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Special Bd. of Aldermen — 06/24/2019 Page 2

facility and that one does not have a license exemption. So the license, we also knew about as part of this
process, is going to expire in and I'll talk about that on the next slide | think, in 2023. So that is driving a lot of
this. When the City acquired both dams, we put an RFP out and we have hired an operator who has been
operating them daily for us, Essex Power Services.

So | am just going to go through what the revenue has looked like since we brought both of these one. The
green line is the total revenue; you can see the revenue numbers on the side and the years. Jackson, we
started halfway through the year of FY16 so the total revenue produced versus the operation and maintenance
is the red line and repairs. And then the net revenue is the balance of the two. You'll see on the Jackson, the
very drastic red and purple lines in the opposite directions. Since we have had Jackson again 35, you buy a
35 year old entity that needs some repair, or we didn’t buy it we were given it and it needed repairs. The
turbine has been down twice; once for 3 months this Fall and 6 months last year. So those repairs have been
very costly and they’ve also lost a lot of time where we are not operating, therefore we are not making money.
So that is some of the big problem here; but overall it has been a net positive experience.

In 2016 total net income was about $46,000.00 for the 5 months. FY17 $105,000.00; FY18 was negative
$178,000.00 as we put so much into repairs. And FY19 so far, even though we have been down for 3 months,
we have had so much water we are at a positive of almost $300,000.00 at the moment. So that’s kind of
where we’ve been with revenue there, net revenue.

So Mine Falls, again we bought in the Spring on ’17 we do have one turbine down now, it went off-line in
March maybe. But we have two turbines at Mine Falls and they don’t both run at the same time all the time.
They both run only at very high water; usually we run one and bring the other one in. So one has been down,
the other is still running. The revenue at Mine Falls is significantly higher and repairs, while they peaked a little
bit first buying it, we knew we had some initial capital, we have a longer term plan to do those investments over
time. This is very much a revenue generator so as general in 17 for the short year a total net revenue was
about $140,000.00. Last year we are $700,000.00 in the positive and so far this year we are at $600,000.00
and there is quite a bit more | think to come in because of the delay and how that works.

So | am here before you to ask for a bond for the improvements that we know are coming. We are trying to be
proactive at Jackson and not have emergency shut downs and expenditures that are unbudgeted for. With the
spending cap as you all know it’s very hard to just say well |’ll just need an extra $400,000.00 this year or |
need an extra bit this year. So we are working with Essex Power and HL Turner, who is the hydro experts, we
have put out an RFP for a new turbine at Jackson. Jackson is a very, very unique situation; there is no other
hydro-facility anywhere in the whole world that is exactly like that. It is a custom-made turbine that’s there right
now. So it’s not like we can say we just want to buy that kind off the shelf and let’s pop it in. And going out to
bid for this turbine this spring we have had four responses from some companies, you know, from all over the
world. It is unique; the costs are ... it’s just an expensive proposition. So about $4 million dollars of the bond
before you is for the new turbine at Jackson and not just the purchase, but all the engineering and the actual
fabrication and installation. It is, again, built into the side of a functioning restaurant and building; it is not the
easiest place to do major work on. We do have that beautiful crest gate which gives us a lot more control but it
is a major, major proposition and it is expensive and unique.

At the same time, the fish ladder which is probably the biggest part of the dam that you see; it is the big
wooden piece that goes back and forth. That is literally how the fish climb the ladder to get up. It is also 35
years old so there are some other things that as we upgrade the turbine it might change some flows so those
things, we’ve tried to pull all that together. We are talking about the improvements that have to be made there.
So this is a process that will take about 18 months from once we pick something to design, fabrication and
installation. So it is a big process and that’s why we’d like to get started before it breaks again so that we are
further along so we are not off-line for say 18 months or two years. So we keep running until we have it all
fabricated, we hope, that’s the goal.

