HomeMy WebLinkAboutlc_12122012 RECEIVED
Mansfield Mansfield Municipal Electric Department S p�f r n,; CLERKS
Minutes of Light Commissioners Meeting
December 12,2012 Z013 MAR 21 A 8: 30
Present: Chairman George Dentino, Clerk Douglas Annino, Commissioner Jess IELD
Commissioner Olivier Kozlowski,Director Gary Babin,Town Manager William 48s$S A C HIJ S E T T S
Absent: Commissioner Kevin Moran
Light Commissioners Meeting
The meeting was called to order at 7:15 PM. Chairman Dentino stated that this meeting was
being televised and taped by Mansfield Cable Access.
Approval of Board Minutes October 17,2012
Motion: Hold
Chairman Dentin would like to see more detail added on the rate design discussion with Mr.
Seavey as the description of the discussion in the minutes was minimal.
Approval of Board Minutes November 14, 2012
Motion: To approve(Aptowitz/Annino)4:0 passes
Financial Statements October 2012
Director Babin presented his analysis of the financial statements:
1) Net Income — The net operating income year-to-date through October is $1,077,918
while non-operating income is $117,585. In total, net income through the month of
October is $1,195,503. Director Babin pointed out that this net income had been
adjusted to account for the FY13 over-collection of Generation Charge revenues of
$444,553.
2) Cash Position — MMED's operating cash position through October 2012 was
$7,323,349. Adjusted cash taking into account Generation Charge over-collection is
$7,269,056. Director Babin noted that this compares with adjusted cash for October
2011 of$8,853,986,a reduction of approximately$1.58 million.
3) Generation Charge Accounts Payable Director Babin stated that through October
the Generation Charge payable stands at$54,293.
4) Energy Sales—Energy sales for October 2012 were down 4.3% from October 2011
For the year sales have increased 0.1%from FY12.
5) Depreciation Fund MMED's depreciation fund balance stands at $2,503,581, a
reduction of approximately $3.99 million from October 2011. Director Babin stated
that all substantial Bird Road substation construction costs had been paid except a 5%
contract retainage to the Ryan Company for punch list items and that some consulting
work to finalize the project needs to be completed.
Summary of Requirements for New Purchased Power Contract - Director Babin stated
that as a follow-up to the Board's directive to procure future power supply in order to
supplement the Constellation energy contract and to ensure stable energy pricing through
2017,there were several steps MMED must undertake to complete such a process.
Director Babin referred to a memo from Mr. Seavey summarizing his analysis of the
recommended energy volumes MIMED should procure for the five year period of 2013 —
2017. It was noted that Mr. Seavey is recommending purchases for 2013 under the new
contract that will supplement the existing Constellation contract.
Director Babin stated that the recommended volumes were designed to supplement MMED's
entitlements in its MMWEC generating unit contracts and MMED's New York Power
Authority (NYPA) allocation. Any requirements beyond these levels of the new contract
would be procured from the spot market.
It was noted that,the estimated value of the entire purchase for the term of the contract is
$13.3 million, or an average of 5.3 cents per kWh.
Director Babin stated that MIMED will be required to enter into a power supply contract with
the preferred bidder. These contracts are based on existing agreements that Rubin&Rudman,
MMED's legal counsel for these types of contracts, has already executed with several
suppliers.
The protections such a contract ensures are that:
(1) If the selected supplier defaults on the contract, the guarantor of the contract is
a financially stable parent company of the subsidiary entering into the contract.
(2) Should the selected supplier lose its investment grade credit rating at any point
during the contract, they are then required to post a letter of credit, over which
MMED has control,to cover MMED's maximum financial exposure under the
contract.
Commissioner Aptowitz had a few questions about the letter of credit from the
contract. Director Babin explained to the board how the town would exercise
the protections in this agreement.
(3) Under the contract the supplier is required to take physical delivery of the
power needed to meet the contract, as opposed to the Constellation contract,
including scheduling of delivery, and to meet all other associated ISO New
England requirements.
Director Babin stated that bidding and contract execution is essentially a 3 step process: (1)
Issue an RFP and solicit indicative prices from a number of suppliers. Based on the indicative
prices submitted, a group of up to 8 suppliers can be reduced to 3 finalists. (2) Once those 3
finalists are determined, issue proposed contracts to each to ensure that the contractual
language is satisfactory to both parties. (3) Ask each of the 3 finalists to supply "best and
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final" offers. Assuming prices are favorable and MMED wishes to proceed, a preferred
bidder is selected and all contracts are executed by the authorized signatories for each party.
Director Babin said MMED is in the process of soliciting the supplier's indicative bids,which
will provide the Board with a sense of what can be expected. Best and final offers can be
requested once the 3 finalists are determined and each party agrees to a form of contract with
MMED.
Commissioner Kozlowski had questions regarding the future price of fuel in relation to energy
prices. He noted that the contract locks in a fixed price so it depends on other factors, such as
the weather, to see if the prices will have gone up or down. He stated that it's not exact
science and how good the contract is really unknown at this point.
Commissioner Aptowitz asked if town counsel had been consulted or reviewed this
Director Babin stated they had not because MMED uses different counsel for power supply
contracts. Mr.Ross stated this type of contract is not in the area of law they are familiar with
Director Babin further explained that MMED has used this firm before and it is a standard
contract that they developed and is the contract template for MMED to execute.
A general discussion of energy markets and spot pricing of energy, as opposed to a fixed price
contract, ensued and MMED's existing power supply portfolio was discussed. Mr. Babin
stated that MMWEC handles bidding MMED's load requirements into the ISO as part of their
member services.
Motion: To authorize the Director and Manager to solicit power supply bids and to authorize
the Manager to execute a new power supply contract. (Aptowitz/Annino)4:0 passes
MMED Banner Policy
Director Babin stated that at the last few Light Commission meetings, there was significant
discussion of the MMED banner policy as it affects signs hung over Route 106 near North
Main Street.
As was stated at the last meeting, Manager Ross had at that time contacted the Town
Counsel's office to seek clarification on issues the Board needs to consider should they wish
to develop a new policy.
The board then reviewed an email received from Rod Hoffman of the Town Counsel's office
addressing banner content issues for the Board to take into account when considering whether
to modify the existing policy.
Director Babin stated that the staff suggests that some minor level of modification is
necessary to more accurately reflect the actual implementation of the policy,particularly with
respect to the moratorium on sign acceptance around the holidays.
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He said the MMED staff was seeking direction from the Board as to whether to rewrite the
policy. Director Babin stated that the goal is to establish a clear set of updated guidelines that
MMED staff may use to implement the policy with parties interested in having banners hung.
Commissioner Annino reiterated his position that he would like to view and approve or deny
requests based on aesthetics considerations. Mr. Ross and Commissioner Kozlowski both
pointed out that Town Counsel stated that it would not be advisable to do so as graphics are
considered part of content.
Conversation on this topic was tabled and no policy changes were implemented at this time.
Motion: To adjourn the Light Commissioners meeting at 8:21 PM.
(Aptowitz) 40 passes
Douglas Annino \1\11\ March 25,2012
Signature of Clerk Date of Approval
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