2020 VisionThe HBPW is making improvements now to ensure that our electric generation, water, and wastewater treatment capabilities meet the needs of our community, both today and tomorrow.

2010 ANNUAL REPORTHOLLAND BOARD OF PUBLIC WORKS

2020 Vision 2010 ANNUAL REPORTHOLLAND BOARD OF PUBLIC WORKS

LETTER FROM LOREN HOWARD A letter to the community.

2020 VISION: HOME Energy Smart

Water & Sewer Replacements

Smart Grid

Credit Card Bill Payment

Tree Trimming

Phone Service Upgrade

2020 VISION: BUSINESS LG Chem/JCI SAFT

Holland Community Sustainability Committee

Water Cross Connection Inspection

Education on Energy Efficiency

Michigan Business Polution Prevention Partnership (MBP3)

Energy Optimization

2020 VISION: COMMUNITY Strategic Planning

Wyoming Water Interconnect

New Equipment

Synergy with the City

Wastewater Treatment Improvement

Downtown Lighting

Community Energy Plan

BOARD OF DIRECTORS Meet the board of directors from the Holland BPW.

FINANCES Overview

Statistics

All content taken verbatim from the online report.

View the Full Interactive Annual Report, with

employee interviews, detailed statistics, and photos:

annualreports.hollandbpw.com/

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Water & Sewer Replacements

Welcome to our 2010 annual report.

In the pages that follow, you’ll find

highlights of initiatives that the HBPW

is undertaking now to prepare for the

future utility needs of our community:

our 2020 Vision—everything from

the purchase of new, state-of-the-art

equipment to detailed analyses of our facilities.

Conservation is going to play an increasingly important role in

meeting the service requirements of our community. We have

important programs underway in virtually every area of our

operations to help the community do more with less. They include

everything from educational community forums on energy efficiency

and conservation to smart metering programs that allow our

customers more hands-on control over the amount of energy they

use.

However, we will not be able to meet our future utility needs through

conservation alone. As the world advances technologically and

Holland continues to grow, so too does the demand on our utilities.

To provide the low-cost, reliable electricity, water, and wastewater

treatment services our community will demand in the future, the

HBPW will have to expand. We’re looking at several different ways

of doing it.

We are pursuing the option of constructing a new generating unit.

In addition to burning several different types of coal cleanly, the

unit could burn a variety of alternative energy sources, including

bio-mass (wood waste), tire derived fuel, petcoke, industrial bio-

waste and bio-solids from our wastewater treatment plant. Initially

the State denied our application for an air permit on the grounds

that they weren’t convinced of the need of a new generating

facility. Because the Michigan Department of Natural Resources

and Environment (MDNRE) doesn’t have the authority to deny

an air permit application based on need alone, we brought suit

against the State and received a ruling in our favor from the court

in December 2010. The court has told the State to re-examine

the proposal within 60 days. We’re optimistic that the outcome

will again allow the HBPW Board of Directors and the Holland City

Council to decide what option is best for the community.

Alternative energy has a bright future in our community. This year,

the HBPW investigated the viability of a 1,400-acre wind farm in the

Upper Peninsula. While the wind regime at this location proved to

be insufficient to support economical electric production, we have

not stopped looking. We have two test sites in place on more than

3,000 acres in Allegan County that may be used for the installation

of a wind farm, which could support a 200 MW wind generation

project. We are very optimistic about the potential that this location

holds.

Over the past several years, the HBPW pursued a grant from the

Department of Energy to pilot a carbon capture and sequestration

program, a relatively new technology that would help to reduce our

CO2 emissions by up to ninety-five percent. Though we did not

receive the federal funding needed to make the project feasible,

we will continue exploring ways to reduce our impact on the

environment. The community expects us to be on the cutting edge,

and investigating and investing in innovative projects like these will

keep us there.

In addition to looking for new energy sources, we’re also performing

essential maintenance on existing facilities to ensure they continue

to operate as cleanly and efficiently as possible.

