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HomeMy WebLinkAboutLIGHTCOMM MIN04132009 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting April 13, 2009 --i~lF~D ~.,- 'CE ," r 1 7'inn ..._.~ v ! Present: Vice Chairman Jess Aptowitz; Commissioner Sandra Levine; Commissioner George Dentino; Director Gary Babin; Engineer Chris Cox; Staff Accountant Ken ThOmson; Line Foreman Gary D' Ambra; Supervisor Laurie Anderson; Financial Assistant Jacqueline Lee and Town Manager John D' Agostino ; c l:~ f"t: L~ q j i "\ Light Commissioners Meeting The meeting was called to order at 7 :00 PM followed by the Pledge of Allegiance. It was agreed to table all minutes until the next meeting when there would be a full Board. Financial Statements February 2009 - Director Babin told the Board that Staff Accountant Thomson has completed the fixed asset inventory. Director Babin explained that net income was inflated due to the actual depreciation expense being less than the amount that was in the cost of service. He also explained that MMED's cash position reflects an account payable of $192,670 that represents an overcollection of the Generation Charge to be refunded to the ratepayers. On March 4 the Board also voted to return $248,286 to the ratepayers in order to reduce CY08 net income which had exceeded the 8% which MMED is allowed to earn. The total amount to be returned to the customers is $441,000 so available operating cash is overstated by this amount. Commissioner Levine inquired as to the formula that is used to report the overcollected money. Staff Accountant Thomson answered that there is a formula where the monthly Generation Charge revenues are calculated and then the purchased power and transmission costs are deducted to arrive at the over/under figure. Commissioner Dentino questioned the amount in the Calpine Rate Stabilization Fund and wondered why MMED was stringing it out until May 2009. Director Babin said that the drawdown schedule was an error on his part as he had thought it was going to be exhausted by the end of December 2008 but it was not. As a result, the money will still be credited to the ratepayers through the Generation Charge and will be drawn down and exhausted by June 2009. Commissioner Dentino then questioned whether the Dominion contract had ended. Staff Accountant Thomson answered that it had in December 2008 and explained the reason it is still shown on the financial statements is that the fiscal year goes July to June so the FY09 financial statements represented six months worth of Dominion charges. In response to Commissioner Dentino's question about the Constellation charges, Director Babin explained that with respect to the Constellation contract, there were two options available. The first option was for Constellation to buy the physical power, schedule it with the ISO and bill MMED for the physical delivery of that power. The second option, which ....,._..~-_._-....._....~,....,..,_..... "IT was the one that Constellation notifIed MMED would be exercised, was a purely commodity related cash transaction with no physical quantity of power involved. This was directly related to the credit issues with the ISO and the increased collateralization for power contracts required by the ISO of the power suppliers because of the economic crisis. Director Babin noted that there was a clause in the Constellation contract that allows them to do this. Commissioner Dentino questioned the Customer Account Expense prior year actual of $189,813; the FY09 budgeted amount of $162,067 and the FY09 YTD actual of $342,014. Staff Accountant Thomson explained that the increase was due to the write-off of bad debt. Commissioner Dentino also commented that the Administrative & General expenses decreased. Staff Accountant Thomson said that was because the legal fees are below budget. Commissioner Dentino said it was disheartening to see the amount of the AIR write-offs. He noted that MMED has got to do better than this. Director Babin explained that with respect to the lump sum write-off MMED performed in FY09, it was because one customer declared bankruptcy; MMED reached a settlement on a second account and wrote off the balance and on the third account MMED did a poor job with keeping up with collections. Director Babin said that in hindsight, the Board voting the deposit and collections policies was a wise move in that it has limited MMED's exposure for collections. Vice Chairman Aptowitz commented that at the end of the day, the residential customer is subsidizing the bills of those who are not paying. He believes that the write-offs are also a factor when raising the rates. He has great concerns about collections with the way the economy IS. Commissioner Dentino noted that MMED did have a policy previously then it was abandoned, then reinstituted. He said that unfortunately, in the meantime, there have been commercial accounts set up with no deposit. Director Babin said that in the past customer deposits had accrued interest at a rate of 6% under the Massachusetts General Laws. He said the deposit policy was actually losing money and believed this was one reason it was done away with. The law has since been changed to a more reasonable interest rate that