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HomeMy WebLinkAboutLIGHTCOMM MIN09142009 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting September 14, 2009 ,.~~\tr--D ' :. \ . '.. '", .- r 1 r t:" ," t.'-t'r lVL. ,."r:(\ W.fl Present: Chairman Jess Aptowitz; Clerk Ann Baldwin; Commiss.i9ner George Dentino; Commissioner Sandra Levine; Director Gary Babin; Engineer ChIjs'. Cox; Staff AccQuntant Ken Thomson and Financial Assistant Jacqueline Lee. 7 0 ,6.. '21 Light Commissioners Meeting The meeting was called to order at 7 :00 PM followed by the Pledge of Allegiance. Motion: To approve the minutes of the July 13, 2009 Light Commissioners meeting (BaldwinlDentino) Passes 3/0/1 (Levine abstained) Commissioner Dentino asked about the last paragraph of the July 13 minutes where he questioned Director Babin about revising the engineer's job description. He said that he hadn't disagreed with Director Babin but that the union had to agree with the revision of the job description. Director Babin responded by saying that the Board is being asked here to approve the minutes as an accurate description of what was discussed. Chairman Aptowitz suggested that Commissioner Dentino bring this issue up at Old and New Business. Chairman Aptowitz requested that going forward, Director Babin post the Director's Items from the Board packet on the website as the other agenda which is currently posted to the website does not contain any specific information. Financial Statements for July 2009 - Staff Accountant Thomson explained that the Transmission expenses in July were very low because of a $205,000 transmission bill that was received in July but had to be recorded in June because of the fiscal year end. Director Babin reported that energy sales were down 19% for the month, which were primarily weather driven but also reflected the economy. He said that the Generation Charge through July was undercollected by $500,000. MMED will see how the Generation Charge for the month of August looks and then it will be adjusted for the last quarter. Director Babin told the Board that there is $82,000 remaining in Rate Stabilization money from the 8% rate of return issue that needs to flow back to the ratepayers in August and September. Commissioner Levine wondered how you distinguish whether low energy sales can be attributed to unseasonably cool weather or whether it's the downturn in the economy. Director Babin answered that he had spoken to Mayhew Seavey of PLM about this. According to Mr. Seavey's model it comes out, weather adjusted, to be about a 5% drop in sales. That's the economic component and the rest can be explained through weather. Commissioner Levine then asked how MMED knows when they should increase the Rate Stabilization Fund. Director Babin stated that it's not a timing issue but more of an issue of what has occurred. For example, he said that when MMED had an 8.6% Rate of Return in 2008, the Board voted to return the excess over 8% to rate stabilization and this was being . returned to ratepayers through the Generation Charge. He explained that the Rate Stabilization Fund is money that is earmarked to go back to the ratepayers and that the Board also has the right to direct operating funds to the Rate Stabilization Fund. Commissioner Dentino questioned the Non-Operating (Income)/Expense on the Profit and Loss Statement. Staff Accountant Thomson said that the ($56,920.00) for FN 2010 YTD Actual represents income from customer funded projects MMED performs. He explained that the ($4,984.00) figure in the FN 2010 YTD Budget column is a per month estimated figure. The Prior Year Actual of ($173,650.00) is due to the construction of the Mansfield Green. Commissioner Dentino said that MMED has extended the Calpine Rate Stabilization Fund for about seven months as it should have ended in January. He reiterated that he has asked for this information before and that he would like to know the total dollar amount of the Calpine drawdown and the total dollar amount of the Dominion contract that replaced it. Director Babin said that $10.2 million was the difference between the $7.2 million MMED would've paid Calpine and the $17.4 million that Dominion was paid for the same amount of energy. Calpine then paid MMED $9.2 million cash from an escrow account, which then accrued interest, toward the $10.2 million and was allowed to contractually skip a $194,000 payment to Calpine for energy delivered. He said that MMED ratepayers actually paid $313,000 more for Dominion than they would've paid for Calpine due to the termination of the Calpine contract. Commissioner Dentino believes that was just a paper swap and wants to know the actual amount MMED has drawn down in escrow. Director Babin stated that the total value of the Calpine settlement was $9,878,554. Commissioner Dentino stated that MMED got $9.9 million from Calpine and it cost $17.4 million to buy the power from Dominion. He believes Director Babin cannot add on what he thinks MMED would've paid Calpine because it is irrelevant. He stated that he doesn't care what MMED would've purchased from Calpine because they didn't. He believes it cost the ratepayers $7.5 million ($17.4 million minus $9.9 million) to get out of the Calpine contract. Director Babin said that for example, in January 2006 MMED would have paid Calpine $211,000 that month for energy and actually ended up paying Dominion $557,000 that month for the exact same amount of energy, the incremental cost being $346,000. That additional amount was then covered from the Calpine Rate Stabilization Fund. Commissioner Dentino pointed out that Director Babin chose to draw down the escrow account instead of continuing with Calpine which he could've done. Commissioner Dentino noted that Calpine was still supplying energy as of yesterday. Director Babin believes the Town was made 97% whole, costing them only $313,000. He stated that MMED got the same amount of energy from Dominion that it would have gotten from Calpine and that the incremental cost was $10.2 million, toward which MMED received $9.878 million from Calpine. Commissioner Dentino said that since Director Babin took the escrow, he didn't have to pay for Calpine's power. Commissioner Dentino stated that MMED breached the contract then 2 . went out and paid $17.4 million to Dominion. He believes the Town was damaged by $10.5 million. Chairman Aptowitz said that he spoke to Office Manager Laurie Anderson in regards to the Accounts Receivable NSF charges and whether they had anything to do with the new lock box issues. Director Babin indicated there were two instances where it did. Chairman Aptowitz said that he would like that reported to Treasurer Roxanne Donovan who is going to let Century Bank know that they are responsible for the charges as it was their error. Chairman Aptowitz questioned the decrease in Administrative-PayrolllBenefits and wondered if the difference was the engineer's salary. Staff Accountant Thomson said that Administrative-Payrol1/Benefits represented his own salary and Director Babin's salary plus benefits for the entire department. He explained that last year there were a couple of employees who were out sick for an extended amount of time which contributed to this years Increase. Reimbursement to Town for FY09 Costs Incurred for Employee Benefits, Insurance, Town Services and PILOT - Director Babin stated the services that the Town pays for on behalf of MMED and for which the Light Department reimburses the Town are retirement, health and dental insurance as well as various types of auto and liability insurance. The only services the Town provides that MMED pays for are MIS and GIS services. In addition MMED makes a $480,000 PILOT cash payment. An estimate is prepared at the beginning of the fiscal year and MMED accrues the expense monthly. Estimated quarterly payments are made to the Town and the 4th quarter payment reconciles the actual charges with the estimated charges for the year. Commissioner Levine questioned the funded pension amount of $3,205,320. Director Babin answered that the Light Department pays $290,000 of the total pension liability; $216,000 for pensions paid plus $74,000 ofthe unfunded pension liability. Chairman Aptowitz wondered where he would find the Treasurer's Department costs for bill processing. Director Babin explained those costs are not broken out because they are considered part of the services that MMED gets for the PILOT. Chairman Aptowitz thought it was unusual that some costs, including insurance, had decreased over the years. Director Babin also explained that MIS costs are actual costs and based on the amount of requests for services that MMED makes during the year. He said that the Light Department does not pay a percentage of Lou Costa's salary. Senior Luncheon - Director Babin said that Chairman Aptowitz had asked him to put this item on the agenda. Director Babin explained to the Board that the cost of the Senior Luncheon is considered as part of MMED's 14 of 1 % revenue requirement for MMED's Residential Conservation Services (RCS) program because energy conservation and electric safety are emphasized. Chairman Aptowitz then suggested energy saving light bulbs as the giveaway instead of the reusable shopping bags but told Director Babin he would leave this up to him. 3 ~ - Implementation of 6.25% Sales Tax - Director Babin told the Board that MMED implemented the new 6.25% sales tax for non-exempt accounts with the September billing. FY09 Auditor Hire- Director Babin told the Board that R.E. Brown and Company will be the auditor for both the Town and the Light Department for the next three fiscal years. MMED's cost will be $18,000 per year. Update on Automatic Payment Methods and Lock Box System - Director Babin gave the Board an automatic monthly payment summary update. He said that in addition to the recurring credit card and direct debit payments, MMED also receives on-line payments. Director Babin explained that due to staff reductions in the Treasurer's Office, MMED started using a lock box for payments with Century Bank in July. There was a problem in the beginning of August where no payments had been received one day and it caused a problem with those customers who had made payments that had not been posted. It was determined that the post office sent the batch of payments to the wrong