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HomeMy WebLinkAboutmin of light comm 10062008 ( Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting October 6, 2008 ,- -'.-:f~ 1\ [~lJ ("-, (--, r-,- 'C r: :~:~- t.j C ;-- ~ - L. 11 ..1\ '~: 3 q Present: Chainnan Ann Baldwin; Vice Chainnan Jess Aptowitz~ Clerk Kevin' Moran~ Commissioner George Dentino; Commissioner Sandra Levine; Director Gary Babill;EngiIl~t;r: Chris Cox; Engineer Ann Langille; Staff Accountant Ken Thomson; Line Foreman Gary D' Ambra and Financial Assistant Jacqueline Lee 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 September 8, 2008 Light Commissioners meeting (AptowitzlBaldwin) Passes 2/0/1 (Levine abstained) Financial Results for August 2008 - Staff Accountant Thomson told the Board there was a net increase to surplus of $872,038. Purchased power costs were down from the previous month by $535,564. He said that the Calpine Rate Stabilization Fund was at $1,067,401 as of the end of August. He also said that MMED's operating cash position was $1,975,136, down slightly from the same period last year. Staff Accountant Thomson reported that MMED had overcollected Generation Charges in FY08 by $713,216. East Mansfield Substation Update - Director Babin told the Board that MMED has focused on two things since the last Light Commissioners meeting in regards to the East Mansfield Substation. First, the MMED staff met with Town Engineer John Sullivan, Building Inspector Nick Riccio, Planning Director Shaun Burke and Conservation Agent Michele Grenier to discuss what will be required in order to obtain permitting approval for the construction of the new substation. The second area MMED has focused on is continuing to work with National Grid in regards to construction requirements for the proposed substation. Director Babin feels MMED has made good progress with National Grid. Vice Chairman Aptowitz inquired as to whether MMED had received a final cost from National Grid for the land. Director Babin responded he had not but that the staff has a pretty good idea that it will be a one-time cost not to exceed approximately $100,000 based on National Grid feedback. Vice Chairman Aptowitz then had more questions regarding the financials which were previously discussed. He wondered if all of the Depreciation Fund was to be used towards the cost of the substation. Director Babin answered no, that not all of it would be used and that MMED would be borrowing money through a bond issuance. He explained that you wouldn't want to use all of the Depreciation Fund, perhaps just half of it. Vice Chairman Aptowitz pointed out that the less MMED borrows, the less effect it will have on the ratepayers. ,. Commissioner Levine inquired as to whether anyone had checked to see what the availability of borrowing is. Director Babin said no, not yet. He explained that his plan is to go to Town meeting next spring to ask for bond authorization. Commissioner Levine questioned the design of the proposed substation as she was not in attendance at the last meeting. She said she had concerns about the aesthetics. Commissioner Baldwin pointed out that it had been addressed in the motion that was made at the last meeting. Commissioner Levine asked if a certain amount of money had been set aside for aesthetics. Director Babin answered that the project design had not reached that level of detail yet. Revised Commercial Customer Deposit Policy - Director Babin stated that the Board had decided at the last meeting not to require a deposit from landlords who are between tenants. He then presented the revised policy prepared by MMED staff for the Board's review to reflect the motion taken at the last meeting. Director Babin pointed out to the Board that he also added to the Commercial Customer Deposit Policy the option of a recurring credit card (in addition to the direct debit option) as a way of waiving the deposit for the commercial customer. He stated that the original policy had referred to the direct debit option as a general method of MMED controlling the transfer of money. He then added that direct debit typically refers to a checking account debit and that he wanted to specify the recurring credit card as another option so that it was clear. Vice Chairman Aptowitz wanted to verify that if a customer is on a payment plan and they miss their payment, that their meter is pulled. He asked if for example, a customer is supposed to pay $500 plus current and the day comes that the $500 is supposed to be paid but it is not, does MMED do anything. Director Babin answered that the termination process would then begin but that this is where he allows the staff some discretion. He stated that if the customer in question were able to get back in conformance with the payment plan before the shutoff date, that customer would not be shut off. Vice Chairman Aptowitz stated that he just wants to make sure that someone is staying on top of this. Commissioner Levine suggested that a motion needed to be made in regards to the clause that a deposit is not required from a landlord who is between tenants. Director Babin pointed out that the