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HomeMy WebLinkAboutmin of light comm 09082008 C'-n /f- , ' ',. ,.. 0 .~!.. ;:- ::.{' c~. >t - " ; ;,.) Lil- F ICe'- 'l~"8 I c. LUiJ Or7 '''''' '., I I, j\ ,) ....\ 8: 4 1 Present: Chairman Ann Baldwin; Vice Chairman Jess Aptowitz;' ..Cl~fk Xevin ,.Moran; Commissioner George Dentino; Director Gary Babin; Engineer Chris Cox; Engineer-Ann Langille; Staff Accountant Ken Thomson; Line Foreman Gary D' Ambra; Financial Assi~tant Jacqueline Lee and Town Manager John D' Agostino Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting September 8, 2008 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 July 16, 2008 Light Commissioners meeting (Aptowitz/Moran) Passes 4/0 NEPP A Commissioner Service Award - Former Light Commissioners David McCarter and Louis Amoruso were honored with NEPP A Commissioner Service Awards. The Executive Director of NEPP A, Patrick Hyland, was on hand to present the awards. He explained that the criteria for these awards included service as a Light Commissioner for 10 years or 3 terms. Mr. Hyland also said that Mr. McCarter and Mr. Amoruso had been nominated by Director Babin. Mr. Hyland presented the awards and thanked them for their years of service. Mr. McCarter commented that even though you're elected as a Selectman, being a Light Commissioner is also very important and believed there was even more he could have learned. He thanked the employees of the Light Department for their hard work and also congratulated Director Babin on being elected President ofNEPP A. Mr. Amoruso stated that this award is indicative of the great people in the Light Department and believed he too should thank those loyal, hardworking people. The current Light Commissioners thanked Mr. McCarter and Mr. Amoruso for their years of service and congratulated them on their awards. Financial Results for FY08 - Director Babin stated that the capital budget approved by the Board for FY08 was $1,700,977. The actual expenditures for the year were $1,369,750 and as a result, MMED was under budget by $331,277. One reason for being under budget was that MMED had more billable work than had been projected. The other reason was because there were fewer projects that had to be done on an "as needed" basis. Clerk Moran inquired as to how MMED determines the "as needed" projects. Engineer Cox explained that a project list goes around amongst Line Foreman D' Ambra, Engineer Langille and himself. A project is determined to be "as needed" should a condition come up during the year that requires it be addressed immediately but for which does not have money specifically budgeted. He said that the budgets for these types of "as needed" projects are set by studying the trending of expenditures in these categories each year. He also said that at the 6 month - point of the budget, adjustments are often made to include these projects when revising the budget. FY08 Operating Budget Summary - Director Babin stated that the FY08 operating budget estimate was $30,616,455 while the actual cost was $34,055,599. He said that MMED was over budget by $3,439,144 because the cost of power has increased so dramatically. Director Babin explained that distribution costs came in $30,187 below budget because labor expenses were less due to the amount of billable work. Another issue that contributed ~o this was that a lineman was out part of the year on worker's compensation. Staff Accountant Thomson stated that customer accounts came in $21,639 over budget. He explained that this was because over the last 6 months of the budget, MMED had started to accrue an amount in reserve each month for bad debt expenses. Director Babin said that A&G was $125,333 over budget, $108,091 of which was legal expenses. Depreciation expense came in $259,807 under budget. Staff Accountant Thomson explained that when MMED completed the fixed asset project, many of the assets were already fully depreciated. Net Income for FY08 was $2,775,810. Director Babin said that in January, MMED started collecting under the new, unbundled rate structure a Generation Charge but unfortunately, undercollected by approximately $2,000,000. He explained that under the statutes MMED is required to collect the cost of production for the electricity used to supply the residents. He said that MMED classified this undercollection as a receivable on the balance sheet. Staff Accountant Thomson stated that based on his discussions with MMED's prior auditor, other municipals treat unbilled revenue the same way. He said he had not been able to reach MMED's current auditor for his views on this. He commented that it is a common practice. Vice Chairman Aptowitz told the other Light Commissioners that he had called the Light Department that day to check with Director Babin and Staff Accountant Thomson as to whether R.E. BroWn was okay with how this was being handled. Vice Chairman Aptowitz then pointed out that it does mean more work for the staff keeping track ofthe accruals. Commissioner Dentino also pointed out that the rate was increased to make up for what had been undercollected. Director Babin said that energy sales increased 3.6% from FY07. He believes this is weather related and is also due in part to the added load from the Mansfield Crossing stores. He said that the Calpine Rate Stabilization fund had a balance of $1 ,586,817 at year end. The depreciation fund had a balance of$3,78l,130. ,.. Commissioner