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HomeMy WebLinkAboutLIGHTCOMM MIN08312009 Mansfield Municipal Electric Department Minutes of Meeting August 31, 2009 r'" ~- ....... r- f \ J r :1""1 'C: ("-F ICE l~\ It: 3b Present: Chairman Jess Aptowitz, Vice Chairman Kevin Moran, Commissioner George Dentino, Commissioner Sandy Levine, Director Gary Babin and Financial Assistant Jamie Kelley. Light Commissioner's Meeting The meeting was called to order at approximately 7:00 PM followed by the Pledge of Allegiance. Director Babin stated there were two main items on the agenda; review of the FY09 Budget Summary plus presentations by three different power supply companies for MMED's power services in 2010. These are services that are currently being contracted with MMWEC. FY09 Budget Results - Director Babin and Accountant Ken Thompson reviewed the financials. The FY09 operating budget was $30.7 million. Operating expenses were $30.6 million, or $110,000 under budget. Purchase power expense were $278,000 under budget, transmission expenses were $300,000 over budget. Director Babin stated that this is an area that has escalated rapidly and will continue to escalate due to the fact that there have been a lot of transmission lines built throughout New England. Distribution costs were budgeted at $1.5 million but actual expense came in $100,000 under budget. The Customer service budget was $810,000 and actual cost was $85,000 over budget. The A&G expense budget was $1 million, actual costs were $66,000 under budget. Depreciation was $74,000 under budget. Write offs for the year were $161,000, or $100,000 over budget. Ofthat amount, about $69,000 was write-offs for bankruptcies while $73,000 was for write-offs performed manually in January as part of MMED's procedures. Director Babin stated A&G costs came in under budget due to legal expenses being under budget while distribution costs came in $150,000 below budget in part because there was less tree trimming done. A good amount of billable work was also done such as when MMED helped central Massachusetts to deal with the ice storm in West Boylston and Holden. Director Babin said Net Income for the year was $2.96 million, approximately a 7.8% rate of return. Energy sales were down significantly by 4.3%. Fund balances were a little over $4 million in operating cash at year's end while the depreciation fund balance was about $3.8 million. Commissioner Dentino questioned practice of writing off bad debt in January. He asked if it would it be more prudent to write off debt in the first or second week of November. This would be prior to mid-November when the shutoff moratorium became effective ." Director Babin explained the write-offs are only on accounts that are already closed. MMED is still pursuing the money through collection, but the accounts that are written offhave been delinquent for at least one year. For example, an account written offin January 2009 was closed at some point in 2007. Director Babin explained that once an account closes, a letter is sent 30 days later asking for payment; after 40 days another letter is sent saying it will go to collection in 10 days and after 50 days it is referred to collection and a letter is sent to that effect. Chairman Aptowitz asked whether bankruptcies were part of this bad debt that was written off. Director Babin explained what is typically done with bankruptcies is that once efforts to collect are exhausted, regardless of what time of year it occurs, then they are written off. Last year, this was done for 3 different accounts. The standard write-off policy, which was had been approved by the Board previously, says that debt is written off in January of each year for closed accounts that are at least one year outstanding. That write-off activity is then reported to the Board in either the January or February meeting. Power Supply Services Presentation Director Babin stated that three vendors will be giving presentations this evening. They are seeking to provide power supply services beginning in 2010 that MMED is currently receiving from MMWEC. The bidders are PLM Electric Power Engineering, Energy New England and MMWEC, who provide the services currently. The primary requirements are to bid MMED's daily load into ISO New England and undertake an extensive financial settlement process with ISO for the power delivered. This typically involves a few million dollars in settlement costs each month. Director Babin reminded the Board that in 2007 MMWEC had been served with a membership termination notice. However, the Board had voted in 2008 to extend their relationship with MMWEC for one year to allow their major reorganization to take hold but also reserved the right to terminate membership effective December 2009. The Board had indicated in 2007 they wanted to speak directly to the vendors. Each vendor is allocated 45 minutes for presentation and questions from the Board. Director Babin said the staff is not making recommendations; they'll merely present the vendors. It was stated if tonight was not sufficient to gather enough information, the vendors could return. Director Babin stated the MMED staff standardized the Request for Proposals format since the Board previously indicated they wanted an apples-to-apples comparison of costs categories. Each bidder was given a format to follow, a copy of which was included in the Board's packet, and the results of that proposals were then summarized for the Board's information. 