motion was already made and approved at the last meeting and that the staff merely added the wording to the policy to reflect that motion. Generation Charge Re~onciliation - Director Babin gave the Board a reconciliation of MMED's Generation Charge through August. He informed the Board that MMED had undercollected the Generation Charge by $1,331,273 for the first eight months of 2008. He also informed the Board that the Generation Charge for the 4th quarter was set at 12.74 cents, down 0.49 cents from the 3rd quarter. Director Babin noted that the Canal Generating Plant charges had cost each ratepayer an average of 1.13 cents/kWh thus far in 2008. ~ In answer to Vice Chairman Aptowitz's question, Director Babin explained that the typical residential ratepayer will pay $18 per month for each of the next three months in order to recoup MMED's $1.331 million undercollection through August 2008. Revised Risk Management Strategy - The Board was given a proposed revision to MMED Risk Management Strategy to be implemented with the Constellation Gas Indexed Heat Rate contract as recommended by PLM. Director Babin said the current contract limits the volume of gas that MMED can purchase each year and does not allow for any purchases beyond 3 years. He explained that MMED knows that the costs for the purchase of power in future years is a good deal right now and PLM recommends that MMED allow for the ability to lock in greater volumes of gas for the full five years to ensure obtaining this pricing. Director Babin said the volatility of the gas market is why MMED is seeking a change. He added that the gas market is also prone to spikes in pricing and because at the current time gas pricing is favorable, it is in MMED's best interests. Motion: To accept the .,evised MMED Risk Management Strategy (Levinel Aptowitz) Passes 3/0 Vice Chairman Aptowitz questioned how low the gas price is now. Director Babin answered that it is around the $7 per MMBtu range, which is very low relative to pricing in recent years and corresponding electric prices are also favorable. MMWEC Membership Issues - Director Babin told the Board that he is not looking for a vote this evening in regards to terminating MMED's membership with MMWEC. He did say that once MMED served notice to leave MMWEC, the staff has solicited two proposals to replace the MMWEC services. Director Babin said he has also met with Ron DiCurzio, newly appointed Chief Executive Officer of MMWEC. Mr. DiCurzio told Director Babin that MMWEC has been taking significant measures to cut costs. They have downsized through the retirement or voluntary severance of 18 out of 60 employees, of which only 8 new personnel will be hired. Many services have been cut, including no longer paying the costs of litigation, such as supporting the cost the Canal caste. MMWEC's position is that the affected municipals are now supporting that litigation cost. Director Babin summarized by saying that he believes MMWEC has respond~d to the termination of membership notices it had received by reshaping the organizatidn. Mr. DiCurzio asked that MMWEC be given six months in 2009 to prove themselves by allowing the changes to become fully implemented. Director Babin proposed that Mr. DiCurzio be invited to the next Light Commissioners meeting on November 17 to address the Board. Director Babin stated that he has solicited two proposals to provide the services MMWEC provides. The first proposal is from Energy New England in the amount of $70,000. The second proposal is from,PLM for $50,000. Director Babin indicated that PLM's limited staff '" is a concern. He also indicated MMED staff would be performing a more detailed analysis of each proposal. Vice Chairman Aptowitzasked if it would be at all possible for the Light Commissioners to receive their informational packets earlier then they have been receiving them. His suggestion is to send each piece along to the Board as soon as it is completed. Director Babin said he preferred to put everything in one packet but would try to get it out to the Board members earlier than they've gotten it in the past. Commissioner Levine asked if the Board could get a three way comparison of services between Energy New England, PLM and MMWEC. Director Babin said he would put that together. Old and New Business Vice Chairman Aptowitz said that at a prior meeting the pending home heating energy crisis for those people in need i~ Mansfield was discussed. He commented that MMED's funding was previously used for assistance with any kind of home heating, not just electric, but that it became restricted to electric heat only. He then said he wouldn't mind seeing MMED's money used for other fonrts of home heating. Chairman Baldwin questicimed whether Gale Farrugia from Social Services was coming back to address the Board. Director Babin said he would try to put her on the agenda for the next meeting. Chairman Baldwin then requested that Ms. Farrugia be put first on the agenda. Commissioners Dentino and Moran arrived at 8 :22pm. Clerk Moran explained that he and Commissioner Dentino had just come from a Court of Honor Ceremony for Troop 