bank and that those payments had finally shown up at Century a month later. He also said there is still a timing issue with payments that go to the Treasurer's Office through the Town Hall drop box and then are mailed to the lock box. There also continues to be a problem with on-line banking payments through the lock box, although Director Babin indicated MMED has always had on-line bill payment issues with bank issued checks. Commissioner Dentino asked the cost of the lock box. Director Babin answered that MMED has not been invoiced as of yet. Liens on Residential Properties- Director Babin told the Board that one time each year, MMED has the opportunity to lien home owners who have not been paying their electric bill. This year there have been 19 of these accounts identified, 10 of which are protected accounts, which means they have paperwork on file with the DPU or are senior citizens. In the past, MMED has liened only unprotected accounts. He said the resident is first notified by letter that if they don't pay their electric bill that they will be liened. If they don't respond or indicate that they are not going to pay it then MMED would place a lien on their property which will show up on the resident's property tax bill. Director Babin said he wanted to inform the Board of the procedure and also get direction from the Board as to whether they thought MMED should lien the protected accounts. He also noted that although protected accounts could not be shut off, the DPU did not prohibit MMED from placing a lien. Chairman Aptowitz questioned the dollar amount of $11,056 which represents two accounts belonging to senior citizens. He commented that this must go way back and asked if they ever made any payments at all. Director Babin answered that because they are senior citizens they are protected and they can't be shut off. Chairman Aptowitz then raised the issue of the resident's credit, if pulling their meters was not an option and they were not making any payments. He said he would also like an idea of the properties in question. 4 - .. ~''''''d__~_'''__~_'~'" Commissioner Levine wondered if any of the people on the list ever made any progress with their balance. Director Babin said there are periodic payments made. Chairman Aptowitz thinks that at a minimum people should be paying their current bill. Chairman Aptowitz again suggested calling the credit agencies in regards to these customers. Director Babin said that he believed the only time MMED could get involved with a customers credit line is when an account has been finalized and the customer doesn't pay, then this would be placed on the customer's credit report. Chairman Aptowitz pointed out that the rest of the ratepayers should not be subsidizing these people and MMED should do whatever they can to protect all of its customers. Commissioner Dentino thought these accounts deserved another look, as to what the property is like and the current situation of the owner. Chairman Aptowitz said he believes they owe it to the other customers. Director Babin cautioned the Board that they should be careful about attempting to judge hardship and that they need to be objective. Chairman Aptowitz asked Director Babin to look into the possibility of reporting these customers to the credit bureaus. Commissioner Levine asked Director Babin how MMED determines the legitimacy of the forms and the people who submit them. She wondered if the DPU had a certain formula. Director Babin assured her there were criteria that had to be met and that MMED did its due diligence to verify the information. Commissioner Levine asked if there was ever an instance where MMED was aware that a customer had a doctor fabricate a letter. Director Babin answered that is not for MMED to judge. Commissioner Levine asked that Director Babin look for other avenues as she was not inclined to put a lien on a senior or protected person's account. Director Babin said in his opinion he saw nothing wrong with liening all of the accounts. He said MMED had until the end of October to submit a list of liens to the Treasurer's Office. Chairman Aptowitz then asked if this could be discussed at the next Light Commissioners meeting in October when Director Babin could come back with answers to their questions. Director Babin indicated he would put it on the next agenda. Discussion of Power Supply Presentations - Chairman Aptowitz asked Director Babin ifhe was looking for a motion that evening as to which of the three power supply organizations MMED should choose. Director Babin said that he was not and it did not have to be this evening since MMED did have some time. Commissioner Levine said she has concerns about PLM because they are such a small organization. She thinks that they can't offer the services that the others can. She said she would compare ENE to MMWEC. Commissioner Levine then commented that MMWEC is complete and MMED gets all of its needs met although MMWEC, although it is pricy. Commissioner Dentino was surprised that PLM and ENE put on such professional presentations especially since they are the newcomers. He also believes ENE is comparable to MMWEC and noted that it is cheaper. 