2 '" PLM - Director Babin introduced Mr. Mayhew Seavey from PLM. PLM is consulting engineering firm located in Hopkinton, Massachusetts. Mr. Seavey said PLM was founded in 1983 with the current management so they have a good deal of continuity. It employs approximately 20 professionals with diverse backgrounds and utility engineering backgrounds. PLM has completed more than 700 projects in 25 years of business for over 200 clients and they offer power supply services through a subgroup of three individuals/principles and three senior employees. This group has some 75 years combined experience in the utility and consulting industry. They supply comprehensive power supply and rate services to over 20 different municipal light departments in New England and to the 34 members of the New York Municipal Power Authority. They were instrumental in setting up the New York Municipal Power Authority, and they provide complete bid-to-bill services for the NY Authority. The three principles have worked together for 15 years at PLM and prior to that in municipal utilities, so they are aware of how municipal utilities work and how to provide what you need and how to interact with ISO New England on a daily basis. They have a good working relationship with the ISO staff and represent clients as needed and do the same in NY. PLM is very familiar with operating environment municipal utilities work in. Over the years PLM has constructed automated data services to process and verify the settlement data. The system within which MMED operates is becoming increasingly complex, and PLM has a lot of experience in compacting and understanding the information. Over 10 years, PLM has procured over 20 billion kilowatt-hours of energy on behalf of 20 clients in New England and a comparable amount in NY. They are very familiar with all aspects of power market and they are very proficient at procuring and managing power purchase contracts. They also provide risk management services to a dozen public entities with heat rate contracts similar to what Mansfield currently has. The NY Municipal Power agency has the lowest administrative costs on a per-kilowatt-hour than any joint action agency in the country. PLM only provides services that the client wants and needs. Mr. Seavey said that they are highly responsive, and have a high proportion of senior level staff. PLM services include basic ISO settlement services, including bid-to-bill services, ISO meter reading and distributing reading reports to appropriate agencies. PLM currently does this for multiple NY and New England municipals and entities. PLM uses state-of-the-art MV90 software, which is capable of remotely reading any brand of meter. They can read and report the meter readings and provide a database to the client. Load analysis and scheduling is another part of that service. Scheduling involves bidding load into the day-ahead market or in the real-time market. They will work with clients to find out what the best strategy is in terms of bidding day-ahead load with slightly less volatility or if you want more load in a real-time market, which tends to have lower long-term costs. They've found the 3 - lowest risk approach is to put about half of the load into the day-ahead market and half in the real-time market, a good balance of risk and cost. PLM takes all of the detailed information produced by ISO New England, processes it, maintain a database of it, develops management reports that provide information on the performance of the client power supply resources in the market. PLM attached a sample report, which can be formatted to meet your requirements. Finally, PLM provides verification ofthe market settlement, which is a two-stage process; weekly settlements and monthly settlements. Weekly settlements are verified on an aggregate basis, and the monthly settlements are verified on a detailed hourly basis and tell you ifthe resulting invoice represents accurate information. PLM has the ability to do a detailed, accurate daily forecast ofloads, but their experience in New England is that it is not necessary and not cost-effective. They do not recommend it, but they do have the capability to do that. Commissioner Dentino questioned Mr. Seavey if they do this load analysis daily and asked ifhe felt ifit is necessary to bid into the day-ahead market. Mr. Seavey said that they could do the analysis daily-- PLM does it daily for NY clients because of a particular need for that. As far as the expense, the price in the proposal reflects what he would recommend only