In 2008, the Sierra Club filed suit against us for making what they

believed were modifications to the James De Young Generating

Station, made without first obtaining new air permits. The HBPW

is only one of the utilities targeted for this kind of legal action by

the Sierra Club which has a national agenda to eliminate the use

of coal. We are confident that the maintenance work at the James

De Young plant is just appropriate routine maintenance and exempt

from permitting rules requiring new air permits.

Our direction for the next 10 years is clear: To engage in advanced, responsible thinking on how to meet the electric, water, wastewater treatment, and broadband needs of a growing community.

That will undoubtedly bring a number of new challenges. We need

to find new ways to collaborate while protecting our community’s

independence. We need to enable community growth that is

sustainable, with policies and services that are both reliable

and affordable. We are working to anticipate the changes in our

community, state, nation and the world that will challenge utility

providers. We will work with our stakeholders to ensure their

collective values are reflected in our actions.

We’re up for it. We think the year 2020 is going to be exciting. And

we’re doing everything we need to make sure we are ready.

Letter to the Community

LETTER FROM: LOREN HOWARD

2020 VISION: HOME

You depend on the HBPW to provide reliable, cost-effective power, water, and wastewater treatment. We take this responsibility seriously, and we are always looking for new and innovative ways that we can serve you better.

The HBPW is committed to helping our customers conserve energy,

improve efficiency, and ultimately lower their utility bills. Our Energy

Smart program, which began in 2009, has helped thousands of

customers throughout the community with our energy optimization

programs, such as the distribution of nearly ten thousand high

efficiency Compact Fluorescent Lights (CFL), our refrigerator and

freezer recycling programs, and our rebates for customers who

install high-efficiency HVAC systems.

The HBPW coordinates years in advance with the City of Holland

so that our plans for water and wastewater upgrades, maintenance,

and repairs coincide with the City’s road repair and resurfacing

projects. By doing so, both the HBPW and the City are able to save

money and minimize any disruption for residents.

This year, the HBPW and the City of Holland collaborated on

two street and utility replacement projects: 18th Street between

Cleveland and River Avenues and 40th Street between Washington

and Lincoln Avenues. In both areas, there had been problems with

deteriorated water and sewer mains. Deteriorated water and sewer

mains allow clean groundwater to seep into the sewage system.

This clean groundwater is then treated alongside sewage, putting

unnecessary strain on our wastewater treatment facility. The 18th

Street piping had reached its expected life, and the main on 40th

Our program continues to grow. In 2011, our budget for Energy

Smart is $1.1 million, and in 2012, the budget will increase to $1.5

million. And as our commitment to this effort increases, so does

the number of opportunities we have to help our customers save

money.

Street was failing due to corrosion. We replaced these pipes with

ductile iron wrapped with polyethylene, which offers far greater

durability and improved corrosion protection.

In addition, the HBPW replaced water mains on Sunset and Sunrise

Avenues at the east end of Holland Heights with PVC. This was our

first such installation of PVC water mains.

As technology progresses, the HBPW will continue to look for new

cost-effective, durable materials that will improve the quality and

reduce the cost of our services for many

years to come.

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Energy Smart

Water & Sewer Replacements

2020 VISION: HOME

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At the core of our mission is making our services more reliable,

more efficient, more sustainable, and more convenient. That’s why

earlier this year we added credit card bill payment to our list of

approved payment methods. Customers may make payments by

credit card at any time, either online or by phone. This service offers

a convenience to our customers and it allows customers to better

manage their finances.

Credit Card Bill Payment

In 2010, we partnered with Consert Inc., a leader in the design and

implementation of intelligent energy distribution and management

networks, to conduct a limited residential Smart Grid trial. For our

residential customers, Smart Grid technology means the ability to

control usage digitally. And for the HBPW, Smart Grid allows better

monitoring and response to changes in demand across the grid.

In addition, we’ll be exploring a number of new technologies in

the next several years, including a self-healing distribution system

that responds automatically to outages, rerouting power to cover

affected areas until a maintenance crew can restore downed

power lines.