Special Bd. of Aldermen — 06/24/2019 Page 3

In addition, even though it isn’t subject to Federal Licensing, we do get it inspected every year and because of
the age of the facility, just like when you buy a really old house, the home inspector comes in and says “Oh
you’re going to need to upgrade some of these things, some of these wooden components like the fish ladder
need to be upgraded a bit”. And also the fish species that we are most concerned about passing every year
has changed since this was first installed. We used to be really concerned about salmon but we have now
accepted the fact that we are never going to have salmon again and so now we are very concerned about
herring and eels and so they need slightly different things. So being able to modify everything to make sure we
are in compliance is important.

At Mine Falls one generator is down and we are doing a complete rehabilitation of it. There are some other
things when that goes off line that you fix if you are fixing things and you have a giant generator out of the way
you are going to fix those things while you can. But most of the bulk of the money that would go for Mine Falls
is the other repairs in that CIP that we have listed out for the next 5 years and all these licensing studies that
are required by the FERC License. The FERC re-licensing process is 5 years; we started last August with our
pre-application document and from that document FERC came back and they have requested 9 studies that
we conduct as the next phase. And we from these different, well US Fish & Wildlife, The National Marine
Services, NH Fish & Game, NH DES together requested nine studies. We have put out an RFP, we are
bringing on a specialist firm to help us conduct these studies. We are not fish specialists. We are going to
start negotiation on what those studies will and will not include. But these are studies that will cost a very
substantial amount of money over the next two seasons and so we need to be ready to do that so that is
included in this bond as well to keep us on track. | think that’s it. lm happy to answer questions if you have
more specific questions.

Vice President O’Brien

Just for a moment, tonight’s Hearing was supposed to be to receive testimony from the public. However |
know that many of us are on a tight schedule to be somewhere else. So we will open it up for brief questions,
but to remind you that it is also on the Budget Review Committee’s meeting, which is going to be immediately
following this. Director Marchant will you be available for the Budget Hearing as well?

Ms. Marchant

Yes.

Vice President O’Brien

So | will allow a limited amount of questioning.

Alderwoman Melizzi-Golja

Yes thank you. Director Marchant, in looking at the life of the bond that is being requested, what is the life
expectancy for the repairs that are being proposed.

Ms. Marchant

Excellent question. So the turbine, the new turbine and the rehabilitated turbine are expected to last another
30 years. The bond that is being proposed is a ten year bond, so certainly a lot longer than that. And the other
repairs that we are doing say fish ladder type repairs, all have those same kind of time frames associated with
them.

Alderwoman Melizzi-Golja

Ok thank you.

Special Bd. of Aldermen — 06/24/2019 Page 4
Alderman Laws

| was just wondering if the revenue generated from the Jackson is going to be included in the TIF for that area.
Ms. Marchant

That’s a great question, no. The revenue from that does not go to the TIF at this time.

Alderwoman Kelly

| just wanted to know if historically we Know what these would be at once they are at capacity because | know
both of them have been down for a while in terms of revenue generation.

Ms. Marchant

That’s a great question. So we look back at a 10 year average even though we didn’t own them, we have
pulled the FERC records to see what they have generated over a 10 year average. This past year has been
an incredible amount of water, incredibly high revenue which is a good thing in many ways, but it isn’t
necessarily an average. So we do believe that in an average flow year, that these would net a little under $1
million dollars, closer to $800,000.00, the two together.

Alderman Caron

My question is that money that we get from Mine Falls is that going to go pay off the bond?

Ms. Marchant

It goes to the General Fund but it certainly would off-set the bond costs.

Alderman Caron

Thank you.

Vice President O’Brien

And this may be a good segway, I'll let Alderman Klee make the decision, but currently the State is looking at
net metering which could affect this potential dam. I'll allow you a brief summation as to what is happening
right now.

Alderman Klee

It is being held off until this fall, it was vetoed by the Governor, as far as net metering was concerned to allow
greater than 1 up to 5 megawatts. | guess | would ask my question, are we exempt from the current net
metering of 1 megawatts?

