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HomeMy WebLinkAboutmin of light comm 11172008 l\fansfield Municipal Electric Department Minutes of Light Commissioners Meeting November 17, 2008 i'~ C__\ :~ ; '--/ L~ 0 .'",-... f-f""f~E r r /l., i 1 /\ c,: i (] .i /.-\ -.J -, Present: Vice Chairman Jess Aptowitz; Clerk Kevin Moran; Commissioner George Del11ino; Commissioner Sandra L~vine; Director Gary Babin; Engineer Chris Cox; Engineer.Alm Langille; Staff Accountant Ken Thomson; Line Foreman Gary D' Ambra and Financial Assistant Jacqueline Lee Light Commissioners Meeting The meeting was called to lorder at 7: 10 PM followed by the Pledge of Allegiance. Vice Chairman Aptowitz Ithen requested a moment of silence in honor of Specialist Corey Shea who paid the ultimatt price for us in Iraq. Vice Chairman Aptowitz t bled the minutes of the October 6 Light Commissioners meeting. MMWEC Membership tatus - In attendance were Ron DeCurzio, Chief Executive Officer and Chief Financial 0 cer for MMWEC and Stan Herriot, General Manager of the Ashburnham Municipal Li t Plant and MMWEC Chairman of the Board. Director Babin gave a rec p of MMED' s MMWEC membership status to the Board, stating that MMED had served a ne-year notice to terminate membership in MMWEC in December 2007. Since that time, WEC has undergone a re-structuring including a 20% reduction in their 2008 A&G budget. MED's budgeted membership cost for 2008 was $214,309 but is now projected to be $176, 16. Mr. DeCurzio distributed a directory of MMWEC services to the Board. He gave some background on MMWEC, explaining that it is not a private organization but a joint action agency for municipal light departments. He stated that he was the first internal staff member to be hired to head the or anization. His belief is to make the employees appreciate that the organization is not there fi them but rather, they are there for the membership. Mr. DeCurzio said that lout of 60 employees accepted severance packages as part of the downsizing effort but assu ed the Board that not all the experience left with those people. His focus is on better custome service. He also plans on managing the power supply portfolio in a more proactive manner. One major advantage of MMWEC, he explained, is that MMWEC can issue debt and they m . ntain a credit line with banks to the members advantage. Mr. Herriot told the Board that when you're involved in MMWEC, you're a member and not just a customer. You ha e a say in what goes on. He said they're trying to focus their attention on power supply. He also said they're very interested in co-operating with everyone and that they have everyo e's best interests at heart. Mr. Herriot added that he believes they have a more focused Board since the reorganization. - Clerk Moran questioned I the Comparison of Alternative Proposals to Provide Services Required by MMED whic~ was included in the Board packet. Director Babin said that he had planned on reviewing tha~ summary with the Board after Mr. DeCurzio and Mr. Herriot had finished their part of the ptsentation and had left. Clerk Moran commented .hat there are 17 light plants that have memberships with MMWEC and wondered if any ofth~se decide to drop out ifMMED's membership cost would be more. Mr. DeCurzio believes thq 17 are happy and it is a solid number for a while. Director Babin noted that no members hate served notice to terminate membership which would be effective in 2009. I I I I I Line Foreman Gary D' I bra, Engineer Ann Langille and Engineer Chris Cox joined the meeting at 7:40. Commissioner Levine ask d what MMWEC's strategies have done to reduce the overall cost of membership. Mr. De urzio answered that you get a more competitive price for power supply jointly than if you ere purchasing on your own. Commissioner Dentino s id he is worried about the drop in participation by municipals because the more that dro out, the more it will cost MMED. Mr. DeCurzio stated that 21 or 22 systems has been the orm and that the number is now 19 or 20. He explained that their budget was established ithout including the three municipals who have given notice (including MMED). Mr. Herriot commented that the systems they now have seem very willing to work together, i cluding Mansfield. Commissioner Dentino ointed out that out of 40 municipals, only half participate in MMWEC and this bother him. Mr. DeCurzio noted that most of the members are Central Mass participants. Director Babin wanted t clarify for the Board that a member of MMWEC receives all services. A project parti