Dentino said that the total paid to Dominion under this contract was $14 million while the amount received from Calpine was only $10 million and he questioned the $4 million difference. Director Babin explained that the $4 million is what would have been paid to Calpine had they not breached the contract. Commissioner Dentino stated that it cost the ratepayers $5 million when MMED terminated the contract. Director Babin said MMED would've paid $4 million to Calpine but instead paid Dominion $14 million but got $10 million from the Calpine escrow account, which made MMED ratepayers whole. Director Babin then pointed out that Calpine filed for bankruptcy so they are the ones who breached the contract. Commissioner Dentino said that they actually filed Chapter 11 but were still willing to supply the power. Town Manager D' Agostino questioned whether anyone would want to rely on someone who was declaring bankruptcy. Vice Chairman Aptowitz asked Director Babin if he could do an analysis showing how much the undercollection is now costing the average rate payer. Commissioner Dentino stated that if the reserve fund hadn't been depleted, it could have been used to offset the increased rates. He said that the question ratepayers often ask is how much of the rate increase is due to litigation costs. Commissioner Dentino said they've been told there is no rate impact from the settlement but he believes that's not correct. He also believes that the MMWEC Reserve Fund was intended to be used for the East Mansfield Substation. Director Babin said he was not aware that the Reserve Trust Fund was ever collected to support the cost of the East Mansfield substation. Town Manager D' Agostino said that he did not believe so either. He said it was meant to be used in the event that deregulation required MMED to lower rates to remain competitive. East Mansfield Substation Update - Director Babin provided the Board with a side by side comparison of Section 3.4.1 - Municipal Use and Section 3.4.8 - Public Service Utility of the zoning by-laws. MMED staff recommended that the Municipal Use standard be used for the permitting of the East Mansfield substation. Director Babin stressed that residents would have equal input in either process but that because both the Building Inspector and Planning Director had gone on the record as saying it was a Municipal Use standard of review, he felt this was the correct process. Clerk Moran said that he would like to see the Municipal Use process used to keep the project under the control of the Light Board and that the Light Department and residents would have input as well. Vice Chairman Aptowitz said that he had visited the Taunton substation and thought it could be used as a model while tweaking it to Mansfield's needs. Commissioner Dentino was not as impressed with the Taunton facility as Vice Chairman Aptowitz. He said he wants to make it as natural a setting as possible as well as the least intrusive. He also supports the Municipal Use process. - Chairman Baldwin's biggest concern was making sure residents have input. She agreed with the rest of the Board about using the Municipal Use process. Motion: To proceed with the construction of the East Mansfield Substation using the Municipal Use permitting process. (Moran/ Aptowitz) Passes 4/0 Director Babin mentioned the site visits by the Light Commissioners to the Taunton Light Department substation in Raynham and said if anyone else was interested he would be willing to schedule another visit. He said that MMED is in the process of working with PLM to solicit a proposal for the detailed design work of the new substation. Director Babin also reported that he did follow up with Attorney Carroll's July 22 request for information on the electric field calculations by PLM. He stated that to his knowledge there has been no other issues with Mr. Carroll since that time, something he confirmed with Ms. Woods, resident of6l Bird Road who was in the audience. MMED has also been trying to schedule a meeting with National Grid to discuss obtaining an easement for the property on which the new substation would be built. System Reliability Summary for 2007 - Engineer Cox referenced a summary of MMED's 2007 reliability statistics that was included in the Board package and told the Board that MMED tracks and records outages on a monthly basis. An outage is recorded if it affects more than one customer and lasts five seconds or more. There are also DTE exclusions for the calculation of reliability indices which include planned outages; outages that last less than five minutes; outages that do not involve a primary distribution circuit and outages that affect 15% or more of the total number of customers. Engineer Cox then reviewed the tables of reliability statistics. Table 1 included MMED data and Table 2 included Industry data. Director Babin reiterated that if you look at MMED's reliability statistics on an equal basis with other utilities and especially National Grid, MMED's reliability was superior. Update on Commercial Deposit and Delinquent Account Collection Policy - Director Babin reviewed a summary of commercial account activity since the Board's approval of the new commercial deposit policy on July 16. He then said he was requesting clarification of three issues for the MMED staff. First, he asked if MMED should be collecting deposits from landlords whose spaces are vacant and are between tenants. Vice Chairman Aptowitz