Loading...
HomeMy WebLinkAboutLIGHTCOMM MIN06082009 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting June 8, 2009 . '-~ f ~~. E 0 - . .~. . '.- '" ! C E ,)Ur-r, Present: Chairman Jess Aptowitz; Vice Chairman Kevin Moran; Ctidiimissid~r 6eJA.gt I Dentino; Commissioner Sandra Levine; Director Gary Babin; Engineer Chris Cox;, Staff Accountant Ken Thomson; Financial Assistant Jacqueline Lee and Town ManagerJoljrn D' Agostino . Light Commissioners Meeting The meeting was called to order at 7:03 PM followed by the Pledge of Allegiance. Motion: To approve the minutes of the January 14 Light Commissioners meeting (Moran/Levine) Passes 4/0 Motion: To approve the minutes of the January 26 Light Commissioners meeting (Dentino/Moran) Passes 4/0 Motion: To approve the minutes of the February 9 Light Commissioners meeting (Dentino/Moran) Passes 3/0/1 (Levine abstained) Motion: To approve the minutes of the March 4 Light Commissioners meeting as amended (Moran/Dentino) Passes 4/0 Motion: To approve the minutes of the March 30 Light Commissioners meeting (Dentino/Moran) Passes 4/0 Motion: To approve the minutes of the April 1 Light Commissioners meeting (Moranffientino) Passes 4/0 Motion: To approve the minutes of the April 13 Light Commissioners meeting (Dentino/Levine) Passes 3/0/1 (Moran abstained) Chairman Aptowitz announced that going forward there would be Questions and Comments scheduled for every Light Commissioners meeting. Financial Statements for April 2009 - Director Babin stated that the net operating income year-to-date through April was $2,487,132 and non-operating income was $117,502. MMED's cash position is up significantly from last year by about $2.8 million, due mostly to the MMED receiving the Generation Charge revenues that had been under-collected through April 2008. Director Babin also said that approximately $250,000 of operating cash is earmarked to be returned to the rate payers through the Generation Charge, as voted by the Board in March. He reported that energy sales are down 4% from prior year. He believes that MMED has a healthy balance sheet. ." Vice Chairman Moran questioned why the high tension sales were so low. Director Babin said that the last time this issue came up, only one out of five HT customers had experienced increased energy sales while the other four had a decrease in kWh sales. Director Babin will put together some information on this. Commissioner Dentino asked where the Generation Charge overcollection appears on the financials. Staff Accountant Thomson answered that it appears as a line item on the balance sheet under Current and Accrued Liabilities. Commissioner Dentino stated that at one time MMED's PILOT was $300,000 then there was a vote by the Board for a one time increase of $180,000. He asked that someone go through the minutes and find the vote as he believes it was only a one time increase. Director Babin said that this issue had arisen before and it was determined that when the Board approved operating budgets, the $480,000 PILOT was a line item in the budgets so the PILOT was approved annually as part of the budget process. Town Manager D' Agostino pointed out if the intent was to reduce the PILOT, this would have to be clarified immediately because then $180,000 would need to be cut from the municipal side and school side for the FYI 0 budget. Chairman Aptowitz questioned the use of Light Department funds by the Town to pay their bills. Town Manager D' Agostino explained that the legislature determined that because light plants are municipal departments, MMED revenues go into the general fund and are comingled with other Town funds, although accounted for separately. Director Babin pointed out that the Town uses those funds as a cash working capital fund and thereby avoids short term borrowing. Chairman Aptowitz believes this is fine as long as it's legal. Review of Cost of Service and Rate Design - Mayhew Seavey from PLM was in attendance to discuss MMED's rates. He reminded the Board that MMED implemented unbundled rates in 2008. He said that the projected revenues have been as expected, within 1% of projections. Expenses have been lower, however, for A&G expense and Depreciation expense than he had projected. The expense reductions are what accounts for most of the difference between target rate of return and actual rate of return. In addition, "Other income" is higher than what was projected but due to the low amount involved this is not a major concern. Mr. Seavey said that it doesn't appear MMED will exceed the 8% profit for the fiscal year. He said that while MMED could slightly lower the rates to get back down to the target 6% rate of return, he recommended that MMED not do that because sales are decreasing and rates may have to be increased in a year or two because of the new substation. Director Babin reminded the Board that they established the Rate Stabilization Fund in March. He pointed out that this fund can be used as a mechanism to return what the Board may deem to be an excessive rate of return to ratepayers. Chairman Aptowitz said that he wants to give back to the ratepayer as much as MMED can. Commissioner Dentino pointed out that it will just cost the ratepayers more later when they have to pay for the new substation. 