ipant, however, buys a piece of a specific project as there are 7 projects for which MM C issued bonds. Those project participants help underwrite a portion ofMMWEC's A G costs. Mr. DeCurzio noted that approximately 28 municipals are project participants. Co issioner Dentino questioned why some ofthe municipals are given the opportunity to choose nly what they want to participate in by being project participants. Commissioner Dentino al 0 commented on former MMWEC CEO Steiger who addressed the Board last year then left MWEC within a few weeks of that Light Commissioners meeting. He pointed out that perhap things were not what Mr. Steiger made them out to be. Mr. Herriot said that pretioUSlY, sharing of information was almost non-existent between MMWEC departments but that has changed. People are willing to cross lines now where they weren't before because of he way MMWEC was reorganized. Commissioner Dentino commented that it is a good thing that MMWEC is established and that there is not a lot of competition. - - Vice Chairman Aptowitz !stated that out of the participating municipals, 3 have given notice (MMED and 2 others). Hb asked what they thought in regards to the other 2 municipals. Mr. DeCurzio said he is certai~ one of them is leaving MMWEC. I After the departure from! the meeting of Mr. DeCurzio and Mr. Herriot, Director Babin reviewed the Comparisoni of Alternative Proposals to Provide Services Required by MMED. The most elementary serv~ce offered is basic ISO settlement service. MMWEC's cost for this service is $61,684 while ~NE's charge is $70,800. PLM's cost would be only $28,200 but Director Babin is not comfortable with their low staffing levels. Clerk Moran commented Ithat the total costs of $118,800 for ENE and $37,150 for PLM vs. $213,369 for MMWEC ismnderstandable as MMED would need to go elsewhere to obtain all ofthe services that MMWEC provides but that both ENE and PLM don't offer. Commissioner Dentino sa~d he would've liked to have been able to meet with representatives from both ENE and PLM~ He would've liked the opportunity for them to explain what was listed on the spreadsheet a$ "not offered" and "as needed". Director Babin told the BQard that it was his understanding that he was to evaluate the various proposals and report back to the Board. Director Babin's recomm~ndation is to extend the MMWEC membership for one year. Commissioner Dentino ~elieved the Board had been done a disservice by MMED not bringing in representative$ from ENE and PLM. He wanted to be able to look people in the eye and ask them questidns. Vice Chairman Aptowitz asked Director Babin if this could logistically happen. Di$ctor Babin answered no, not realistically given that MMED's membership terminated o~ December 14. Director Babin then added that this is the first time he has heard that the Boar~ wanted to speak directly with the others. Again, he noted he felt it was his responsibility to s~licit proposals and report back to the Board. Commissioner Dentino p~inted out that the Board members had only just been given the spreadsheet but that he had asked for it in the beginning ofthe process. Vice Chairman Aptowitz ~sked Director Babin for a synopsis of the staff opinion. He said that he himself relied heav~ly on staff opinion at his place of work. Commissioner Levine's o~inion was that if someone can't offer what you need, you don't go there. She stated that she ldoesn't need to talk to the others because they can't provide all of the services needed by MMED. Commissioner Dentino questioned whether MMED is really in need of everything that is being offered. Director Babin elaborated! on the reasons he was recommending extension of the MMWEC membership for another year. The first reason is when MMED let MMWEC know that they needed to fundamentally restructure the organization, by serving notice to terminate membership, MMWEC clearly listened and there was a drastic reorganization. Director Babin also believed MMWEC should be allowed the time necessary to fully implement the - changes. He felt it woul<:l be unfair to ask them to institute change and when MMWEC did so, that MMED would tertninate membership anyway. Director Babin pointed out that the alternatives to MMWEC services may cost less but you get less in return as there was not the depth of staff in the other organizations. He said that MMWEC also provides clline of credit support to pay MMED's weekly settlement bills with ISO New England but tMt the others did not offer this. He added that as he dug in deeper on this issue he was