under normal circumstances, scheduling half of the load into the day-ahead market and during periods of extreme weather going to a price-sensitive bid that would allow you to schedule more of that load into day-ahead. Commissioner Dentino asked how much ofthis load percentage-wise are we talking about? Mr. Seavey said that this is simply your load obligation, the use of your customers each hour. The way this market works, you pay ISO New England for 100% of your load and you get paid by ISO for your resources. The second item on the list is consolidated billing system, essentially a billing function. Mr. Seavey said there is no reason why you can't do the consolidated portion of it in-house. This is really just accounting for three separate invoices. This is not a service PLM provides. The ISO New England financial settlements portion is a separate item from the consolidated billing, which involves the services of a financial services organization and PLM is an engineering consulting firm. PLM does not offer financial settlement services. You have other options, and it's shown what the other options are and cash management is outside the scope oftheir proposal. With regard to Item 6, portfolio analysis and reporting, this involves looking at your portfolio contracts, doing an assessment of how well they're performing in the market and what is the level of risk. Factors include covering your load adequately; excessive exposure to other market volatility such as natural gas markets and oil markets. PLM has a package that provides this assessment. The assessment report is based on quarterly reports. PLM is very active in this market and knows all resources available to add to your portfolio. 4 '" Item 7, procurement support, ties back into item 6 as a long-term activity competitive market solicitation, for which they've developed procedures to do in a very cost-effective way, customize it to your particular requirements, send it out to the market, request indicative prices, short list the suppliers, work with legal counsel to develop acceptable contract documents and get final pricing and provide whatever support is necessary to finalize the deal. This service is not on a fixed-price basis so it's provided on an as-needed basis. Because PLM does so much of this, they are very efficient at doing it as a cost-effective way to get the best price for the power. Item 8, long and short-term power supply resources, is all considered part of the procurement process in Item 7. Items such as monthly forecast and risk mitigation, power cost budgeting and providing monthly power cost budgets are done for numerous clients. The budgets generated are used for planning purposes and also for setting purchase power cost adjustments or generation charges for customers. PLM does short-term load forecasting and have all the data that's needed to project a customer's use of power. It's provided on a regular basis but PLM prefers to do it on a quarterly basis because they feel it's frequently enough. This also includes a reconciliation of actual cost of budgets. Provide economic analysis of conservation and demand side measures. This used to be required when municipal utilities had to report to the Department of Public Utilities and are very useful anytime there's a regulatory filing. It's often necessary to provide regulators with some evidence that you've considered demand side conservation as an alternative to providing additional supply. Litigation support on global issues of concern: PLM is not a law firm but do work closely with law firms and provide litigation support and have done so numerous times, including for Mansfield a few times in the past and most notably during the Calpine bankruptcy. PLM does not do rate comparisons and feels there's adequate rate comparisons out there that are being performed by others. PLM can package that public domain information in a way that's useful for the client. They are actively involved in soliciting renewable resources on behalf of clients that have a renewable portfolio obligation in other states and have procured quite a lot of renewable energy on behalf of those clients. And they can provide that if needed as part of the procurement support in item 6. Finally, PLM does not provide staff training. Vice Chairman Moran asked about doing work within New England and asked are there many Massachusetts-based companies PLM deals with. Mr. Seavey deals with the New England municipals and another person in the firm works with the New York municipals while the third person provides backup for both of them. Most of his clients are Mass. municipals. PLM is 5 11 actively involved with about 15 municipal utilities, and some of the public agencies like the MBTA. Chairman Aptowitz asked about the 15 municipal utilities, whether they are in MMWEC and if PLM provides the services in addition to MMWEC. Mr. Seavey responded that he would guess around five or six clients are currently MMWEC members, an equal number have left MMWEC, and some were