Ms. Marchant

It's a great question. So at Jackson Falls we currently net meter. We get just under 10 cents a kilowatt hour,
right so 9.7 cents something like that . At Mine Falls we are not allowed to net meter. When we bought Mine
Falls it came with a longer term power purchase agreement that will expire in 2023, with our license as well
that we could net meter and we could make again almost twice, we were about 5.6 cents right now per kilowatt
hour at Mine Falls. So we could almost double our revenue at Mine Falls if we could net meter, which we can’t

do yet. But hopefully we are on our way there and it would make a very substantial difference in the amount of
revenue that we would be earning.

Special Bd. of Aldermen — 06/24/2019 Page 5

Alderman Klee

| do have one other comment, currently when it was originally voted in it was what we could call veto proof, but
as we know things change as time moves on. This will be brought up in September but the key is if we were
able to net meter in someplace like Mine Falls we would be able to cover much of the City, like City Hall kind of
thing, not the individual people but the City’s expense as far as our electricity, etc. If we could get to the 3,
which it does right now, 3 megawatts, if we could use the full capacity of it.

Ms. Marchant

So just as a point of reference, the City alone is about 25,000 kilowatt hours a year; the school is about 25,000
kilowatt hours a year. We could cover, in theory we would produce enough electricity to cover the City’s hall of
25,000 kilowatt hours in an average between the two dams.

Alderman Klee

Which would be quite a savings, thank you.

Vice President O’Brien

Further questions for Director Marchant? Alright, Director Marchant thank you very much and look to seeing

you when we open up the Budget Hearing. At this time we are going to open up the meeting to the public.
Bear with me as we wrestle quickly through this.

Testimony in Favor - None
Testimony in Opposition - None
Testimony in Favor - None
Testimony in Opposition - None

ADJOURNMENT

MOTION BY ALDERMAN TENCZA TO ADJOURN
MOTION CARRIED

The meeting was declared adjourned at 7:20 p.m.
Attest: Patricia Piecuch, City Clerk

Nashua Hydroelectric Facilities

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603-589-3095

NEW HAMPSHIRE'S GATE CITY www .NashuaNH.gov

HISTORY

¢ The Jackson Mills hydroelectric
project was returned to City
ownership at the end of a long
term lease in January 2015.

facility was completed on April
13th, 2017.

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¢ Both facilities are operated and maintained for the
City by a contractor, Essex Power Services.

JACKSON MILLS
TOTAL REVENUE AND EXPENSES 2016-2019

$600,000.00

$500,000.00

$400,000.00

$300,000.00

$200,000.00 Total Revenue

Total Essex O&M and Repairs

$100,000.00 Net Revenue

FY2016 FY2017 \ FY2018 / FY2019
S(100,000.00) \/

$(200,000.00)

(300,000.00)

$1,200,000.00

$1,000,000.00

$800,000.00

$400,000.00

$200,000.00

MINE FALLS

TOTAL REVENUE AND EXPENSES 2017-2019

/p—~

//

FY2018

FY2019

Total Revenue
Total Essex O&M and Repairs

Net Income

IMPROVEMENTS NEEDED
JACKSON MILLS

¢ Existing 35-year old turbine was down for 3 months in FY19
and nearly 6 months in FY18 for major repairs. The turbine
is at the end of its life. In anticipation of future failures, the
City has been working with Essex Power Services and HL
Turner to begin design, engineering, fabrication and
installation of new turbine.

¢ Continued work with federal and state agencies relative to
fish and eel passage will also require improvements to
aging infrastructure of the fish ladder.

IMPROVEMENTS NEEDED
MINE FALLS

¢ Rehabilitation of 1 of the 2 turbines, with associated
repairs while offline

¢ The current 40 year FERC license for the Mine Falls
project will expire on July 31, 2023.

¢ Relicensing started in August of 2018 and continues
through 2023

— Performance of studies requested by the US Fish and
Wildlife Service, National Marine Fisheries Service, NH
Fish and Game Department, and NH DES

— Additional measures required by FERC