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Present: Chairman Ann Baldwin; Vice Chairman Jess Aptowitz; Clerk i'Ktvln . MpJ;an;
Commissioner George Dentino; Director Gary Babin; Engineer Chris Cox; Engine~t' Ann
Langille; Staff Accountant Ken Thomson; Line Foreman Gary D' Ambra; Financial Assistant
Jamie Kelley; Financial Assistant Jacqueline Lee and Town Manager John D' Agostino
Mansfield Municipal Electric Department
Minutes of Light Commissioners Meeting
June 23, 2008
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Light Commissioners Meeting
The meeting was called to order at 7:00 PM followed by the Pledge of Allegiance.
Motion: To approve the minutes of the April 14, 2008 Light Commissioners meeting
(Dentino/Baldwin) Passes 2/0/2 (Moran and Aptowitz abstained)
Commissioner Dentino questioned the April 14, 2008 minutes regarding out of state travel
and also the request for a list of seminars, meetings, etc. which the Board still has yet to
receive. It was decided to table this discussion until Old and New Business.
Financial Statements for April 2008 - Staff Accountant Ken Thomson began by addressing
questions that had been asked at the last Light Commissioners meeting for which the stafftold
the Board they would report back. Commissioner Dentino had inquired as to why the
Administrative-Payroll/Benefits for March went from $140,087 to $138,045 for a decrease of
1.5%. Staff Accountant Thomson said this was due to the allocation process for benefits. In
FY07, 75% was the overhead rate MMED was using to allocate benefits but for FY08 an
allocation rate of 80% is being used. He assured the Board that the decrease was not due to a
decrease in salary for anyone.
Staff Accountant Thomson then reported on MMED's April Financial Statements. Net
income year-to-date is negative $442,538 and net operating income year-to-date through April
is $355,401. He said the Calpine Rate Stabilization Fund had a $155,000 drawdown and
MMED's cash position is down slightly from the prior year. Staff Accountant Thomson also
said the Depreciation Fund stands at $3,738,193, up from $3,021,790 in FY07.
Commissioner Dentino inquired as to the increase of 64.4% in A&G from 2007 to 2008.
Staff Accountant Thomson stated that it was due to legal expenses. Commissioner Dentino
asked where the bulk of those expenses lie. Director Babin answered he believed it is for
Leonard Kesten and his firm and Town Counsel with respect to the Beliveau case. MMED
also had a power supply contract executed which incurred legal fees from Rubin and Rudman.
Vice Chairman Aptowitz questioned the detail of the legal expenses, such as which firm and
which costs belong to each. Director Babin said that information would be available at the
Town Accountant's office but availability would depend on the on-going litigation. Director
Babin also said the MMED staff would provide a breakdown of those legal expenses.
Vice Chairman Aptowitz then questioned Net Operating Income Y-T-D. Director Babin said
that this year, MMED has undercollected $1 million in Purchased Power Expense through
April. He explained that during the first six months of the year, rates weren't recovering
enough revenue. Vice Chairman Aptowitz wondered ifMMED's budget was seasonalized or
whether each month was based on 1/12 of the year. Director Babin answered that power
supply costs and energy sales were seasonalized but expenses were allocated at 1/12 of the
total per month.
Commissioner Dentino voiced concerns about Bad Debt Expense going from $41,000 in
FY07 to $105,000 in FY08 and also Collection Charges going from $22,000 in FY07 to
$46,000 in FY08. Accountant Thomson indicated the bad debt was now being accured
monthly instead of booked only once per year. Commissioner Dentino then questioned
Municipal Sales and wondered why MMED had dropped the rate by 10%. Director Babin
said that MMED was overcollecting from the municipal class from a rate of return point of
view as the cost-of-service analysis had pointed out. Commissioner Dentino then asked if the
rate was lowered, why was there such a swing in the numbers. Director Babin explained that
streetlight sales are now rolled into Municipal Sales where previously, they had been put
under Miscellaneous. Commissioner Dentino believed that the Miscellaneous category made
more sense as everyone, including residential and commercial, uses streetlights. Director
Babin pointed out, however, that the bill is paid by the Town.
Fixed Asset Management Update - Director Babin told the Board that when Staff
Accountant Thomson first joined MMED, he was given the task of developing a fixed asset
management system which had been recommended by MMED's auditors. Director Babin
thanked Staff Accountant Thomson for a job well done.