never part ofMMWEC. PLM provides support for their in-house staff. Commissioner Levine then raised the issue of 3 people handling the day-to-day business. If one ofthose cannot perform the day-to-day functions, what would happen to those 3 people that will be servicing Mansfield. Mr. Seavey responded that they are all cross-trained in other functions and that they are currently pursuing another agent that is familiar with their business and that they have worked with in the past. Commissioner Dentino requested a list of 15 municipal light plants in Massachusetts they're working with and asked if it was the same scope of work. Mr. Seavey replied that the scope varies enormously and also depends upon the end user's staffing. PLM provides different levels of support. It also depends on contractual arrangements. Commissioner Dentino asked if out of the 5 that left MMWEC, does PLM currently perform all of the functions that MMWEC was providing. Mr. Seavey responded that PLM does not provide all those services. Some of the utilities hired in-house staff and use PLM to supplement the in- house staff. He said that could provide a list of the utilities and the services that are provided to them. Director Babin noted to the Board that all 3 candidates were given a sheet with everything that MMWEC does and asked the bidders to respond if they could duplicate those functions, at what cost, and if you can't provide it, who would be an alternative provider. Chairman Aptowitz asked Mr. Seavey why Mansfield should use PLM. Mr. Seavey responded that PLM will work with Mansfield to provide the services needed at the lowest cost and the highest quality. Energy New England - ENE was represented by Tim Hebert, Senior Vice President of Energy Operations; Leo Swift, CEO and John Muro, President. & Chief Operating Officer Tim Hebert spoke for ENE and stated it was formed in 1998 as a public power entity owned by 5 Massachusetts municipal light plants. It was meant to be entrepreneurial and react to changing and deregulating markets of the 90's. and also as a solutions provider to public power as the wholesale market deregulated. ENE has major counterparty relationships with all the entities who supply both electricity and fuels to municipal sector. ENE provides extensive demand side management and experience in all facets of retail product delivery. John, Tim and Leo all wear several hats in the company. They are focused on providing customized products and being a 6 - low-cost service provider. Tonight's focus will be more on the energy operations and finance. ENE is fully staffed with backup to address all aspects of business. ENE services more than 35 municipal utilities, including Mansfield. ENE said that they have a very experienced staff and have recently brought on board two managers to head the sustainability planning green practices. In Mansfield they have performed more than 150 residential audits and fielded approximately 300 calls from residents. Mansfield is a member of ENE's Residential Conservation Services Advisory Committee. ENE also provides commercial and industrial service audits. ENE has developed proprietary software, energy aid and water aid, as well as an appliance calculator that they provided to Mansfield. They are active in the renewable sectors, which has primarily been more solar based. On the wholesale side they've looked at and participated in a number of hydro and biomass projects. On the wholesale side of the business ENE manages approximately l,OOO MW for public power, plus other generation. They're comprised of 17 municipal utilities with resources of 700 MW and a combination of other entities totaling 225 MW that they manage. ENE also does the ISO settlements; they manage fuels, and consult with regards to new renewable energy credits. There's a broad range of services that are provided by ENE. In any given year they execute approximately 200 to 250 transactions. They purchase power for up to 5 years, purchase fuel (physical and commodity) and manage ISO settlement activity. Their goal is to provide t price stability to their municipal accounts and they also have bid to purchase several power plants. ENE combines a number of skill sets from different industries, including utilities, generation companies, power marketing, banking, and accounting. ENE has tried to build an outsourced risk management and power supply management organization over the last 11 years. Their employees know the generation side of the business very well. Many also spent time with municipal customers, helping them sort through the complex wholesale power markets. Wholesale power costs are, generally speaking, somewhere between 70 and 80% of the utility's cost structure. ENE devises strategies to help public power manage those costs. ENE's approach is outsourced credit and risk management; they help municipal systems figure out how much power they need to buy, when they need to buy it, and make sure that the municipal is positioned well in the marketplace. ENE sorts