HomeMy WebLinkAboutlc_04172012 Mansfield Municipal Electric Department REC�IED
Minutes of Light Commissioners Meeting o � CLERKS OFFICE
�. April 17,2012
BIZ JUN Its All 49
Present: Chairman George Dentino; Vice Chairman Kevin Moran; Comm'
Annino; Commissioner Jess Aptowitz; Director Gary
Babin; Financial Ass TS.
Lee and Town Manager William Ross
Light Commissioners Meeting
The meeting was called to order at 7:00 PM followed by the Pledge of Allegiance. Chairman
Dentino stated that this meeting was being televised and taped by Mansfield Cable Access.
There was no one signed up for Questions and Comments.
Motion: To approve the minutes of the March 14,2012 Light Commissioner's meeting
(Aptowitz/Moran)Passes 4/0
Financial Report for February 2012- Director Babin thought it was important to point out
that the net operating income for.the year is a negative $286,283, which is the direct result of
the $2.2 million rebate made to the customers in January and February. He said that
MMED's operating cash of$9,002,785 reflects one month's impact of the rebate because of
the lag between billing and collection of cash. March will see another impact from February
billing.
He also reported that the Generation Charge Accounts Payable stands at $198,292. Director
Babin stated that energy sales for February 2012 are down significantly from February 2011
because of the mild winter. For the year, there has also been a 5.9%reduction in sales due to
the loss of ADM. Director Babin explained that the depreciation fund of$6.7 million will
begin to be drawn down when MMED receives more invoices for the new substation.
Vice Chairman Moran inquired about the refund to the customers as it shows on the financial
statements. Commissioner Aptowitz suggested that a footnote be added to the statements for
clarification purposes.
Commissioner Aptowitz asked what the energy sales for Mansfield Crossing and Mansfield
Marketplace account for in the overall picture. Director Babin said he would find out and get
back to him on that.
Approval of 2011 Department of Public Utilities Annual Report — Director Babin stated
that this report must be filed annually with the DPU and is based on calendar year data, even
though MMED's fiscal year runs from July to June along with the Town. He said that the
total cost of the electric plant is what MMED bases their rate of return on and by law MMED
is allowed to earn 8% of the gross plant. Director Babin reviewed-the balance sheet for the
year which lists the assets and liabilities of the Department. He also reviewed electric
operating revenues stating that there was a $2.4 million decrease from prior year and that
energy sales declined by 6.3 million kWh. Director Babin then reviewed additional data in
the report, which included a breakdown of kilowatt hours sold by customer class and the
number of customers in that class. The DPU report also lists all sources of MMED's power.
and MMED's purchases of energy.
Motion: To accept the 2011 Department of Public Utilities Annual Report and to
authorize the Town Manager and Selectmen acting as Light Commissioners to sign the
report
(Aptowitz/Moran)Passes 4/0
Scope of Services for Rate Study—Director Babin introduced Mayhew Seavey from PLM,
who is MMED's rate consultant and was at the meeting to speak about their proposal. Mr.
Seavey told the Board that he recommends to his clients that they look at their rates every five
years or so to see how they have performed. He said that he has done this recently for other
clients who are also making significant capital additions similar to MMED putting in the new
substation.
Mr. Seavey said that MMED would want to determine a prudent amount of cash and a
prudent amount of rate stabilization funds to maintain in order to cover the swings of the
market as you develop a rate structure that will work. There are three major points to be
considered; the first is to look at how the existing rates are performing,the second is how you
want the rates to perform over the next five years given the new substation will be in place
and the third is how you want to incorporate renewable energy into your portfolio.
Vice Chairman Moran voiced his concerns about making sure MMED is able to keep up with
the changing times and wants to make sure the model is flexible enough to account for any
dramatic game changes.
Commissioner Annino inquired about green energy and how that will affect MMED. Mr.
Seavey explained that MMED is exempt from regulatory renewable energy portfolio
mandates and that they can choose from whatever resources they want to purchase from.
Commissioner Aptowitz said he is concerned about less people paying because of the loss of
ADM and wants to keep the rates as low as possible. He struggles with the issue of having a
large operating cash balance versus having low rates.
Chairman Dentino wondered if MMED has to perform a rate study every year. Mr. Seavey
answered no, after the last study MMED unbundled their rates so the net income at the end of
the year determines whether the rates make sense. Director Babin added that MMED
periodically performs a check and balance to make sure that the rates are doing what they're
supposed to be doing,which they are.
Chairman Dentino questioned whether some of the information needed by Mr. Seavey to
perform the study could actually be compiled in-house by MMED employees. Director Babin
said that a lot of the data is available at MMED that will be provided to Mr. Seavey.