2 .. Constellation Energy Supply Contract - Director Babin stated that since Mr. Seavey would be at the meeting already, he had scheduled a discussion on the Constellation contract as a follow-up to the prior month's questions about that contract. Mr. Seavey told the Board that Constellation had elected to financially settle their contract with MMED rather than scheduling a power supply transaction through ISO New England. He said that Constellation had done this with all their power supply contracts because they were under pressure to reduce their credit exposure. Doing so saved Constellation money and it made financial sense. He stressed that doing this has no impact on the financial terms of MMED's contract with Constellation. Director Babin added that you also need to consider the timing of Constellation's move. After the collapse of the stock market last fall, the ISO started discussions about increasing collateralization from power suppliers to cover the ISO's risk of default by those parties. Vice Chairman Moran commented that under the contract Constellation is basically being paid to take on the risk. Commissioner Dentino asked if MMED has executed contracts with Constellation in accordance with the gas heat index. Mr. Seavey answered that MMED has locked in the price on 90% of the volume under the contract over the five year period. He noted that the average price of gas locked in was in the $7/MMBtu range. Chairman Aptowitz asked how much of MMED's purchased power is from Constellation. Mr. Seavey answered about 15%. Electrical Engineer Job Vacancy - Chairman Aptowitz thought it was best that the Board postpone their vote on whether or not the Light Department would fill their current vacancy of Electrical Engineer. He noted that Commissioner Baldwin was not present and he felt this was an important vote. He indicated, however, that it CQuld be discussed in the meeting. Commissioner Levine wanted to point out that she was not a part of the vote to defer the hiring of the engineer as she was not in attendance at the May 22 meeting when this was done. Director Babin stated that on March 20 the Board voted to direct him to fill the Electrical Engineer position. Chairman Aptowitz stated that his recollection was that the vote was to advertise for the position not to fill it. Commissioner Dentino concurred with Chairman Aptowitz. Vice Chairman Moran disagreed, saying he thought the vote was to go forward and hire someone. Commissioner Levine agreed with Vice Chairman Moran. Director Babin then stated he had advertised the position after being given the go ahead, interviewed an initial group of candidates, selected 2 candidates with good experience for final interviews on May 27 but that on May 22, the Board voted to defer the hiring of MMED's Electrical Engineer. Director Babin told the Board that MMED has an approved budget for FYI0 which includes funding for this Electrical Engineer position. He then referred to a spreadsheet he had compiled of 13 municipal electric departments in Massachusetts roughly equal in size to MMED which he had distributed to the Board in the Board package. He pointed out that the average number of employees in the 13 utilities shown is 31 employees while MMED now has only 23 approved positions, 22 people plus the vacant engineer position. He said that this 3 ." provided verification that MMED is not overstaffed and that there's no fat in this organization. He believes MMED does more with less manpower than other utilities that have 50% more employees than MMED. He expressed his concern that the Board's temporary action of allowing only one engineer on staff would eventually become a permanent situation. Director Babin also explained that he and Engineer Cox are now on engineering standby every other week which he believes is excessive. He stated that there are 6 on-call lineman who rotate weekly, 4 substation operators who rotate weekly but only 2 engineers who now have to assume standby duty every other week. The second engineer position provides the 3rd standby person in the engineer rotation. Commissioner Dentino asked Director Babin how many times he has been called in while on stand-by. Director Babin said that you don't often have to come in but that simply by being on standby you are severely limited in what you can do and where you can go. He said that putting this every-other-week limitation on people is excessive and that when he arrived in Mansfield, there were only two engineers on standby so he added himself to the rotation to lessen the burden. Commissioner Dentino said he understood there was a stipend involved. Director Babin indicated that Engineer Cox did receive a stipend of $750 for the week in accordance with the union contract but that Director Babin received no additional compensation. Commissioner Dentino commented on the municipal side versus the enterprise side mentality, saying he likes to treat both sides the same. He does not think enterprise accounts should be exempt from the hiring