fluctuates with treasury bond yields. He stated that there was no deposit policy in place when he started at MMED. Commissioner Dentino said that he had been waiting for Director Babin to come to the Board about Covidien, a commercial account that has been set up by MMED but has yet to place a deposit. Commissioner Dentino said the Board would have instructed Director Babin to follow the appropriate policy. Director Babin said that he has been attempting to work with Covidien to establish the deposit but that he has had difficulty working through the bureaucracy at Covidien. He added that if the Board was concerned and wanted him to tenninate service, MMED would do so. Commissioner Dentino believes that Covidien has escaped from paying a very large deposit. Director Babin said that the deposit will be made, 2 "IT it was just unclear in what form it would be done. Vice Chairman Aptowitz asked that Director Babin keep the Board appraised regarding this situation. Vice Chainnan Aptowitz asked ifMMED has done a cash forecast for the new substation. He believes the less that is borrowed the better. He inquired as to how much can be paid with cash or from the depreciation fund. Director Babin answered that some funds would come from the depreciation fund but that there would be significant borrowing. Identity Theft Protection Policy - Director Babin said that MMED has prepared an Identity Theft Protection Policy under guidelines established by the Federal Trade Commission. Office Manager Anderson explained the portions of the red flag policy. She said that MMED has enhanced security by requiring a customer paying online to have a PIN number in order to access their account on the MMED website. There is also a form that needs to be filled out if the customer of record wants to designate another person to be able to call and ask questions about an account. Office Manager Anderson stated that MMED needs to enact this policy by May 1, 2009 and it requires a Board vote. Commissioner Levine asked how MMED would be handling the training since there is currently a freeze on all seminars and training. Office Manager Anderson said the training would be done in-house. Commissioner Dentino asked if, as the program administrator, Office Manager Anderson would have additional responsibilities. Director Babin answered that yes, it does outline additional responsibilities. Commissioner Dentino said that when he sees a change in scope of someone's duties, he sees pay increases and wants to make sure that's not going to occur. Director Babin indicated it would not. Commissioner Dentino inquired as to the cost for accepting credit cards. Office Manager Anderson answered that it is a percentage of the dollar amount plus a transaction fee. Director Babin stated that MMED has experienced a significant increase in the usage of credit cards with the more stringent collections policy. Office Manager Anderson added that the stipulation of getting the lower credit card rates is that MMED can't charge the customer for the cost of the transaction. Commissioner Dentino said he would make the motion about implementing the Identity Theft Prevention Program but wanted to make a statement prior to making the motion. He said that he doesn't like getting things like this at the last meeting prior to needing the motion passed. He said that the Board gets the information at the last minute and he strongly suggests that MMED discontinue this practice. Motion: To approve the Identity Theft Prevention Program (Dentino/Levine) Passes 3/0 Generation Charge for 2nd Quarter 2009 - Director Babin told the Board that MMED has caught up on the undercollection of the Generation Charge from last year. The 12.67 cents 1st quarter generation charge will be reduced to 9.95 cents for the 2nd quarter. 3 .".- -"..-.._'..-.._--_._-~~-"---... "IT Director Babin said that the $248,000 which the Board voted to return to the ratepayers will be done over a six month period. Commissioner Dentino suggested that perhaps the money should not be returned to the ratepayers now but should be saved for the new substation so that less money would have to be borrowed. He pointed out that the ratepayers will be the ones paying for the substation. Director Babin stated that the nature of the stabilization fund requires the money to be returned through the Generation Charge. Commissioner Dentino noted that the Canal charges are decreasing but there are monthly legal fees and he wondered where MMED stood with these legal fees. Director Babin answered MMED had expended about $65,000 since the Board approved the litigation a year ago. He then reminded the Board that they can discuss ongoing litigation in executive session only. East Mansfield Substation Update - Director Babin told the Board that MMED had an ambitious schedule for the new substation at the beginning of the year and the staff has worked extremely hard to achieve it. He then reviewed a summary of the activities on the substation project. Estimates were obtained from Weston and Sampson for the landscaping and fencing costs; $99,000 for the landscaping and $215,700 for the fence. The original estimate included only $17,000 for a chain link fence so the entire cost of the station is now