HomeMy WebLinkAboutlc_10172012 Mansfield Municipal Electric Department
Minutes of Light Commissioners Meeting ,,E �
October 17,2012 U CLERKS OFFICE
Present: Chairman George Dentino, Clerk Douglas Annino, Commissioner Tess`�ptavvitz 8: 3b
Commissioner Olivier Kozlowski, Town Manager William Ross MANS r-I F I D
M SSACH ETTS
Absent: Vice Chairman Kevin Moran, Director Gary Babin. Commissioner Kozlowski
arrived 7:10pm
The meeting was called to order at 7:00 PM. Chairman Dentino stated that this meeting was
being televised and taped by Mansfield Cable Access.
Approval of August 22, 2012 meeting minutes.
Motion: To approve. (Annino/Aptowitz) 3:0 passes
Cost of Service and Rate Design -Mayhew Seavey of PLM made a presentation on the Cost
of Service Study and Rate Design for which MMED has engaged his services.
Mr. Seavey told the Board that he had a few issues to discuss that he had been working on
with Director Babin. He referenced a presentation package he prepared and that had been
included in the Board package. That presentation covered the following areas:
1) Development of a proforma 2013 test year to evaluate the performance of the current
rates.
2) Modeling of a 6 year forecast of cash flows to determine whether the existing rate
structure provides adequate cash to support MMED's future capital program. The 6
year time frame is designed to coincide with the drop of debt payments for MMWEC
projects. Those payments are approximately $4.7 million in 2013 and decline to
approximately $3.9 million in 2016, after which time they drop precipitously.
Commissioner Aptowitz wondered whether the depreciation fund would increase
because it's a cash account. Mr. Seavey answered that it would. Commissioner
Aptowitz stated that MMED spent $6.5 million to build the new substation and
refunded $2 million back to the ratepayers, however there is still approximately
another$9 million. He believes it is the job of the Board to keep rates low and doesn't
see the need to be creating$2 to $3 million savings accounts. He doesn't foresee any
major capital projects in the near future and feels the increased depreciation can fund
any projects that do come along.
Town Manager Ross said to keep in mind that over the next 3 to 4 years the capital
funds will be used to build the infrastructure to connect the two substations. This
ensures that service is available to the entire Town from either substation. He believes
it is important to make sure that MMED has enough funds in order to accomplish this.
�`' Commissioner Aptowitz says he understands that but in his opinion MMED is
collecting more money that it needs to. Town Manager Ross suggested that the Board
have a careful review of the capital plans and the cash flow.
Chairman Dentino says that he agrees with Commissioner Aptowitz and he also agrees
with Town Manager Ross. He believes that if MMED did get itself in the hole that it
could recover very quickly. He thinks MMED is constantly upgrading to keep itself
intact, however, Chairman Dentino pointed out that every project comes in 20% to
40%under budget generating a surplus. This is where he wants to be very careful. He
agrees with Commissioner Aptowitz that the Board should address a rate reduction.
3) Analysis of the impact of Net Metering on MMED's finances based on the two solar
installations currently in service, at VAM Realty Trust and Miller Recycling.
As part of the analysis the Board must consider whether to expand the percentage of
MMED's load, currently at 2% of peak load or 1.1 MW that will qualify for
reimbursement under the Net Metering provisions of the filed tariff.
The board briefly discussed the need, or lack thereof, of the 2% provision. It was also
pointed out that some private utilities have raised this cap to 6 or 7 percent.
Mr. Seavey explained the reimbursement method to be employed under the Net
Metering provision to the board.
4) A general discussion was conducted of whether MMED should enter into a power
contract at the conclusion of the Constellation contract in December 2013. It was
pointed out that with energy prices at historic lows the Board may wish to enter into a
fixed price contract, as opposed the variable Constellation heat rate contract.
Mr. Ross asked when we should start looking for a new contract and Mr. Seavey
stated"immediately"as natural gas prices are starting to rise.
Motion: To authorize Mr. Ross to engage in RFP/contract negotiations for a new energy
supply contract. (Kozlowski/Annino)4:0 passes
Financial Statements for August 2012 The Mansfield Municipal Electric Department's
FY13 financial statements through August 2012 were presented. The following observations
relative to those statements were made:
1) Net Income — The net operating income year-to-date through August is $567,558
while non-operating income is $65,969. In total, net income through the month of
August is $633,527.
This figure has also been adjusted to account for the FY13 under-collection of
Generation Charge revenues of $169,987, which is not taken into account when
computing FY13 net income.
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2) Cash Position — MMED's operating cash position through August 2012 was
(Th $6,628,230. Adjusted cash taking into account Generation Charge under-collection is
$7,509,587. This compares with adjusted cash for July of$7,583,789.
3) Generation Charge Accounts Receivable—The Balance Sheet line item"A/R Under-
collection of Generation Charges" is a running total for monthly collections of the
Generation Charge since it was instituted in 2008. Through August, that receivable
stands at $560,247. This under collection will be factored into calculation of the 4th
quarter Generation Charge.
4) Energy Sales - Energy sales for August 2012 are up 1.4% from August 2011. For
the year sales have increased 0.5%from FY12.
5) Depreciation Fund —MMED's depreciation fund balance stands at $2,946,173. This
money has been drawn down to pay contractor and equipment costs associated with
the East Mansfield substation construction. There remain contractor costs for the
balance of the substation work,which should be paid off in October.
6) Financial Position — If you look at MMED's overall cash position by combining
Operating Cash, Depreciation and A/R Under-collection of Generation Charges,
MMED has reduced overall cash by $4,968,949 in the last year: from $15,424,708 to
$10,455,759. This reduction is due to the $2.2 million rebate the Board voted for
January and February 2012 as well as by funding the cost of the East Mansfield
substation from depreciation.
Commissioner Aptowitz stated that the Board should think about rates and do the best we can
to lower the rates for the ratepayers. He does not foresee any major capital projects in the near
future.
Mr. Ross stated that although we do not have any capital projects of the substation scale
planned we do need to keep a substantial amount in the account for a variety of reasons.
Chairman Dentin stated that he can see what both Mr. Ross and Commissioner Aptowitz are
saying and believes that we can find a middle ground between the two.
Banner Policy-In April 2000 the Board developed a policy governing the installation of
banners by MMED over Route 106.
As the policy has been interpreted over the years based on the vote, specific Board
authorization has not been required to hang banners as long as the organizations (non—profit
and community groups)meet the requirements of the policy.
MMED staff asked the Town Counsel's office to review the liability waiver section and they
provided updated language to better protect MMED in the event of problem.
Selectman Annino would like to see the applications for all banner requests. Rt. 106 is a
major route through town and he feels the Board of Selectmen should review them all for
design and content.
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Mr. Ross stated that we receive quite a few applications at this type of year so if the board
would like to restructure the application process we need to train the staff and community
groups on the revised policy.
After a brief conversation about size, colors and content of banners the board decided to
review the current policy and have the board members submit their suggestions for revisions.
Old Business
• The East Mansfield substation project is nearly complete.
• Street light update -All the lights that had been turned off due to budget reductions
have been turned back on. The MMED will continue to patrol the town to ensure that
burnt out lights remain at a minimum.
• Copeland Road- The proposed underground electric route through the woods makes
construction difficult. Mr. Ross has directed the MMED staff to consult with
contractors to see if this route is feasible or if the Maple St. route is more practical.
Motion: To adjourn the Light Commissioners meeting at 8:45pm
(Aptowitz) 4:1 passes
/0/3
igna t of Clerk Date of Approval
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