Chairman Dentino also questioned MMED's contracts for purchasing energy and believes 50-
70% of the contracts are high priced agreements. He pointed out that MMED is unable to
take advantage of the low priced natural gas at this time because they are tied down to so
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many other contracts. Mr. Seavey said he couldn't disagree but pointed out that it is just a
snapshot of today.
Motion: To engage PLM Electric Power Engineering to conduct a Cost of Service Study
and Rate Design for MMED as presented in their proposal for an amount not-to-exceed
$9,500
(Aptowitz/Annino)Passes 4/0
Approval of Easement for 68 Spring Street — Director Babin explained to the Light
Commissioners that Town Counsel's office has recommended that the. Light Commission
should execute easements. It has been previously recommended that the Light
Commissioners authorize the Town Manager to execute all easements on their behalf for the
Town. Director Babin said that this easement for 68 Spring Street gives MMED access for
the equipment that's being put on private property to supply the energy to that property. He
said that MMED has dozens of easements like this and it is very common in the industry.
Motion: MOVED, that the Mansfield Municipal Light Commission delegate to the
Mansfield Municipal Electric Department Manager the authority and power, on behalf
of the Commission, to accept, amend and release an easement for the transmission of
electricity at the property known as 68 Spring Street,including executing an easement
agreement for such purposes.
(Aptowitz/Moran) Passes 4/0
Municipalization Legislation-Director Babin said that there is currently proposed legislation
r-`, to allow towns to create municipal light departments. However,he noted that the language of
this legislation is detrimental to existing light departments. As written, the legislation would
require MMED to collect an additional $550,000 annually from its customers to comply with
the mandatory assessment for the Energy Efficiency Charge in this legislation. MMED would
also be forced to join the Mass Renewable Energy Trust, which would cost customers
approximately $110,000 annually. Finally, to comply with the mandatory State Renewable
Energy Portfolio Standard it would have cost MMED approximately$1.5 million in 2011 and
the cost would go up from there as MMED has no qualifying renewable sources of power.
Director Babin went on to say that he doesn't think this legislation is going anywhere and that
MMED had been in touch with all of its State Representatives to oppose this.
Copeland Road Town Meeting Warrant Article-Director Babin stated that with the new
substation MMED has to figure out how to move the power from East Mansfield to other
areas of Town. It has been determined that Copeland Road, a paper street, is the best routing
option because it is the least intrusive. He said the first step will be to develop a Town
Meeting warrant article authorizing the acquisition of the land.
Town Manager Ross said that MMED has walked this route with the Conservation Agent and
they have no objections. He pointed out that if Copeland Road is used there will be less
construction on the newly paved Route 106. He told the Board that all of the abutters have
been sent a letter and that they plan to sit down with them,particularly St. Mary's Church.
Motion: To accept sponsorship of Article 34 of the 2012 Mansfield Town Meeting
(Moran/Annino)Passes 4/0
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East Mansfield Substation Update —Director Babin told the Board that MMED is waiting
for transformers to arrive but they have been delayed by travel permits in some states. They
obtained a permit for a certain route then they had to re-route because of construction.
Overall, the substation construction is moving along quite well absent the problems with the
transformers.
Commissioner Aptowitz questioned who the clerk of the works is and if there is another
person on site that is a full-time MMED employee. Director Babin explained that the clerk of
the works is on site very little because an MMED employee is there monitoring construction
activity. This particular employee has twenty years of valuable construction experience
before coming to work at MMED.
Chairman Dentino then questioned the hours spent on site by the clerk of the works, the
MMED employee, MMED's engineer and Director Babin. He wondered why MMED pays
all of these people to be there when there is a general contractor doing all of the work.
Chairman Dentin said that if it was his jobsite he wouldn't want all of these people coming
around to watch and says he doesn't see the value of this to the ratepayer.
Town Manager Ross said that in his experience he would want a knowledgeable person on
site representing the owner in order to ensure that the contractor doesn't cut corners,
especially in the case of anything that is being placed underground because it is then out of
sight.
Chairman Dentino believes it is too much money spent on a lot of people walking around
doing nothing.
Director Babin said he feels strongly that MMED is doing a good job and that they are
delegating in a fair and consistent manner. He stated that he has been commissioned with the
responsibility for allocating resources to the job and that he has done that prudently.
Chairman Dentino asked for a breakdown of all the costs spent on labor for the East
Mansfield Substation.
Old and New Business - Commissioner Aptowitz would like to see MMED's website
spruced up and offered to sit down with Director Babin to help him with it.
Director Babin told the Board that the Audit Committee signed off on MMED's FY11 audit
and will be making a presentation in conjunction with the Town audit soon.
Motion: To adjourn the Light Commissioners meeting at 9:10 PM
(Annino)Passes 4/0
Respectfully submitted: Jacqueline Lee 5/23/12
/‘r
Signature of Clerk Date of Approval
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