through ISO market rules and helps make sense of them for the customers. ENE is always on the lookout for opportunities that provide savings or reduce risk for their customers. It might be getting away from fluctuating fossil fuel prices with gas prices going up and down, it might be adding green power to the portfolio or any number of things. For example, ENE recently agreed to buy hydropower from a plant in Maine that moved ENE's customers away from fossil fuels. It provides green energy at a market-based price. ISO market management in Holyoke keeps ENE busy with a number of daily, weekly, and monthly tasks that 7 - any utility has to contend with in order to operate in the wholesale power markets. ENE functions as the outsourced agent to do a lot of those things that help you make sure that your cost structure is in line with what you're expecting With regard to load forecasting and cost projections, ENE puts out a report each week that shows a power supply budget prediction on a rolling four-year basis. With ENE's risk management design and implementation they look at each customer independently. Mansfield would be buying the power just as it is now but ENE figures out whom to buy from and when. ENE retains flexibility to pursue other types of transactions, such as looking at power plants or green power like the hydropower they recently purchased from Maine. They also respond to proposals for wind power and wood fired power. Renewables are getting a lot of attention, some ofthose projects are expensive but some are pretty competitive and do address fossil fuel price risk. ENE prescreens them, and takes the best of the group to the customer base to solicit participation, showing the cost, benefit, risk, and reward for each. The weekly report has turned to be great management tool. Most of public power is a net buyer of energy from the wholesale markets. You get an invoice every week from the ISO; you have to pay that bill within five days and at the end ofthe month you get a bill for your power suppliers or plants with whom you have contracts, so the settlement process is ongoing. Since ISO switched to weekly billing, it's become a bigger chore to deal with. Part ofthat bill reflects the amount of power that you buy from the wholesale market. ENE functions as the settlement agent. They set up customer deposit accounts for each customer and use those funds to service the ISO bills each week, replenish funds by billing their customers, and set up a mechanism to pay those weekly invoices more easily. If you buy a power contract from one of the contract suppliers, they confirm volumes and costs every month. And lets customers know in most cases whether they're okay to payor not. In a few cases ENE facilitates the settlement for the customer. Credit line support is not something ENE offers. They have not had a need to extend credit to their customer base; they're set up as a service organization and each customer maintains a deposit account with them. ISO representation - Generally, ENE recommends that customers appoint someone as a proxy to attend meetings for them and they monitor the changes in the market rules. ENE provides projections to their customers of what the impacts of any changes are going to be. ENE does not currently staff each of the ISO meetings. They do review a lot of information that the NEPP A consultant covers from all ISO meetings. Portfolio analysis, reporting and monthly load forecast and risk mitigation is from a functional perspective co-mingled with other areas and based on what they find to be effective is to deal with those two areas together. 8 - ENE talked of the residential conservation services work they currently do for Mansfield earlier. ENE also noted they perform industrial audits as well. They also do rate comparisons between municipals as well as investor owned utilities. A number of their customers have asked them to do an overall comparison and they're in the process of putting that together. ENE does not provide staff training. ENE took at look at how they priced their services several years ago. On a bundled or unbundled basis, they've been able to provide substantial cost savings to public power systems, typically between 25 and 50 percent, compared to their incumbent providers. Someone's always at the office that is able to service anything that their customers need on a given day. ENE also holds customer forums, getting the directors and general managers together three or four times a year to talk about significant items of interests and importance that are going on in the market place. This is done in a collaborative environment. Six to seven people would be assigned to work with Mansfield in different capacities, but MMED would have one or two primary contacts. The office staff is cross-trained and if anyone should be out of the office, backup is there. The ISO changed from monthly billing to weekly billing to help ease cash requirements because smaller bills more often seemed easier to pay than one