5 . Chairman Aptowitz said he liked ENE but he wonders if they are best serving their owners or clients. He pointed out that MMWEC is the only one that offers a credit support line for MMED. He noted that MMED may have to wire ENE money on a daily basis. He also commented that MMED has a long history with MMWEC. Director Babin stated he had refrained from offering the staff s opinion to this point as he wanted the Board to come to their own conclusions after hearing the presentations. He said that he agrees with the Board on PLM's capabilities but is concerned with their lack of depth and coverage and what they offer is really minimal. Director Babin stated that ENE does offer everything that MMED is looking for and has deep staff. He believes they offer everything MMED needs and would do a good job. But he added that ENE benefits from all the work that MMWEC does representing public power and that this is bothersome. He believes ENE rides MMWEC's coat tails in terms of representing the best interests of public power in a variety of industry forums. Director Babin agreed with Commissioner Aptowitz that ENE does not offer the credit support or the active cash management services MMWEC does. Director Babin believes MMWEC offers the whole package. He admitted there are some services offered that MMED doesn't need and that MMWEC is more expensive. But he also added that in his view, this is more of a philosophical decision than a financial one. MMWEC represents public power as a whole and if you are philosophically committed to the idea of public power then MMWEC is the right choice for MMED. Director Babin stated that MMED and public power is a lot different from investor owned utilities. Despite having separate service territories, he said the competition between them is very real. He said MMWEC has always been in the front lines representing and fighting the competitive battles on MMED's behalf in the regulatory and ISO arenas. Director Babin added that he was surprised MMWEC did not feature during their presentation that MMWEC had initiated the litigation with the ISO on the Canal issue and that MMED directly benefitted with a $450,000 settlement on the initial phase of the litigation. MMWEC also preserved its future litigation rights in that settlement and continued the fight which ended up with a resolution to the Canal issue, which had cost MMED ratepayers $2.3 million in 2008 alone. The expedited transmission solution was directly due to MMWEC's involvement and as a result MMED no longer faces Canal charges. Director Babin then posed the question to the Board of how much of a philosophical commitment do they want to make to public power. He believes it is not strictly a financial issue and his opinion is to go with MMWEC. Chairman Aptowitz asked that this be put on the next agenda for a vote. Old and New Business - Clerk Baldwin said that even though Vice Chairman Moran was not in attendance, she was prepared to vote on the engineer's position this evening. Commissioner Levine asked if there was going to be any further discussion on the subject. Director Babin requested that the Board hold their discussion of the topic until there was a full Board. 6 Commissioner Dentino said that the Board had discussed work at home policies at the last Selectmen's meeting and wondered if they were going to do the same as Light Commissioners. He said if someone working for the Town had to work from home they had to bring it for approval to the Town Manager. He suggested that perhaps, for the Light Department employees, they should be required to ask approval from the Light Department Manager or the Light Commissioners. Director Babin said to the best of his knowledge there is no one at the Light Department working from home and using it as a substitute for their scheduled work hours in the office. Motion: In order for a Light Department employee to work at home they must first obtain approval from the Light Department Manager after which it is to be reviewed by the Light Commissioners. If the Light Department Manager wishes to work from home, he/she must first go through the Light Commissioners for approval. (DentinolBaldwin) Passes 3/1 (Levine against) Commissioner Levine stated that she thought this was an attempt to run the Light Department and she believes this is not the Light Commissioners job but rather the Light Department Manager's job. She said she is very much opposed to this policy. Director Babin proposed Monday, October 19 for the next Light Commissioners meeting. The Board agreed. Chairman Aptowitz asked where MMED stood with the plans for the new substation at Bird Road. Director Babin said he plans on giving a full report at the next Light Commissioners meeting. Chairman Aptowitz also asked Director Babin to produce a worksheet which would satisfy the Light Commissioners in regards to Calpine. Director Babin said he will do that. Commissioner Dentino wanted clarification as to whether comp time shows up on an employee's payroll stub. Director Babin answered that it does. Motion: To adjourn the Light Commissioners meeting at 9:25 (Baldwin) Passes 4/0 Respectfully submitted: Jacqueline Lee 10/19/09 l~/~r k~tal 7 .