surprised at how many times MMED had tapped into that credit line for ISO settlement. Director Babin also pointed out that MMWEC is the premier representative of public power in New England and that philosophically he felt it was MMED's obligation to support that. He told the Board that tll1e incremental cost is minimal for the depth and quality of service received from MMWEC. Director Babin also note~ that when he spoke to the MMED staff, they told him that they have always felt that MM(WEC offers good customer service and is responsive and helpful. Commissioner Dentino pointed out that the spreadsheet provided to the Board did not include a number of items and was also given to the Board too late. He stated that they were never given the opportunity to compare by being able to have the others attend a Light Commissioners meeting. Commissioner Levine said that if the others can't measure up then she would choose MMWEC as she believed ENE and PLM couldn't come close to MMWEC. Commissioner Dentino II1lade the statement that he would not be voting. Clerk Moran said that h~ was not comfortable with the level of "step down" service of PLM. He felt more comfortabld with giving MMWEC another year. Vice Chairman AptowitlZ asked what the notice period for MMWEC would be. Director Babin said that the Boalrd would decide that tonight by extending the notice and Director Babin recommended for bne year. Vice Chairman Aptowit~ said he agreed with Commissioner Dentino that there was too much technical information involved. He said this is why he usually relies on staff. He also pointed out this is another reasop. why he believes the Selectmen should be separate from the Light Commissioners. Commissioner Dentino said he wouldn't vote because the Board never heard from ENE or PLM. He believed the $oard should not base this vote just on what's written on the piece of paper or just because of ~taff opinion. He stated that this process is not correct. Vice Chairman Aptowitz asked if this could be addressed earlier in the process for next year. He wants to make an informed decision earlier in the process. Motion: To maintain m~mbership in MMWEC for a period of one year until December 31, 2009 and during the I renewal period to see how MMWEC's organizational changes have progressed over thti course of the year (MoranlLevine) Passes 310/1 (Dentino abstained) Financial Statements September 2008 - Staff Accountant Thomson reported MMED has a net income y-t-d through $eptember of$I,186,61O. This is a 67.8% increase over FY08. He said that the Calpine R~te Stabilization Fund was $778,077 at the end of September. MMED's cash position isl very strong and was $3,078,054, up from $2,059,521 in the same period in FY08. MMEDi has collected $962,759 of the undercollected Generation Charge owed by customers. All ~f the undercollected generation charges should be collected by the end of the year which wi~l improve MMED's cash position. The depreciation fund balance stands at $3,714,298 and will be used to offset the cost of the new East Mansfield Substation. Commissioner Levine inquired as to how low MMED would allow the balance of the depreciation fund to go. If:>irector Babin answered that it was a judgment call but in order to fund the new East Mansfiqld substation, he believed that MMED needs to issue bonds to fund at least some of the cost ,in addition to depreciation monies. Commissioner Levine asked what balance Director B~bin foresees leaving. He answered that it should not go below $1,000,000 to support any lemergency capital addition. , Clerk Moran asked ifMMIED would finish collecting the undercollected generation charge by the end ofthe year. Staff ~ccountant Thomson answered that MMED is on track to do that. i Vice Chairman Aptowitz ~uestioned the 17% increase in accounts receivable and asked how MMED was doing with cpllections. Director Babin said that the collection and termination policies were being impl~mented according to the Board's direction and that MMED was staying on top of collectiOJ!1s. I Vice Chairman Aptowitz ~aid that he understands MMED has to collect the undercollection of the generation charge an4 wondered if the ratepayer should expect their rate to increase. Director Babin said he expects to come back to the Board with the new generation charge for 1 st quarter of 2009 as "1ell as the impact of replacing the Dominion contract with the Constellation contract by t~e next Light Commissioners meeting. Vice Chairman Aptowitz ~nquired as to when the June 2008 audit would commence. Staff Accountant