large bill each month. Also, if Mansfield chose to go with ENE, their services can be purchased on an a-la-carte basis, although there is a discount for bundled services. Commissioner Dentino asked if Mansfield signs on with ENE, will Mansfield eventually become part of the ownership cooperative with Wellesley, Taunton, Hingham, Belmont and Concord. ENE responded that Mansfield would become a customer, not part of the coop, but they may take it into consideration. Typically, a contract is at least 12 months while some have been two or three years with a 90-day notice provision. ENE has members who are clients but also clients who are not members. From a pricing perspective clients want to make sure members don't get a better deal. Pricing for both members and customers is comparable, depending upon size and scope. Basically, ENE helps their customers bid their plant into the ISO every day and helps them do it as cost effectively as possible, making sure they participate in as many of the wholesale markets as they can. ENE works with 25 municipal systems and has done 1,100 audits to date for public power (over 150 for MMED customers). They provide toll free 800 line support 5 days a week. ENE's energy auditors are all state certified. They use a customized software tool that captures the usage. ENE developed their own software tool, built it and fully customized it for every municipal customer they work with. They been performing this service since 2003, they have quarterly 9 - meetings to share what's going on with certain issues and also have other municipals outside Massachusetts that they work with. ENE also speaks at the Mansfield Council on Aging Safety Luncheon each year about energy saving tips. Chairman Aptowitz asked how ENE involves customers in the decision making process for power purchase decisions. Leo Swift answered that each client gets a look at everything ENE does. The opportunities go to everyone. Tim referenced the hydro transaction; it's a small transaction but a nicely priced transaction. ENE put the information out to everyone and those interested parties took a pro-rated piece. Some needs are different, special and distinct and ENE deals with each client directly based on their wholesale needs and retail needs. A list of the 15 Massachusetts clients can be given to Mansfield on a confidential basis. MMWEC - CEO Ron DeCurzio, Treasury and Commodity Manager James Klein, and Chairman of the Board Stan Herriot, Manager ofthe Ashburnham Municipal Light Plant represented MMWEC. Ron DeCurzio provided a brief Company history. MMWEC is a not-for-profit company formed under M.G.L.Chapter 775. MMWEC has certain privileges others don't have, including issuing financing and producing power to supply light departments. In 2008 the MMED Board had concerns about controlling the cost ofMMWEC. Since those concerns were raised MMWEC did add more members as Chicopee and South Hadley came back. People not involved in joint action agencies are quickly joining because they see it as a way of stabilizing their costs and improving their clout in the political environment by being involved in the group. Joint action has a lot to offer, as does Mansfield's collective knowledge. Last year, there was concern about controlling costs because they have been rising and MMWEC promised the Board that employees would become aware of how every penny was spent and what it meant to your ratepayers. Managers met with every employee to discuss the labor hours that they put in, every hour they charge, and how it gets spent down the line. So MMWEC has taken steps to address customer concerns with employees with how it funnels down to the customer. The estimated cost for Mansfield to rely on MMWEC for all their services is roughly $175,000 for 2009. MMWEC is a joint action agency and they're very well recognized on state and regional issues. MMWEC was instrumental in lowering costs for MMED by getting the Canal Unit reclassified so it did not get out-of-merit settlement payments. One thing Jay Kline does for MMWEC is pro actively manage the power supply. One significant transaction could absorb all the membership costs for Mansfield. Since MMWEC does things from a joint action perspective, they can get the benefit for all the light department's portfolios as the prices goes down instead of guessing. 