Smart Grid

2020 VISION: HOME

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We are always looking for better ways to communicate with our

customers. In the coming year, we’ll be upgrading our phone

system to allow us to do just that. Among other things, we will be

implementing an Interactive Voice Response (IVR) system that will

allow customers to more quickly report and receive information on

outages rather than entering a queue and waiting for an available

representative.

Phone Service Upgrade

Branches that fall during storms and damage distribution lines

are one of the leading causes of power outages. To prevent

outages before they occur, the HBPW maintains a tree trimming

program throughout our service area. The program has been a

tremendous success. In carrying out our tree trimming program,

we work to have the least aesthetic impact possible in customer

neighborhoods. It’s important that we keep our neighborhoods safe

and maintain their character for the future. The Waukazoo Woods

area, for example, has historically suffered from regular outages

during heavy storms. The area experienced no distribution line

outages in the past year.

Tree Trimming

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In early 2009, the HBPW and the City of Holland formed the Holland

Community Sustainability Committee. When the Committee was

established, it was given a one-year lifespan. However, because of

the strong response from the community, the City Council voted to

extend the Committee’s lifespan by another three years.

In 2010, the Sustainability Committee hosted 19 community forums

for residential, commercial, and industrial customers. These forums

helped us gauge the business community’s priorities in energy and

water management. Additionally, they provided an opportunity for

our business customers to come together and discuss changes

they’ve made in energy efficiency as well as problems they’ve

encountered.

Combining this information with the Community Energy Plan and

the HBPW’s own energy plan, we will develop a plan by which to

better meet the utility needs of our community while preparing for

the needs of the future.

The reliable, cost-effective utilities that the HBPW provides are

valuable community assets. We are strongly committed to using

these assets to help bring innovative new technologies and

opportunities to West Michigan. This year, the HBPW helped attract

two key players in the future of sustainable energy: LG Chem and

JCI SAFT. Their lithium ion battery plants will provide more than

1,000 jobs in our community and help power the next generation of

electric cars. and LG Chem and JCI SAFT each cited the HBPW’s

superior reliability and low cost as key factors in their decisions to

build in West Michigan.

We never stop looking for ways the HBPW can help fuel economic

growth in our area.

Holland Community Sustainability Committee

LG Chem/JCI SAFT

The Holland business community is made up of some of the most talented men and women in the country. They rely on the HBPW for reliable, cost-effective power, water, and wastewater treatment services to support their operations, and we depend on them to keep West Michigan running.

2020 VISION: BUSINESS

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Education is a fundamental part of changing how we think about

and use resources—both now and 10 years from now. In 2010,

the HBPW partnered with the Department of Energy (DOE) to offer

a training class for our business customers on how better to utilize

resources. Courses like these are just one way that the HBPW

engages with our customers in an effort to prepare together for the

energy needs of the future.

Ensuring safe, reliable utilities requires a collaborative effort.

As mandated by the State, the HBPW visits businesses throughout

our water service distribution system on a regular basis to perform

inspections of the backflow valves that connect these businesses to

the public water distribution system. The safeguards are required by

law and protect the public water supply from hazardous materials

those businesses may handle.

The HBPW maintains a strong relationship with the Holland

business community, and businesses rarely experience problems

with compliance. Should we find a problem, the HBPW does

enforce compliance by working with the customer and helping to

ensure connections meet applicable requirements.

Education on Energy Efficency

Water System CrossConnection Inspection

2020 VISION: BUSINESS

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We constantly look for ways that both our utility and our customers

can save energy. This year we worked with businesses across the

community to install high efficiency CFL bulbs, variable frequency

drives in their heating and cooling systems, and occupancy sensors

on lighting systems. These improvements will save businesses

hundreds of thousands of dollars each year and reduce our

community’s overall energy demand.

Our strategy is to partner with businesses to find ways to reduce

consumption and increase efficiency. It’s a strategy that has proved

both effective and popular with our business customers. Our future

demands big improvements in efficiency and we are well on our way

to achieving them.