estimated at $7.9 million. Engineer Cox reviewed the renderings for 64 Bird Road and 449 Bird Road. There are two more abutters scheduled to meet with staff. Engineer Langille (who was not present) had made initial contact with the necessary Town departments about discussing the design of the new substation. Engineer Langille is terminating her employment with MMED so she has been transitioning her responsibilities on the project to Engineer Cox. Director Babin stated that the Notice of Intent is to be filed this week with the Conservation Commission. The Planning Board is scheduled to meet on Wednesday, April 29 for the Site Plan Review. Engineer Cox will send letters out notifying residents. Lastly, MMED is awaiting the final appraisal for the Bird Road parcel this week. Commissioner Levine commented on the views shown in the renderings, saying that eventually the substation will be completely blocked from the resident's view by the landscaping. Commissioner Dentino complimented the architect then wondered if evergreens would be introduced to block the view for the winter. 4 r "IT Vice Chairman Aptowitz stated that sound, safety and aesthetics were his priorities. He believed everyone was doing what they could and commended the staff for meeting a schedule that was very ambitious. Commissioner Levine commented on the wall samples for the proposed East Mansfield substation that Director Babin had sent them and thought that the gray would blend in best. Old and New Business Commissioner Levine asked when Director Babin anticipated having a replacement for Engineer Langille. He believes it will be by July 1. Commissioner Dentino said he had previously asked for a list of all commercial buildings where MMED claims ownership of the secondary conduits and wire and wondered ifhe'd be getting that. Director Babin said yes. Commissioner Dentino said that at a previous meeting he had commented on the great detail of the legal descriptions of the Duncan & Allen invoices. He said that on the invoices from Lehane (Murphy, Hesse Toomey & Lehane) and Kesten (Brody, Hardoon, Perkins and Kesten) however, there was little detail. Director Babin responded that he had suggested to Town Manager D' Agostino that they consult with their attorneys in an attempt to get Commissioner Dentino the information he is looking for. Commissioner Dentino said he reviewed the petty cash slips he had asked for and which MMED had provided to him. He said that some of them were for legal charges which he believed should not be included with petty cash. Vice Chairman Aptowitz pointed out that it shouldn't make a difference how payment was made as long as the cost was charged to the correct GL number. Staff Accountant Thomson said that many of the miscellaneous charges related to the trial, such as parking fees, had been charged to Miscellaneous A&G. Director Babin pointed out, however, that the dollar amount in question is very small. Vice Chairman Aptowitz inquired about the Mansfield High School Robotics donation. Director Babin said it was unclear as to whether there was a remaining balance in their revolving account. He did indicate that a vote from the Board was still necessary to make the award. Commissioner Dentino then suggested taking the vote at the next Selectmen's meeting as he believed the motion would fail this evening. Director Babin will give all the information to Town Manager D' Agostino. Vice Chainnan Aptowitz asked if MMED could provide coupons to ratepayers for energy efficient light bulbs as they are very expensive. Director Babin will look into it. Director Babin said that Commissioner Dentino had previously asked about extended warranties on vehicles. Director Babin said that the staff had inquired and it would be $2,800 for extended warranties for the vehicles MMED is replacing. He said that based on a review of the repair history of the vehicles MMED is replacing, the cost of items that were repaired 5 ... and would have been covered by extended warranties would not nearly justify the cost of the extended warranties. Director Babin stated that at the last Light Commissioners meeting, Commissioner Dentino had also asked about the cost of the Light Department office renovations. Director Babin said the project was budgeted for $25,000. He said the actual cost of the construction was $15,400, the architect was $6,000 and the desks and office furniture were $5,600 for a total of $27,000. Commissioner Dentino then questioned the cost of MMED personnel's time. Director Babin said there was none as the work was all done after hours. Director Babin announced that Engineer Ann Langille is leaving the Light Department after nine years of service. He noted that she did a terrific job and worked well with the staff. He said she was a real asset and wished her all the best. Commissioner Levine asked if MMED would be working with the Building Committee in regards to the new substation. Director Babin believes that it doesn't apply but will clarify it with Nick Riccio. Motion: To adjourn the Light Commissioners meeting at 9:29 (Levine) Passes 3/0 Respectfully submitted: Jacqueline Lee 6/8/09 'Ii ~ Signature of Clerk big/DC{ Date of Approval 6 ", o"....>.,._.......~._._._~"'___~-'____".. . , ...