Thomson saiq by the end of this year. Vice Chairman Aptowitz asked if the Board could be told exactly when it starts. I Vice Chairman Aptowitz ~old Director Babin that the Board has recently been pretty vocal discussing budgets, staffing and spending. He questioned whether the Light Department was spending money that didn ft need to be spent and wanted to be sure the Light Department was implementing the new pol,ces and procedures. He asked that this be kept on the front burner. Director Babin stated that he has discussed the issue of budget cutbacks at his staff meetings and that the staff is very aware of the new policies. - Commissioner Dentino q'testioned MMWEC's Purchased Power increase of 24.5%. Director Babin explained that for July and August, the cost of power was a lot more in 2008 than in 2007. He believed higher! sales were part of the increase as well. Commissioner Dentino questioned the 28.3% increase in Administration-Payroll/Benefits. Staff Accountant Thomson believed it was due to the benefit allocation process. He stated that benefits had been un4er allocated for 2009. He pointed out that regular payroll had only increased by 3% and thatl the real increase was due to sick time. Director Babin believed it was due to the contractua~ benefit of sick time buy backs. He said they would check that out. Vice Chairman Aptowitz stated that he believes that's something the Board intends to look at, specifically non-compens~tion benefits such as sick pay and vacation. He said they will take a look at Light Departme* benefits for all contracts. MMED Contribution toi Mansfield Social Services Department - Director Babin said that there had been previous 4iscussion by the Board about MMED making a contribution to the Town. The Town can the~ take the money and allocate it to Social Services for fuel assistance for heating sources other fuan electric. I Commissioner Dentino questioned whether this was over and above the other money MMED gives to Social Services.l Director Babin said that yes, this would be separate from the Electric Assistance money. Commissioner Dentino s*d he would like to see an opinion from the Department of Revenue as to whether the Town c~ accept this money. He reminded the Board that MMED's PILOT amount is already up to $$10,000. Vice Chairman Aptowitz! said he believes the bottom line is that an increase is needed by Social Services to help th<j>se people who are really needy. Clerk Moran wondered ie the money could be earmarked for fuel assistance. Vice Chairman Aptowitz didn't believe they could do that. Commissioner Dentino also said they couldn't. Clerk Moran didn't like the lack of definition. Vice Chairman Aptowitz wondered if they should run this by counsei to make sure it's not considered making a donation. ! Motion: That the Ma~sfield Municipal Electric Department contribute $25,000 from unappropriated earned~urPIUs, to be recorded as a below the line expense, to the Town of Mansfield for Fiscal ear 2009 only. (Levine/Aptowitz) Passe 4/0 I East Mansfield Substatibn Update - Director Babin had two main points to review with the Board in regards to the I East Mansfield Substation. He distributed a letter to the Board members from National Grid which stated that $248,000 is the market value of the land on which the substation would be built. He stated that National Grid intended to charge this amount for the easement for the land. Director Babin said that this amount came as a surprise to the staff. He explained that MMED would have to pay for the entire parcel and not just the - ~ they need for the easeIr}ent, as he had been led to believe in prior discussions with National Grid. He said that the MMED staff would be meeting with National Grid tomorrow and this was on the agenda. Vice Chairman Aptowitz IPointed out what MMED is doing is going to benefit National Grid and this should be pointeq. out to them. Engineer Langille, who llad just arrived from a Conservation Commission meeting, told the Board that MMED has t~ see what kind of soil conditions there are at the site of the new substation. MMED filedl for Request of Determination of Applicability at the Conservation Committee meeting, hoping they would get a negative determination so they could do soil borings. Engineer Langflle stated there were seven locations where they need to do soil borings. She said they ~id get the negative determination they wanted so they can move forward with the soil boripgs which will dictate the foundation design of the new substation. Old and New Business Commissioner