Staff Accountant Thomson stated that three different auditors (Goulet, Salvidio & Associates;
Nelson, Adam & Dickson; R.E. Brown) expressed concern that MMED needed to do
something about tracking fixed assets. MMED currently has $36,190,802 worth of fixed
assets on the balance sheet.
Staff Accountant Thomson said that he started the process by reviewing old invoices from
MMED's files, which amounted to about one-third of the fixed assets. For the second part of
the project he used the GIS database which had been compiled by MMED's employees. The
final third of the project was based on a survey of the overhead and underground assets which
required assistance from Line Foreman D' Ambra.
Clerk Moran asked if MMED was considering a maintenance program to keep the data
current. Staff Accountant Thomson answered yes, information is currently going back and
forth from Line Foreman D' Ambra to Staff Accountant Thomson regarding installation and
retirement of assets.
Vice Chairman Aptowitz questioned the issue of obsolescence. If a piece of equipment cost a
certain amount but is now fully depreciated, it has no value and should be reflected as such.
Staff Accountant Thomson said that is not being addressed at this time but is something to
consider.
Commissioner Dentino asked what was previously being utilized by prior management for
depreciation. Staff Accountant Thomson said before he joined MMED, they used to take the
plant balance which was carried forward every year and multiplied it by 5% to get the annual
depreciation expense.
Commissioner Dentino questioned the engineering and supervisory payroll. Director Babin
explained that the engineers spend a lot of their time planning capital projects and this time
needs to be tracked and allocated to the capital projects. He said the auditors approved this
approach.
Vice Chairman Aptowitz wondered about the gross plant number for May 2008 and asked
what entry was made to fix the books. Staff Accountant Thomson explained that when
assessing the value of the assets, he used a formula to back into the asset value. He added that
the value placed on each installation, for instance a pole, made sense. He explained he didn't
intend to adjust the general ledger but made the number work to balance to the general ledger.
Vice Chairman Aptowitz questioned whether the auditors would be comfortable with that.
East Mansfield Substation Feasibility Update - Engineer Cox gave an overview of the
status of the proposed East Mansfield Substation and what has transpired since the last few
Board meetings. He said the first study brought to the Board in November 2007 showed
MMED needs additional substation capacity by the summer of 2010. The second study from
April 2008 evaluated five potential sites. Since the April Board meeting was held, a public
hearing has been scheduled for July 14 at 7:00.
Chairman Baldwin and Vice Chairman Aptowitz stated that they would like to do a walk thru
at the potential site. Commissioner Dentino, who has already gone, will go with Clerk Moran
who also wants to have a walk thru.
Commissioner Dentino questioned the point of the public hearing. Engineer Cox answered
that it is supposed to be a presentation of the study results and a question and answer period
for abutters per the Board's request.
Commissioner Dentino then asked ifMMED has a cost for the land. Director Babin answered
no, that Jay Zola had been asked but had not responded. Commissioner Dentino questioned if
there is no land cost provided, how a feasibility study could be done. Director Babin
answered that he was doing what he was directed to do, which was to evaluate the parcels
individually including estimating the costs to construct the substation on both parcels.
Commissioner Dentino said he believes Director Babin had not been directed to spend more
of the ratepayer's money on engineering services until he knew the cost of the land.
Vice Chairman Aptowitz asked if at the public hearing MMED would have all costs, the
method of payment, where the money is coming from, etc. Director Babin said that MMED
does have a good handle on it and will work through the details when a parcel is chosen.
Commissioner Dentino suggested getting memos from Shaun Burke, Nick Riccio and
Michelle Grenier, voicing their opinion and giving input on the potential site.
Town Manager D' Agostino indicated he wants this to go through the municipal review
process. He stated that this is a municipal project, not so much a utility project, to be
reviewed by the Board which is required by the Charter. This will go through a review
process to make sure the project meets those requirements.
Proposed Delinquent Account Collection Policy - Director Babin said that MMED staff
would like to propose a collection policy for commercial accounts for the Board's
consideration. MMED already has a residential collection policy. He said he was not looking
for Board approval this evening, only discussion. He added that this is not a black and white
issue but has a lot of gray area which he would like the Board to consider.