17. Troop Master Kelly was stepping down after seventeen years of service. Commissioner Levine then questioned Line Foreman D' Ambra as to what he's done for Haunted Hollows and wondered how that is going. She said she wanted to know as much as she could about this experimental project. Line Foreman D' Ambra told her that the only thing MMED had done was to bring service from Maple Street to allow them to illuminate the scenery. He explained *at beyond the meter, MMED has no association with Haunted Hollows. He said that MNlED never gets involved with the customer's electric service on the other side of the meter. Commissioner Levine alsb asked Line Foreman D' Ambra if it had been an easy task to provide service. He respo,ded yes, it had been easy to give Haunted Hollows service. , Commissioner Levine then inquired as to the cost that MMED incurred to do this project. Director Babin answered that MMED had waived the service connect fee but assured Commissioner Levine that the electricity was being metered and billed to the customer. . Revised Risk Management Strategy - Commissioner Dentino asked about the undercollection of the Generation Charge for eight months and wondered if it really wasn't for nine months. Director Babin explained that MMED doesn't receive the September bill until October 20 but that the new Generation Charge needed to be set for October I. He said that MMED is actually truing up the third month of the second quarter and the first two months of the third quarter. There is always a one month lag but MMED is still truing up for three months. With respect to the revised Risk Management Policy, Commissioner Dentino pointed out that in Mayhew Seavey's meplo, it indicates that he had attached two documents, a proposed amended blacklined policy document and a hedge summary spreadsheet. The two documents, however, were not included in the Board packet. Director Babin said it was an oversight and that he would get the doc::uments to the Board. He did point out that he had reviewed the language changes earlier and that they were minimal and Commissioner Dentino noted he had figured out what those changes were. Commissioner Dentino said that he was in favor of locking in gas prices for the entire five years of the contract if it were possible right now as current gas prices were extremely low. He felt the upside risk of gas prices increasing was significant and that gas prices would go up in the 5 years. Director i Babin agreed that the market is priced low now and that taking advantage of the current market is MMED is trying to do. Commissioner Dentino commented that he was in favor of long term fixed price contracts and is opposed to getting Into the commodities market. He said he was in favor of creating the ability as of this date to purchase the remainder of the contract at fixed prices. Director Babin said this could be done under this contract using the heat rates in the contract and locking in gas prices at current rates. Director Babin reiterated that he told the Board at an earlier meeting that MMED is going to come back in December with a summary of gas index pricing and perform a side-by-side comparison with the fixed pricing that MMED received in April. This would be done in anticipation of the end of the Dominion contract in December 2008, at which time the Calpine Rate Stabilization money would run out, in order to determine the impact ofthe new contract. Commissioner Dentino q~estioned the time triggers and how they affect the purchase price of the power. He thought thflt the purchase for 2009 required the entire year to be locked in by the end of 2008. Director Babin indicated that prices are locked in gradually with the time triggers or with the price tiggers and that not all the pricing for 2009 had yet been locked in yet. He estimated that perhaps 80% of January through March 2009 was locked in but was not sure about the summer. Commissioner Dentino asked if MMED had the ability to go out for long-term with a fixed price. Director Babin answered that you could but under the policy only if gas falls within certain triggers. ]I Under other new business, Director Babin announced the Annual Safety Luncheon will be held on Friday, October 31, 2008. Director Babin also said ihe had sent a memo to the Board in regards to the closing of the Spherics account. He explained that their assets had been turned over to an assignee for benefit of creditors but he did not believe they were in bankruptcy. Director Babin said the account was current at the end of July but that they accrued bills over the 35 day period just before they went out of business of approximately $51,000. He stated that Spherics typically had a monthly bill of approximately $25,000. The shutoff procedure had already commenced by the time MMED was, notified they had been placed into the hands of an assignee. He stated that MMED placed all their claims and hopes to receive at least some of the money. Motion: To adjourn the! Light Commissioners meeting at 9:10 (Aptowitz) Passes 5/0 Respectfully submitted: Jacqueline Lee 12/15/08 1C~ Signature of Clerk IL/rslo y- Date of Approval 111