Sustainability and environmental responsibility have always been

key components of our mission. This year we joined the Michigan

Business Pollution Prevention Partnership (MBP3), a voluntary

program that encourages businesses to find creative, cost-effective

techniques to reduce waste and prevent the release of hazardous

substances. While the partnership supports reuse and recycling,

MBP3 also stresses the importance of sustainable production—a

mission that is in perfect alignment with the HBPW’s stance

on sustainability.

It’s our first step toward becoming a Clean Corporate Citizen,

which signifies the State’s recognition that the HBPW is committed

to being a long-term partner in sustainable, environmentally

responsible operation.

Energy Optimization

Michigan Business PollutionPrevention Partnership (MBP3)

2020 VISION: BUSINESS

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The HBPW looks decades down the road to ensure that we

continue to meet the electric generation, water, wastewater and

fiber goals of our community before we get there.

This year we partnered with GMB Architecture and Engineering to

perform a review of our electric and wastewater treatment plants.

Through that process we found several opportunities for increased

efficiency, which we will be exploring in the coming year. Additionally,

we worked with the Retired Engineers Technical Assistance

Program (RETAP) to examine our water treatment facility to look at

possible improvements to its operations. From these reviews, the

HBPW has devised a plan by which we can improve the efficiency

and sustainability of our operations across the board, both for today

and tomorrow. We’ll be implementing a number of these changes in

the coming years.

In addition to efficiency reviews and modifications, the HBPW has

begun developing a program that looks routinely at the utility’s

financial risk and examines possible ways of mitigating that risk. For

example, one possibility for mitigating risk in a fluctuating market

would be financial hedging. Mechanisms like these are common

outside the public sector, and they will help the HBPW to better

control costs and continue to provide cost-effective power, water,

and wastewater treatment. While this program is still in its beginning

stages, the deliverable will be a set of guidelines and operating

parameters that will determine how the HBPW will manage and

mitigate risk.

Experience is one of the HBPW’s most valuable assets. We’ve

been providing power, water, and wastewater treatment for nearly

120 years, and many of our employees have been with us for

decades. They’ve become experts in their fields. The HBPW has

begun conducting interviews in an effort to preserve the extensive

knowledge they’ve accrued throughout their years of service, which

will be recorded and catalogued electronically. This knowledge will

guarantee that our decisions moving forward are informed by those

who know our operations best: the men and women who’ve kept

them running for generations.

These forward-thinking initiatives will continue to ensure that the

HBPW is prepared to meet the electric, water, and wastewater

needs of the community.

Strategic Planning

The HBPW was founded as a community-owned utility. In the nearly 120 years since then, we have made and will continue to make decisions that will enrich the community and the lives of those who make it such a great place to live and work.

2020 VISION: COMMUNITY

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The HBPW continues to invest in state-of-the-art technologies that

allow us to continue to provide reliable, cost-effective energy, water,

and wastewater services to our customers. This year, we acquired

several new devices that will make this even easier.

In the presence of a strong electrical field (such as that found inside

an electrical transformer), air begins to break down. As it breaks

down, a number of corrosive byproducts are formed, including nitric

acid, which corrodes equipment and can eventually lead to electrical

shorts. Our new ultraviolet (UV) and infrared cameras allow us to see

this corona and any hotspots and to address problem areas long

before any interruption of electrical service occurs.

The HBPW also purchased new equipment that will allow us

to make repairs to wastewater collection lines without breaking

ground or disrupting service. The device allows us to place patches

remotely, which we can install through any maintenance structure.

Using this new trenchless technology, we’re able to save at least

$4,000 per use when compared to the cost of excavating and

replacing the damaged section of pipe, and without interrupting

service.

Both new pieces of equipment will enhance the quality and reliability

of the services we provide.

We are looking at alternatives for expansion to help meet the needs

of our community and improve the reliability of our services.