Office Manager Anderson explained the current residential collections policy. When an
account is sixty days past due the collections person starts collection procedures. In order for
the customer to enter into a payment plan, they must pay half of the amount of the termination
notice up front. If a payment plan is broken then the customer is subject to termination and
once terminated, the entire balance of the account must be paid in order to have their meter
reinstalled. Office Manager Anderson also explained that under the DPU guidelines, a
customer could qualify for protection if they have financial hardship along with an infant
under one year old or if an individual in the home has a medical condition.
Office Manager Anderson told the Board that with commercial accounts, however, there is no
protection from the DPU. The proposed policy is that if they enter into a payment plan they
would have to pay with direct debit, either by credit card or by bank account. Two
insufficient funds payments would constitute a broken payment plan and their service would
be terminated.
Vice Chairman Aptowitz asked if there are reports generated to determine which customers
are sixty days late. He also wanted to know who is responsible for reviewing them. Director
Babin answered yes, aging reports are produced and are reviewed by a member of MMED
staff. He added that MMED has a very active collections procedure.
Vice Chairman Aptowitz then questioned whether MMED took deposits on commercial
accounts. He said that he would have an easier time letting a resident slide rather than a
commercial account. He mentioned that a business client of his had to put down a $500
deposit to open an electric account for an apartment he was renting. He said he found this to
be rather steep and wondered why residents should have to pay for commercial bad debt.
Director Babin told the Board that MMED is allowed to ask for a deposit based on three
months estimated usage. This requirement could result in a $25,000 to $30,000 deposit for a
new commercial customer. He believed this was a lot to ask of a start-up business. He
offered to come back with a proposed commercial deposit policy for the Board's
consideration.
Vice Chairman Aptowitz stated that he wants a commercial collections policy and said that he
is very concerned about it. Commissioner Dentino wondered if MMED didn't have a policy
of taking commercial deposits before. Director Babin said that a previous Board had voted to
do away with them. Vice Chairman Aptowitz commented that if MMED collected a
commercial deposit covering three months of usage and the collections person did due
diligence at the time the account became sixty days past due, there should never be a problem.
Commissioner Dentino inquired as to when the Light Commissioners voted to pursue
litigation involving the delinquent closed accounts. Director Babin answered that there was
no vote, that it was discussed with Town Counsel who advised MMED that a legal route was
available. Commissioner Dentino wondered if that isn't the Board's responsibility. Town
Manager D' Agostino said that it was not the responsibility of the Board and that MMED
didn't need to seek the Board's approval to hire counsel. Director Babin added that under the
Westfield decision, the Manager of the Light Department is charged with the responsibility of
hiring attorneys and consultants.
Commissioner Dentino questioned why MMED now wants to memorialize collections
policies; the reasoning being that the staff will know what to do. He is of the opinion that the
staff, in fact, did know what to do. He questioned whether this sudden need to memorialize
collections policies is because a large debt is currently owed from delinquent accounts.
Town Manager D' Agostino then reiterated that the Board did get rid of commercial deposits.
While residential deposits were reinstituted, nothing was done about commercial accounts.
Director Babin said that there's been no commercial deposit policy since he arrived at MMED
that he and Office Manager Anderson are aware of. They are looking to give the staff some
direction, although he said that he and Office Manager Anderson do give the collections
person latitude as far as dealing with accounts.
Vice Chairman Aptowitz believes you don't have to have compassion for a business. If you
don't have enough money to be in business, you should not be in business. He reiterated that
commercial accounts should not be subsidized by the residents.
Director Babin pointed out that if commercial service is terminated, MMED will not receive
any money from the account. One of the difficult decisions for the staff he said is at least if
you have a payment plan you may collect some of the past due balance. Vice Chairman
Aptowitz said he understood this but questioned whether, going forward, someone would be
on top of collections more. Director Babin said that organizationally, MMED has come up
short in a couple of cases and they are taking responsibility for that but stated that these types
of things will not occur again.
Clerk Moran asked if there were any internal controls in place so that the collections
individual will know what his/her responsibility is. Director Babin answered yes, he and
Office Manager Anderson are responsible for supervising the process.
Commissioner Dentino doesn't agree with giving a customer a payment plan after their
balance has reached a certain amount. He believed that MMED allowed some businesses to
reach balances far beyond what should have been allowed.
Commissioner Dentino said that he also had a problem with adjourning to the back room for
an executive session on collections just because the word "litigation" is being used. He
believed the public should not be shielded from this. Director Babin felt there is a level of
privacy customers should be entitled to and that the customers involved in the litigation have
rights to not have their account information aired in public.