said he thought the intent was not to collect a deposit in that situation. Clerk Moran commented that leverage does exist on these accounts with the 30 day termination policy. Commissioner Dentino was unsure because MMED had a previous situation where the owner and the tenant were one in the - same. Chairman Baldwin said that the policy they've set up is working so there is no need to collect a deposit in that situation. Director Babin added that even if the service were terminated for non-payment, MMED would require payment of the outstanding amount before the service would be reactivated for a new tenant. Director Babin said that no vote was needed, only a consensus amongst the Board members. Town Manager D' Agostino, believed however, that a formal vote should be taken as it is part of the policy. Director Babin agreed to come back to the next Light Commissioners meeting with the exact wording of the motion. Motion: To make an amendment to the Commercial Deposit Policy that "When a tenant vacates a commercial property the owner is not required to place a deposit to maintain electrical service". (Aptowitz/Moran) Passes 3/0/1 (Dentino abstained) The second issue Director Babin wanted the Board to clarify is when a corporate account may take a long time in getting their deposit check from their corporate office, which could be located in another part of the country. He again said there was no need for a vote. He believed that MMED just needed some latitude from the Board in dealing with these types of situations. Chairman Baldwin suggested that after an account had been set up for 45 days and there was still no check, then pull the meter. All the Board members agreed. The third issue Director Babin wanted clarification on was whether to waive deposits for temporary accounts for non-profits, such as the Haunted House. The Board agreed to waive these deposits. Renewable Energy Issues - Director Babin stated that green energy has become a huge issue in the electric industry and in society in general. The purpose of bringing up this subject at this time was to assess the Board's interest in this type of issue in order to determine which way the MMED staff should direct its efforts. He told the Board that the only formal program that MMED currently offers is a Residential Conservation Services program (RCS) in which ~ of 1 % of operating revenues must be earmarked by statute for residential conservation measures. The services MMED offers include an energy tip hotline, free energy audits for customers and appliance rebates. Director Babin, however, wants to look beyond that and suggested that perhaps MMED should offer renewable energy as part of its power supply portfolio. Commissioner Dentino thought economically, it was a tough situation. Clerk Moran agreed with Commissioner Dentino, although he commented that philosophically, he thought it was the right thing to do. Chairman Baldwin also questioned whether this was the right time. Town Manager D' Agostino said that at some time it would have to be considered but he also didn't think the timing was right. Director Babin said that he would keep the Board posted periodically on this issue. ,.. Old and New Business Director Babin told the Board that he is still waiting for Energy New England (ENE) to send a proposal for replacing MMWEC's services. Vice Chairman Aptowitz inquired as to the date for the FY08 audit. He wondered how soon that could be. Town Manager D' Agostino will check on that. Commissioner Dentino said that when MMED was on a calendar year fiscal year, the audit began in December. He wondered why this audit couldn't start in June. Director Babin answered that the auditors do not show up as early as he wants but hoped it would be sooner this year. Commissioner Dentino said that David McCarter and Lou Amoruso served the Town tremendously for years and that they, as well as their families, put in a lot of time. He wanted to make sure their families were acknowledged. He believed their family's contributions gave Mr. McCarter and Mr. Amoruso the ability to spend the time needed to fulfill their responsibilities. Chairman Baldwin said she had received a letter from a resident addressed to the Board asking that the Town pay their portion of the federal judgment as it would be fiscally responsible to do so. Chairman Baldwin said that even if the Board took a vote in order to respond to the letter, they would be very limited as to what they could say because of the litigation. Commissioner Dentino said that people do not understand what is being done. He suggested that the Board come back with a prepared statement at a future Selectmen's meeting to clarify and explain the Board's stand. Clerk Moran believed that the less the Board members say at this time, the better. He did not think it was prudent to discuss it at all. Chairman Baldwin said she could understand both sides of the issue. She said that if they put something out there so people have an idea of what's going on, they'd have to be very cautious about what they said. She reminded everyone that this case was still pending and that all of this had been discussed previously in Executive Session. This means that there would have to be a vote by the Board before anything could be said. Motion: To adjourn the Light Commissioners meeting at 9:30 (Aptowitz) Passes 4/0 Respec}fully submitted: Jacqueline Lee 10/6/08 i1~ ~~ Signature of Clerk 10/llo$- Date of Approval -