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HomeMy WebLinkAboutLIGHTCOMM MIN10192009 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting October 19,2009 ;:;::ICF _ I _ /\ II: 3b Present: Chainnan Jess Aptowitz; Vice Chairman Kevin Moran; Clerk, Ann ,BalQwin; Commissioner George Dentino; Commissioner Sandra Levine; Director Gary Babin; Engineer Chris Cox; Staff Accountant Ken Thomson; Line Foreman Gary D' Ambra and Financial Assistant Jacqueline Lee Light Commissioners Meeting The meeting was called to order at 7:00 PM followed by the Pledge of Allegiance. This was followed by a moment of silence in honor of former Selectman Steven MacCaffrie, who passed away on Saturday, October 17. Chairman Aptowitz announced the calling hours and expressed his condolences to Steve's wife and his children. Commissioner Dentino said that Steve was a good friend of his. He said Steve was not afraid to stand up for what he believed in. Steve was on numerous Boards in the Town of Mansfield and worked very hard for the community. Questions and Comments - Resident Gary Forget thanked Chairman Aptowitz for the opportunity to be heard. He began by saying he feels enterprise accounts should be held to a higher standard. He doesn't believe funding an ambulance through an enterprise account is appropriate. He does believe that the water, sewer and electric enterprise funds finance the Town Manager's position and thinks that expecting the Light Department to also pay for an ambulance is crossing over the line. He said this is violating the enterprise accounts. Mr. Forget also believes Chairman Aptowitz's statement that funds for the Town could be created by selling offMMED is coercion and intimidation. Chairman Aptowitz stated that he was glad Mr. Forget brought up this subject. He said that he wanted a conversation about this but didn't necessarily agree with the FINCOMM's suggestions. Mr. Forget suggested setting up an enterprise account for future ambulance purchases. Commissioner Levine joined the meeting at 7:05. Mr. Forget asked what a lockbox is. Chairman Aptowitz answered that it is a mechanism for customers to have bills paid. Payments are mailed to a P.O. Box and the bank picks up and processes the checks for the company. Vice Chairman Moran arrived at 7:10. Resident Darleen Ricci from Essex Street read an e-mail she had sent to Chairman Aptowitz. She stated that MMED's sole purpose is to supply electricity and not to support municipal government. She believes that Chairman Aptowitz's comment about MMED financing the ambulance and that it would not affect the ratepayers is disingenuous. She said that all ." MMED expenditures should be electric related and should be completely separate from the municipal government. In response to one of Mr. Forget's questions, Director Babin stated that MMED does bill the DPW for the snowplowing that MMED performs. Chairman Aptowitz stated that it was the Chairman of the FINCOMM's idea to look into selling the Light Department. Mr. Forget then asked ifmoney from the ambulance runs could be put into an enterprise account. Before Chairman Aptowitz responded, he inquired of the Board if they wanted to continue the discussion on this topic. Clerk Baldwin said she did not as Fire Chief Neal Boldrighini had specifically asked to be present during any conversation regarding the ambulance. Commissioner Levine also thought they should not discuss it as she believed the Board did not have enough information. She said she doesn't think it's legal for the Light Department to purchase an ambulance. Director Babin said he believes it is legal if the money is donated to the Town as a PILOT and the money is earmarked for the ambulance and as long as it's accounted for as a below-the- line expense. He stated that the Light Department has done this before. The example he gave was when the Light Department donated $25,000 to the fuel assistance fund in this manner last year. Vice Chairman Moran stated that he would not say he's in favor of having the Light Department fund an ambulance. He believes, however, that the Board has to look at the situation as both Selectmen and Light Commissioners and he thinks a one-time gift may be okay. He then asked Director Babin about MMED's PILOT amount. Director Babin said at one time the PILOT was about 2.5% of operating revenue but it is now down to about 1.5% of operating revenue because of the increased cost of power. He noted that the PILOT amount is different with different towns but that MMED's number is about at the average. He also added that the PILOT as a percentage of operating income is the normal basis of comparison between towns. Commissioner Dentino took the opportunity to point out that this situation is why the Selectmen shouldn't be Light Commissioners. If they were separate Boards then the Light Commissioners would run the Light Department as a business and none of them would be voting in favor of purchasing an ambulance. He then stated that the Board needs to wear their Light Commissioner hats here, not Selectmen hats, and serve the ratepayers. Commissioner Levine agreed with Commissioner Dentino and suggested scheduling a workshop. Chairman Aptowitz suggested Wednesday, November 18. Commissioner Levine was not in favor of scheduling a workshop for a Wednesday. It was decided, however, to schedule it for Wednesday the 18th and Clerk Baldwin said she would have Karen Doucette post it for 8:00 PM. Motion: To approve the minutes of the September 14, 2009 Light Commissioners meeting (Levine/Baldwin) Passes 4/0/1 (Moran abstained) 2 - Financial Statements for August 2009 - Director Babin reported to the Board that net operating income year-to-date through August is $631,503 and that controllable operating expense accounts came in $143,000 under budget through August. He said that MMED's operating cash position through August 2009 was $4,491,270. Director Babin explained that the Generation Charge had been significantly undercollected due to low energy sales over the summer because of both the economic downturn and the cool