The HBPW is considering the construction of a large-diameter

interconnect between our water system and that of the City of

Wyoming. In the short term, the interconnect would serve as a

reliability safeguard, allowing us to purchase water on an as-needed

emergency basis from Wyoming should we have a problem with our

own water supply. Likewise, should the City of Wyoming experience

shortages in their supply, they could purchase water from the

HBPW under emergency conditions. In the long term, however, the

interconnect may be a supplemental source of water until our need

is great enough to necessitate the expansion of our own facilities.

The cost of expansion of HBPW water treatment facilities is

substantial, and we won’t undertake it until absolutely necessary.

The past few years’ economic recession has slowed our need for

increased water capacity. However, as we continue to emerge from

the recession, the need for increasing our capacity across all utilities

will return. Until it’s cost effective to do so, though, the HBPW will

continue to look for alternatives.

New Equipment

Wyoming Water Interconnect

2020 VISION: COMMUNITY

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Under normal conditions, our wastewater treatment facility is

more than able to meet the needs of our community. However,

the volume a facility is able to process is most crucial under times

of stress. In the past few years, Holland has experienced several

significant rain events that have tested the processing capabilities

of our facility. Our Headworks Improvement project will improve our

ability to effectively treat the waste stream. Currently, two separate

waste streams feed our facility: one from the north and one from the

south. This improvement project will combine these streams prior

to entering the processing plant. This modification will more than

double the plant’s hydraulic capacity, increasing it from 24 million

gallons per day to 50 million and removing a bottleneck that has

caused overflows in the past.

In addition to increasing the volume we’re able to treat, these

improvements will remove additional grit and solids from the stream

before it enters our wastewater treatment facility, which will protect

our downstream equipment and reduce the associated cost of

maintenance.

The project is slated for completion in 2012 and will prepare our

wastewater facility for future improvements and expansion.

The HBPW and the City of Holland maintain a close relationship,

and the City has been an important partner in finding innovative

ways to advance efficiency and sustainability and save our

customers money.

Each year, we meet with the City to discuss the next several years

of projects. Together, we look for possible overlaps between their

priorities and ours. Sometimes, as was the case with the 18th and

40th Street improvements, we delay projects so that they fall in line

with City projects in the same area.

By planning ahead and working together, both the HBPW and the

City realize significant savings in cost and greater efficiency. On top

of that, we’re able to reduce the disruption for our customers.

Wastewater Treatment Improvement

Synergy with the City

2020 VISION: COMMUNITY

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The HBPW is committed to pursuing an environmentally friendly,

sustainable future.

In early 2010, the Holland Community Sustainability Committee

hosted 19 community forums for residential, commercial, and

industrial customers. These forums helped us gather information on

energy and water management throughout the community and laid

the framework for a much larger community energy analysis.

Recently, the Holland City Council approved a contract with Garforth

International, a consultancy based in Toledo, Ohio specializing

in developing integrated plans for reducing the economic and

environmental impact of energy use. The company works frequently

with companies, cities, communities, and property developers and

has already performed efficiency reviews of several utilities similar in

size and scope to the HBPW.

Garforth will develop a 40-year, demand-side energy plan to

complement the supply-side energy plan the HBPW has already

developed. Between these two plans, the Sustainability Committee

and the HBPW will gain a uniquely inclusive view of the community’s

energy needs.

This Community Energy Plan will provide a blueprint for a future that

is efficient, reliable, cost-effective, and sustainable.

The HBPW and the City of Holland collaborate in a variety of ways

to help reduce the City’s energy use. This year the HBPW financed

the conversion of Holland’s downtown traffic lights to LEDs, which

are less expensive to operate and last much longer than traditional

incandescent bulbs. And because of the immense energy savings of

LEDs over incandescent lights(on top of lower maintenance costs),

the City is still paying less per year overall than they had been on

energy alone last year.

Work has begun on replacing the downtown area’s decorative

pedestrian lighting as well. Each traditional incandescent street lamp

uses 225 watts of electricity. Soon, they’ll be replaced with LEDs,

which will each use only 75 watts, conserving energy and saving the

City even more money.