10 - With the deals that Jay does, MMWEC also has a mechanism that monitors where exposure is to each counter-party. MMWEC's customers also have access to lines of credit. MMWEC hasn't had any collateral calls yet. MMED utilized MMWEC's $25 million line of credit in 2008 in ISO settlement until MMED could provide additional cash working capital to cover its exposure. He noted that MMWEC doesn't charge for this credit line access, but the bank will charge for it. Director Babin added that because the cost of power was increasing so dramatically in 2008, and because the billing from MMWEC always lagged at least a month, MMED used MMWEC's credit line frequently. For example, if today is August 31st; MMED won't be billed for August power consumption until September 20. That September 20 bill comes due October 20. So MMED basically pays 50 days later for the August bill. Over time MMED increased its working capital by $600,000 to add liquidity to our account. MMED did this over three months at $200,000 a month to increase the cash working capital. Director Babin added that Locational Marginal Pricing (LMP) determines what you pay for power. That is directly tied to the price of natural gas. During the first six months of2008, it ramped up considerably It's an incredibly complex system. Power costs a lot of money when fossil fuel prices are high, because you're paying whatever cost the ISO assesses and then you can have additional items like congestion, which is one of things that has really cost MMED a lot of money in the Canal case. Commissioner Dentino then stated that fossil fuel does not affect the nuclear power plants, which provides most ofMMED's power, and it isn't related to oil. It's not related to natural gas. Director Babin then explained that ifMMED paid 10 centslkWh for power at our node in the ISO system, we might only be getting eight cents for selling our power at the node up in New Hampshire. Just because you pay one number here doesn't mean you get credit for the same number. You could also be getting paid less because if it's not a congested area. Mr. DeCurzio said that in 2001 there was refinancing of all the project debt. That will be realized next July. For Mansfield, that amounted to $10.7 million in savings for refinancing that debt. What the current MMWEC membership and the Board want is people that want to be members and part of a joint action agency. The bigger systems want to run on their own and they don't really want to participate in joint action. Director Babin let the Board know that the Mansfield Director only has the authority to purchase power for up to 6 months. To change that would require a vote of the Board. Commissioner Dentino asked if we could lower gas prices from the heat rate contract and Director Babin responded that gas prices have largely been locked in. MMWEC offers all of the services for one price, but it customizes what it does for each municipal based on that company's needs. Some may need more daily attention in the smaller 11 '" towns. MMWEC restructured the organization last year, going from 60 employees to 49. 18 took severance packages. About seven new people were hired, so they reduced about 11 out of 60 while also implementing different types of staff positions. Commissioner Levine asked how the membership costs are based for MMWEC. Ron answered that the rates are based on the kWh sales. By taking the DPU report MMWEC sees what the kWh sales were for the prior year and base the rates on that number. Mansfield now pays about 8.57%. When new members Chicopee and South Hadley came in MMED dropped down to 6.7%. Chairman Aptowitz asked how Mansfield could be represented on the Board of Directors. Stan Harriet from MMWEC answered that big systems could actually vote themselves on in the weighted vote. Very likely Mansfield could have representation on the Board, whomever you chose. That's part of being a member of a joint action agency; a commissioner or Director Babin could be a Board member. Mr. DeCurzio said that was the end of the presentation and the MMWEC representatives departed. Chairman Aptowitz asked if the Board wanted to finish the year end financial statements or do them on September 14th. It was decided to go ahead and finish them tonight. Vice Chairman Moran wanted to look at the under/over line on the statements to the budget and asked if going forward, are we going to look at apple to apples. Director Babin answered that MMED will have a comparative analysis to the prior fiscal year starting with the July statement. Director Babin addressed the drop in energy sales by saying there was a big drop-off in industrial sales. Of the six customers on this rate, one was in bankruptcy; one was a large office park account that covers multiple customers within the park and that the overall decline in sales was around 15%. Director Babin explained that MMED took a big hit with those large customers. That was probably the customer segment feeling it the most, large industrial sales. Commissioner Levine wanted to address capital projects line items where it appears you had budget, but you haven't spent it. Director Babin said that a budget number is inserted as a place holder but as a practical matter you don't know if there's going to be expenditures there because it's on an as-needed basis. For example, if a tool broke on one of the trucks, and it cost $1000 to replace it, there would be the account that we would take money out to replace it. Commissioner Levine then addressed computers and software account number 399 and inquired as to what was bought for $25,000. She wanted to know if it was one item or multiple items. Director Babin explained that it was several