Dentino $aid that he had made a suggestion at the previous Selectmen's meeting that MMED do ~way with the Live Wire as a cost savings measme. He believed that the cost was $3,000 quarterly. Director Babin said the cost was actually $8,000 for printing and mailing for each seasrn's edition for a total of $32,000 for the year. Director Babin explaine~ that the Light Department uses the Live Wire as a means of supplying information t9 residents such as appliance rebates, rate changes, energy savings tips, Dig Safe, budget biPing, etc. He believed it was also a public service as it printed the Recreation Department c~lendar and safety information from the Police Dept. and Fire Dept.; as well as information frbm the Health Dept., Relay for Life and Toys for Tots. He said he felt that departments reli~ on the publication to get important information out to the public. Commissioner Levine lotes the Live Wire and asked why it was mailed separately instead of with the electric bill. Ditector Babin said it was because he believes people throwaway bill stuffers but that stand alope items will get read. Vice Chairman Aptowitzl asked if for the next Light Commissioners meeting, Director Babin could have alternatives fqr the Board. Commissioner Levine thfn stated that there was a consensus from Town departments that the return envelope included I for billings should not be removed. They believe this would cause too many problems and t~e cost savings would not be worth it. They think the bills would not get to the right location iif the return envelope was not included with the bill which could cause confusion. Clerk Moran commentep that one MMWEC service that was previously discussed was "alternative energy". Hie believes MMED needs to start exploring green energy as it is becoming more and more in demand. He also believes companies in the Industrial Park will be looking for green energy options. Director Babin will bring back more information on it. I - Commissioner Dentino qpestioned PLM invoices totaling $8,500 for two months for engineering. Director Babin explained that PLM has performed engineering functions for the new substation, such as d~fining the scope of work and information for the site plan review process. Some of the intoices were also for Mayhew Seavey's work on MMED's rates, calculation of the generat~on charge and power supply work. Director Babin believed the $8,500 was for two or thr€!:e months of bills submitted all at once but processed on the same warrant. Commissioner Dentino wpndered if MMED could cut down on the number of times they were bringing in Mr. Sea~ey. He pointed out how it adds up every time someone is brought in to a Board meeting. Director Babin answered that it was only a few times Mr. Seavey was I here on a cost plus basis. I Most times when Mr. Seavey attended a Board meeting it was for the cost of service analys~s he performed and that his cost of attending those meetings was already included in his pr~posal. Director Babin added that next month he was planning on having Mr. Seavey attend I the Board meeting but if the Board members did not want him to come, Director Babin offered to do the presentation himself. to Director Babin said that Ilast week he had sent out an information package to the Board members with respect to t~e Constellation contract. The memo said that some of the gas price locks were done outside the risk management policy which the Board had approved in April. The price of natural gas d~creased in late July and MMED locked in volumes of gas that were outside the scope of the p~licy. Director Babin had not checked the policy at that time to see if it was in conformity atld unfortunately, it was not. He did point out, however, that the current policy as modifie~ by the Board allowed those types of purchases. i Vice Chairman Aptowitz ~nquired as to the date of the next meeting. Director Babin said he I had already proposed a dale of December 15. Vice Chairman APtowit~ reminded Director Babin to check on the motion regarding the donation to the Town andie-mail the Board members. I Vice Chairman Aptowit~ announced that there would be a Town Meeting held tomorrow evenmg. Vice Chairman Aptowitz reiterated that in regards to the budget, the Light Department should be implementing the sam~ policies and procedures that the Town and School Department are implementing. I Motion: To adjourn thtt Light Commissioners meeting at 10:12 (Levine) Passes 4/0 Respectfully submitted: ~acqueline Lee 12/15/08 7~~ Signature of Clerk Izlls/or Date of Approval