Jack Goldberg then shared some thoughts from the Finance Committee on MMED's
collections issues and said these suggestions were for commercial accounts only. He thought
MMED should consider a status report of the commercial accounts to be included in the
monthly finance report so that everyone is aware of the issues. A case by case decision could
then be made by the Manager and the Board.
Town Manager D' Agostino believed a list by account number (not by customer name) is not a
bad idea but questioned who would make the decisions to act on a problem account. Director
Babin emphasized that there should not be any exceptions or handling of accounts differently
for the same issue; that everything should be handled in accordance with a policy. He stated
that MMED has been down that road before and you either have a policy that applies to
everyone or you don't.
Director Babin also indicated he is opposed to providing that level of information to the Board
as it is the staffs responsibility to use that information. Mr. Goldberg said he was willing to
let the Board make that decision.
Vice Chairman Aptowitz asked if the Board ever sees an aging at all. Director Babin said
they do not.
Commissioner Dentino asked if a commercial account is over sixty days past due, don't they
go to collections. Office Manager Anderson said no, active accounts do not go to the
collection agency, only closed accounts do. She then explained the current residential
procedure. Once an account is terminated, a letter is sent when the account is thirty days past
due as a reminder. A forty day letter is sent with stronger wording, saying that the account
will go to collections if not paid. A fifty day letter is then sent letting the customer know the
account is being sent to the collection agency.
Mr. Goldberg then continued with the suggestions from the Finance Committee. Businesses
could be asked to get a standby letter of credit for a small fee. Accounts receivable insurance
is also available for a small price which could be paid for by the customer.
Mr. Goldberg questioned imposing finance charges on accounts. Director Babin said MMED
currently does not do this and believed they would be hard pressed to find someone who does.
He mentioned that NStar and National Grid do not do so. Mr. Goldberg felt it was worth
looking into, as long as MMED is not precluded from imposing them.
Mr. Goldberg also questioned the direct debit of a customer, stating that if their credit is bad,
they'll get denied. Office Manger Anderson stated that MMED would be aware of the
insufficient funds issue as soon as MMED puts it through.
Commissioner Dentino believed the Finance Committee made some valid points and he
pointed out that MMED can't continue to write offbad debt.
Director Babin believed there needed to be some perspective introduced into the discussion
and stated he doesn't believe MMED has a huge problem with collections. He also stated that
the general public should not have that impression either. He said that in 2008, MMED wrote
off $60,000 out of $30 million in revenue. He also said that MMED's 0.2% writeoff was half
of what utilities in the Northeast write off. He admitted the MMED staff blew it on a couple
of accounts but reiterated that MMED staff does a very good job with collections.
Budget Billing Plan Information - Director Babin revisited the subject of Budget Billing.
He reminded the Board that the issue was that these customers were being guaranteed the
discount whether they paid within the 15 day period specified as qualifying for the discount or
not. Office Manager Anderson stated that NDS is working on MMED's billing system to
correct this flaw in the system. They thought they had fixed it but unfortunately, they did not
and are continuing to work on it. She pointed out that one of NDS's other customers also
offers a budget to their ratepayers and their system seems to be working fine.
Advanced Meter Infrastructure Update - Director Babin told the Board that MMED has
been looking for some time at what their long term needs would be for meter technology.
Engineer Langille then gave an overview of AMR (Automatic Meter Reading) and AMI
(Advanced Metering Infrastructure).
She explained that AMR is a one-way system. There would still be a need for a meter person
to either walk or drive-by the meters. She pointed out that this reduces labor costs and would
be more cost effective for monthly readings.
Engineer Langille said that AMI is a two-way system done from a central location and this is
the system she is recommending. Hourly and real-time meter readings are available. This
means enhanced customer service. Engineer Langille did say that this system is very new and
the estimated cost is $1.5 million to $2 million dollars. She distributed to the Board a
proposed long-term plan along with a schedule.
Clerk Moran inquired as to whether this would require fewer meter readers and wondered if
this would involve reassigning them. Director Babin answered yes, there are currently three
people involved, two of which are full-time meter readers. He said they would be given
added responsibilities or reassigned.