things like laptops for the substation operators. Director Babin explained that the Operators have laptops that tie into the system wirelessly. So if something happens, they get an alarm on the laptop that allows them to dial into the SCADA 12 '" system from home. Director Babin said that the account covers both hardware and software. MMED has also implemented a disaster recovery program with our billing provider and that's the sort of thing that gets charged to that account. Vice Chairman Moran asked if the $74,000 under budget depreciation expense was a result of the fixed asset project. Is that a result ofthe one-time correction or we may not have calculated the depreciation properly. He wanted to know if we would see this type of a drop next year. Director Babin stated that next year the Board will see that the budget and the actual number are the same. MMED has done a one-time correction because there were several assets still shown in the books that have already been fully depreciated. Chairman Aptowitz addressed the PILOT. He noticed that it says $507,000. He stated that he has a $480,000 cash payment to the town, a $25,000 payment to social services and $2,000 for robotics. Chairman Aptowitz noted in collections the write-offs increased. Chairman Aptowitz asked if the Board feels comfortable that our rate of collections is okay. Do we see any negative down tics as far as consumers paying late. Is it increasing or slowing down. Director Babin assured Commissioner Aptowitz that collections are very stable. MMED is very aggressive on its collections policy. On the residential side, people are having more trouble with the economy and on the commercial side, nothing is going past thirty days past due because of the aggressiveness of collections. Chairman Aptowitz added that if a big business doesn't pay that represents several hundred residential customers. Vice Chairman Moran also added that Business/Town partnerships are good for both entities. He then mentioned that some towns got stimulus money and mentioned that we may want to look into this. Director Babin explained that MMWEC got into a purchasing venture with a solar panel manufacturer at Devens and a lot of municipals have bought solar panels. MMWEC has their green team, sending out stimulus bulletins. You need a pretty well defined scope of a project you want to use the stimulus money for in order to qualify for it. Director Babin mentioned the Landfill gas project with MMWEC is still out there and MMED can still sign up for that. It's a long-term commitment and might be placed on a future agenda. Chairman Aptowitz said that hopefully we can keep the power supply solicitation process moving forward. He would personally like to see the staffs comments on what their suggestions would be. Next was the lockbox issue. Director Babin explained that Mansfield went to a different system of payment processing. Previously all the payments came in to the treasurer's office to be processed. Due to staff reduction and budget cuts in that office, the Town has gone to a lockbox 13 '" system. When you pay your bill, there's an envelope in the bill to be mailed to a P.O. Box in Boston. Themai1 gets processed through the Brockton post office. Issues related to mail service in early August kept some payments from going to the Town's P.O. Box in Boston and ultimately to Century Bank. Those payments did not show up until just before the meeting. Customers had been contacting MMED and said that they submitted their payments but MMED didn't have a record of those payments. MMED has asked people to use the lockbox when they can but to make sure they use the envelope that is enclosed in the bill. There is about a three-day lag in the mail process before the payment is posted but if you drop it off at the MMED office you'll get credit for it the day you drop it off. The next Mansfield Municipal Electric Board meeting will be September 14. There is a Board of Selectman meeting on Wednesday. Director Babin was asked if MMED has a procedure for someone requesting information, if there is a form that can be filled out to see certain documents. Director Babin responded that MMED does not have a standard form to request information. Chairman Aptowitz asked if there is something that can be done to formalize it if someone wants to request documents, so we can make it fair to everyone if they're requesting information that is public record. Director Babin mentioned that there's a law to the effect. And if someone wanted the minutes from this evenings meeting, they will be on file at the Town Clerk's office. They have 10 calendar days to respond. Lastly, Chairman Aptowitz said he got a call from the Chairman ofFincom regarding exploring what ramifications it will have if Mansfield decides to sell the electric light department. Motion: To adjourn the Light Commissioners meeting at 11 :05 (Dentino) Passes 3/0 Respectfully submitted: Jamie Kelley November 16, 2009 ~w~ \\\\\.D\.O~ Signature of Clerk Date of Approval 14 -