Community Energy Plan

Downtown Lighting

2020 VISION: COMMUNITY

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Water & Sewer Replacements

Long-time resident Tim Hemingway worked

for SAF Holland for 31 years in various roles

including general manager of operations

and international vice president. He also sits

on the board of directors of TMD Friction,

Luxembourg, and volunteers with the Boys &

Girls Club of Greater Holland.

A Holland resident since 1997, Jim Storey has

worked for SEMCO Energy and Consumers

Energy. He has also served as a member of the

Michigan Liquor Control Commission. Today,

Jim operates StoreyLine Communications, a

Holland-based public relations, liquor license

consulting and campaign management firm.

A Holland native, Phil began mowing lawns at

Howard Miller at age 10. In 2008, he retired

from his position as the company’s CEO. In

addition to his work at Howard Miller, Phil has

served on boards at Hope College, Bethany

Christian Services, and ODL, Inc. He and his

wife also coordinate Christmas presents for 475

foster children each year.

A 15-year Holland resident, Diane most recently

served as Sustainability Manager for Haworth,

Inc. Prior to that role, she was a Product

Manager and Team Leader for Haworth’s China

Project during a year’s residence in Shanghai.

Diane is active in the Holland Community

Sustainability Committee and Grand Valley

Artists.

Paul’s construction expertise is recognized in

West Michigan through his work with Elzinga

& Volkers, Inc., and Paul Elzinga Consulting,

PC. Paul’s projects have included Holland

Community Hospital and the City of Holland

Snowmelt project. He also volunteers with the

United Way and the Boys & Girls Club.

HBPW Board President

HBPW Board Member

HBPW Board Member

HBPW Board Vice President

HBPW Board Member

Meet the Board of Directors

Timmothy Hemmingway

James Storey

Phil Miller

Diane Haworth

Paul Elzinga

BOARD OF DIRECTORS

Our Board of Directors is comprised of residents and businesspeople that live and work in our community. In

addition to providing insight and decision-making regarding the Holland Board of Public Works, each member

is also personally active in the community.

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Water & Sewer Replacements

Total operating revenues increased from fiscal 2009 in the electric,

water and wastewater utilities. The electric utility grew from $75.46

million in fiscal 2009 to $78.53 million. Revenues in the wastewater

utility grew from $6.87 million to $7.87 million, and water revenues

increased from $5.88 million to $6.33 million in fiscal 2010.

Total operating expenses for the electric utility increased from

$67.82 million to $68.52 million in fiscal 2010, while total expenses

in the wastewater and water utilities declined from $7.94 million

to $7.66 million, and $5.31 million to $5.27 million, respectively.

Metered sales in each of the three utilities declined slightly during the

period, while the average number of customers for each of the three

remained relatively flat.

• Approval of a $500,000 budget to test the viability of a potential

3,000 acre wind farm in Allegan County

• Installation of lighting upgrades and activity sensors to reduce

energy use and utility cost throughout our facilities

• $5.6 million construction project underway to improve operations

at and downstream of the wastewater treatment plant

• 2009 Holland BPW online annual report wins American Public

Power Association (APPA) national award for best digital annual

report.

• Implementation of both paperless billing and credit card payments

for residential and small commercial customers

• Electric rates that consistently average 15-20% lower than nearby

competitors and are lower than the national average

• Water rates that are some of the lowest in Ottawa County and are

lower than both the Great Lakes region and national averages.

Overview 2010 Highlights Include:

FINANCES: OVERVIEW

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Water & Sewer Replacements

Electricity

FINANCES: STATISTICS (organized by Utility)

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Water & Sewer Replacements

Water

FINANCES: STATISTICS (organized by Utility)

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Water & Sewer Replacements

Wastewater

FINANCES: STATISTICS (organized by Utility)

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Water & Sewer Replacements

Contributions to the City and Expenses Breakdown

FINANCES: STATISTICS (organized by Utility)