2011, the Department made a disgorgement payment of $375,576 to ISO New England, Inc. on December 28, 2011 in complete satisfaction of this obligation.
Construction Programs - The Department has budgeted construction expenditures of approximately $37 million to be incurred during 2012.
A28 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Notes to Financial Statements — December 31, 2011 and 2010
22.0 RECLASSIFICATION
Certain reclassifications have been made to prior year balances to provide a presentation consistent with the current year. Retained earnings, as reported on the balance sheets, were reclassified to fund balances in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
23.0 SUBSEQUENT EVENT
The entities have evaluated events that have occurred subsequent to December 31, 2011, through May 21, 2012, the date these consolidated financial statements were available to be issued. On April 10, 2012, the Department refinanced their Revenue Bonds, with a face value of $35,895,000, with General Obligation Bonds of the City of Holyoke.
H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T A29 A30 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Schedule of Operating Revenues and Expenses — December 31, 2011 and 2010
GAS DIVISION
2011 2010
Operating Revenues: Residential $ 8,691,302 $ 9,050,499 Commercial 10,117,416 8,793,287 Industrial 1,998,835 2,082,905 Municipal 738,383 655,995 Department sales 60,965 1,629,812 Sales for resale 973,950 546,875
Total Operating Revenues $ 22,580,851 $ 22,759,373
Cost of Gas Sold: Purchases - natural gas $ 12,608,024 $ 13,550,669 Liquid natural gas processed 474,768 568,746 Environmental response 575,250 575,250 Supplies and expenses 294,509 230,272
Total Cost of Gas Sold $13,952,551 $14,924,937
Distribution: Salaries and wages - system control and load dispatch $ 265,915 $ 253,781 - supervision and engineering 260,495 275,644 - customer installation 461,150 428,834 - operation 443,285 448,200 - maintenance 475,281 476,408 Supplies and expenses 780,587 694,356
Total Distribution $2,686,713 $2,577,223
Customer Accounts: Salaries and wages - meter reading $ 65,195 $ 69,214 - accounting and collection 132,559 139,708 Supplies and expenses 18,777 13,453 Uncollectible accounts 108,444 114,687
Total Customer Accounts $324,975 $ 337,062
General and Administrative: Salaries $ 741,846 $ 696,042 Pensions and benefits 1,806,798 1,766,566 Insurance 116,905 122,880 General supplies and expenses 555,357 561,436
Total General and Administrative $ 3,220,906 $ 3,146,924
A31 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T Schedule of Operating Revenues and Expenses — December 31, 2011 and 2010
ELECTRIC, STEAM AND TELECOMMUNICATIONS DIVISIONS Operating Revenues: Electric Sales- 2011 2010 Residential $ 12,766,929 $ 13,845,075 Commercial 20,919,226 19,948,711 Industrial 5,217,511 4,910,511 Municipal 2,764,467 2,698,002 Interdepartmental 286,008 439,016 Water 5,871 6,312 Cobble Mountain operation - net 398,448 294,857 Steam sales 2,146,751 Telecommunication sales 1,701,831 1,819,698
Total Operating Revenues $ 44,060,291 $ 46,108,933
Cost of Electricity/Steam/Water Sold: Purchases - electricity $ 9,255,027 $ 11,765,902 Replacement power 3,096,000 Fuel for electric generation 26,484 173,195 Salaries and wages - production 1,618,236 1,517,953 - maintenance 1,382,436 1,341,062 Supplies and expenses 2,975,861 2,846,234 Cost of water sold 580,763 445,127 Cost of steam sold 2,549,310
Total Cost of Electricity Sold $ 15,838,807 $ 23,734,783
Electric Transmission: Salaries and wages $ 514,765 $ 443,811 Supplies and expenses 127,520 56,579 Transmission by others 2,927,761 2,632,987
Total Electric Transmission $ 3,570,046 $ 3,133,377
Distribution: Electric- Salaries and wages - lines, equipment and street lights $1,948,316 $1,670,206 - customer installations 198,869 193,229 Supplies and expenses 2,045,857 1,431,519 Steam Distribution 119,711 Telecommunications distribution 1,031,554 976,211
Total Distribution $ 5,224,596 $ 4,390,876
Customer Accounts: Electric- Salaries and wages - meter reading $ 120,921 $ 116,302 - accounting and collection 246,182 259,377 Supplies and expenses 35,615 24,217 Uncollectible accounts 456,318 275,642 Steam customer accounts 7,962 Telecommunications customer accounts 11,593 2,690
Total Customer Accounts $ 870,629 $ 686,190 General and Administrative: Electric- Salaries $ 1,243,708 $ 1,203,739 Pensions and benefits 3,734,094 3,317,719 Insurance 432,807 425,282 General supplies and expenses 1,614,802 1,637,346 Steam general and administrative 455,903 Telecommunications general and administrative 489,775 431,021
Total General and Administrative $ 7,515,186 $ 7,471,010
A32 H O L Y O K E G A S & E L E C T R I C D E P A R T M E N T