freeze. Director Babin said he did not believe that MMED is better than any other department but that MMED does have a different responsibility. He reiterated that the position is already fully budgeted for FYI0, unlike the situation on the municipal side due to the revenue shortfall. Director Babin stated that he is simply asking to have the 23 positions that are currently funded to be filled. Commissioner Levine said that having spent the money on the advertising, she thought MMED should proceed, as it would be a waste of money if they didn't. She is in favor of filling the position. Chairman Aptowitz questioned the spreadsheet Director Babin had distributed. He wanted to know how many of the positions were engineering positions. Director Babin said he didn't know offhand. Chairman Aptowitz then asked for a job description of the MMED engineer position. Town Manager D' Agostino added that when reducing departmental budgets on the municipal side, he attempted not to cripple anyone department. He said in this case, however, the economic times are not impacting the Light Department in the same way so although it's easy to say everyone should be treated the same, it's not appropriate in this case. He recommended that the Board should vote to fill this position as he believes there is a difference between departments and that MMED really needs this position. 4 T .. East Mansfield Substation Update - Engineer Cox gave an update on the East Mansfield Substation. MMED is currently waiting on information from the Natural Heritage and Endangered Species Program (NHESP) as to what endangered species may exist on the preferred parcel. He stated that MMED sent a letter about a month ago and if they have not responded by June 10, MMED will contact them. Engineer Cox said MMED is modifying the project plans in order to comply with the buffer zone requirements for the wetlands. MMED is also working to satisfy the Town Engineer's requirements on the design. Engineer Cox said that MMED will need to hire a wildlife biologist to work with MMED on the Massachusetts Endangered Species Act (MESA) application. Proposed Repair of Vehicle 20 - Director Babin stated that last October the hydraulic system failed in Truck 20. A pump catastrophically failed and metal filings filled the hydraulic system, lodging in the valves. MMED had spent $11,600 in an attempt to repair it but this did not correct the safety issue. A new estimate to replace the hydraulic system for $38,000 was received but would not guarantee the problem would be resolved. MMED staff is proposing to buy a completely new lift device with a new hydraulic system while reusing the existing cab and chassis. Director Babin recommended to the Board this would be the best course of action and the vehicle life would be 10 to 15 years. Motion: That the MMED amend its FYI0 Capital Budget to include the purchase of a new lift device to be retrofitted onto the existing cab and chassis of Vehicle 20 at an estimated cost not to exceed $80,000. (Levine/Moran) Passes 4/0 Old and New Business - Town Manager D' Agostino told the Board that they needed to vote this evening on a separate post retirement health plan for the Light Department. Director Babin added that in doing so, MMED's liability for the plan would be identified and funded solely by MMED. Motion: To establish a Post Retirement Health Benefits Trust Fund Account to cover the Mansfield Municipal Light Department cost to fund future health care costs for its employees (MoranlLevine) Passes 4/0 Vice Chairman Moran departed from the meeting at 9:40. Director Babin said that at a previous meeting a security deposit issue was discussed prompting the need for an expansion of the commercial deposit policy. He requested that the policy be amended to include the option of a surety bond. He explained a customer is proposing the bond, which Director Babin stated was acceptable to Town Counsel, for a ten year term on the bond. Chairman Aptowitz suggested that it be renewable every ten years. Motion: To expand the commercial deposit policy to include the option of a surety bond (Levine/Dentino) Passes 3/0 Chairman Aptowitz said he wanted to set the date for the next meeting. Director Babin proposed the dates of July 13 and August 31. 5 ." Chairman Aptowitz asked if the Board would be seeing the audit soon. Director Babin answered that it would be presented at the same meeting with the Town audit and that the Light Department was in good shape with no new management letter items. Chairman Aptowitz brought up the issue of every other streetlight being turned off. He said he has heard from a lot of the elderly residents and he believes it might have to be revisited. Director Babin said he will look into it but also made it clear that it is not the Light Department that decides which lights are being turned off. The Light Department follows the instructions being given to them by the DPW, who pays the electric bill on behalf of the Town. Motion: To adjourn the Light Commissioners meeting at 9:50 (Levine) Passes 3/0 Respe~t:fJly submitted: Jacqueline Lee 7/13/09 ~~ --- Signature of Clerk Date of Approval 6 "11