Commissioner Dentino wanted to know which other municipals have AMI or AMR. He
wondered what would happen if MMED paid this money for AMI and then it became as
obsolete as AMR He noted that technology is changing so rapidly. He is also not sure that a
two-way system is necessary in this economy.
Town Manager D' Agostino asked if a pay-back had been calculated. Engineer Langille said
not for Mansfield but for others it's been a ten year payback. Town Manager D' Agostino also
pointed out that there are customers in the Industrial Park in Mansfield who cannot get certain
contracts because MMED is not "green".
Director Babin wondered if it was the sense of the Board that MMED should pursue this over
the next year, although there is no urgency. Chairman Baldwin answered yes. Commissioner
Dentino would like to see a list, including those who regret spending their money on AMR.
He said he would like to be educated over the next year.
Generation Charge for Third Quarter - Director Babin handed out a spreadsheet to the
Board and reported that the Generation Charge beginning in July, for the July 2008 -
September 2008 billing period, will be 13.23 cents per kWh. This is up from 12.18 cents
from the second quarter. He stated that for the first six months of the year MMED
undercollected the Generation Charge by $1.3 million. This is equal to one cent per kWh for
that period. MMED now not only has to collect for the period of July through September but
also for the $1.3 million undercollected from the first 2 quarters. Director Babin explained
that MMED needs to recapture what was underestimated and that is what's causing the spike
in the Generation Charge.
Commissioner Dentino questioned the 7.3 cents which was budgeted for in the spot market
while the average price was 10.3 cents. He pointed out that in the last year of the contract
MMED had with Dominion, it was either 10.2 or 10.3 cents.
Old and New Business
Director Babin reported to the Board about an issue with a customer on Pilgrim Road who
was concerned with the trimming that had been done to his tree and who had written a letter
to the Light Commissioners. Director Babin said that MMED did their due diligence in
performing the work but he had looked at it and believed the tree trimming crew could have
used better discretion. He also mentioned that the tree was actually owned by the Town. He
also had a follow-up meeting with the tree trimming crew. Director Babin regretted any
inconvenience caused to the customer.
Clerk Moran thanked Director Babin for taking time to meet with him at the Light
Department offices the previous week.
Vice Chairman Aptowitz thanked Staff Accountant Thomson for all his hard work on the
fixed asset management system.
Commissioner Dentino said he had previously asked for some information on Professional
Development costs. He wanted MMED to go back three years and track how much was spent
on seminars. Director Babin said he will provide that information.
Commissioner Dentino had also requested a spreadsheet showing the services that MMWEC
provided to MMED and their cost. Director Babin said that Staff Accountant Thomson has
completed that but it has not yet been distributed to the Board.
Commissioner Dentino feels there will be some serious problems next year which will only be
exacerbated by the economy. He believes there will be a much greater need for heating
assistance. He suggests looking at the shut-off moratorium that begins in November and that
MMED should be better prepared for collections. This way MMED doesn't get themselves in
a situation with customers who they won't collect from for 6 or 7 months. He said he would
prefer to see this addressed in September or October, rather than November. Director Babin
indicated that MMED has a flurry of activity in November as the shutoff moratorium
approaches but that shut-offs actually occur every week between April and November. He
said that unfortunately, some people don't respond until you're ready to shut them off.
Commissioner Dentino reiterated that's why their meters should be pulled in September or
October, not November.
Commissioner Dentino asked what MMED's budget is for fuel for the trucks and other
vehicles this year as compared to last year. That information was not readily available so
Commissioner Dentino said he would call Staff Accountant Thomson for the numbers.
Commissioner Dentino commented on how out of proportion the Town seals on MMED's
cars look because the seals are so tiny. Director Babin said the decals are scaled to the size of
the vehicles.
Director Babin announced that the next Light Commissioners meeting scheduled for Monday,
July 21 has been rescheduled to Wednesday, July 16.
Motion: To adjourn to Executive Session at 9:55 and return for the purpose of
adjourning the Light Commissioners meeting
(Baldwin)
Role Call Vote: Dentino-aye, Moran-aye, Aptowitz-aye, Baldwin-aye
Passes 4/0
The Board reconvened the Light Commissioners meeting at 10:55 and the following motion
was made.
Motion: To adjourn the Light Commissioners meeting at 10:55
(Moran) Passes 4/0
Resp~c~lly submitted: Jacqueline Lee 7/16/08
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Signature of Clerk
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Date 'c>f Approval