weather. The depreciation fund stands at $3,959,013. Director Babin also reported that customer deposits are at about $500,000, up 50% in the last year. Staff Accountant Thomson said he contacted the Treasurer's Office about creating a fund for "Other Post Employment Benefits Plan" for the Light Department to fund that liability in accordance with an actuarial report issued in 2008 identifying both the Town's and MMED's liability. Establishment of that fund is in process. Mansfield Electric Assistance Program - Gayle Farrugia and Pam West from Social Services joined Director Babin to discuss the need for MMED to make a contribution to the Mansfield Electric Assistance Program. Director Babin told the Board that MMED contributed $10,000 last year and this year Social Services is requesting $25,000. Ms. Farrugia stated that the fund is now down to approximately $2,000. She told the Board that last year the fund serviced 93 families at a total cost of $27,440.31. Ms. West said that she receives calls every day from people seeking assistance who have lost their jobs, are in foreclosure or can't pay their rent, or have catastrophic illnesses. Director Babin then asked Ms. West to explain the expectations made of residents who are seeking assistance. She said there is an intake process which requires documentation. The person applying for help is also required to sign a document saying that they can reapply for assistance in one year only if they have been making consistent payments to MMED. Commissioner Dentino complimented Ms. Farrugia and Ms. West, saying they stay right around the figure they started at and gave them credit for doing so much with the amount of money they have. He said that he has no problem with approving the amount of $25,000. Clerk Baldwin was concerned that $25,000 is too low and thinks $40,000 would be a more appropriate amount. Commissioner Levine thinks what they do with such little money is phenomenal but said she would prefer to stay with $25,000 and they can come back to the Board if they need to ask for more. Motion: That the Mansfield Municipal Electric Department contribute an amount of $30,000 to the Town of Mansfield for the purpose of donating this money to the Mansfield Electric Assistance Program in order to provide funding for FYI0. (Baldwin/Moran) Passes 5/0 Director Babin mentioned that since Ms. Farrugia was in attendance he would remind the Board that the COA luncheon will take place on Friday, October 30. 3 ." Proposed East Mansfield Substation Update - Engineer Cox joined Director Babin to give the Board an update on the proposed East Mansfield Substation. Director Babin said that MMED applied to the National Heritage and Endangered Species Program for a habitat assessment for the proposed substation. MMED received a letter from NHESP that the project "will not result in a prohibited 'take' of state-listed rare species" on the site based on their review of MMED's plans. At that point, MMED thought they had the required go-ahead and was ready to proceed but the Mansfield Conservation Commission indicated that they wanted a walk-through of the site conducted by a wetlands scientist and a study in addition to the NHESP letter. The cost of this study is to be paid by MMED. The walk-through was done by a Conservation Commission appointed wetlands scientist along with Director Babin, Engineer Cox, the Towns Conservation Agent and a member of the Conservation Commission on October 5. MMED has yet to receive that report despite indications it would receive a copy. Engineer Cox told the Board that other areas of the project have been put on hold pending the Conservation Commission determination. He said MMED had been only a couple of weeks away from completing the draft agreement for the purchase of the easement from National Grid. The other issue put on hold is the site plan review with the Town Engineer's office to finalize the drainage calculations, although the additional soil borings which were needed for this analysis were completed. Chairman Aptowitz said he was going to play devil's advocate and ask ifit would be possible to save $8,000,000 and forget about building the substation. Director Babin said that according to the study MMED had done, there will be additional facilitites needed by the Town at some point in the near future to meet its projected electric demand and that was unavoidable. Commissioner Dentino questioned the appraisals of the property on Bird Road. National Grid's appraisal was $248,000 and. MMED's appraisal of$163,000. Director Babin said that it has come to the conclusion that National Grid needs to be much clearer of its expectations from MMED in order to meet Grid's filing requirements and that there needs to be better communication between them and MMED. He commented that NGrid has been somewhat dysfunctional from a planning perspective on this project and that has severely impacted MMED's schedule. Liens on Residential Properties- Director Babin reported that with regard to the Board's prior inquiries about reporting past due balances of active customers to the credit bureaus, social security numbers would be needed to do this. He said that MMED can request social security numbers from residents when they are signing up for service but can't require them. Director Babin said that MMED was seeking direction from the Board as to whether they should place liens on DPU protected accounts. He then explained there are two types ofliens; the first is a lien that is filed with the Registry of Deeds at a cost of $76 and precludes the property from being sold without first paying the lien. The second type of lien is filed with the Town Assessor and put on the resident's tax bill, where it must be paid before the taxes are paid. 4 .. He said that MMED needs to provide a list to the Treasurer's Office by October 23 in order for the lien to be listed on the next tax billing. MMED will be liening the unprotected accounts and needs to know how to proceed with both the protected senior accounts as well as other protected accounts. Clerk Baldwin felt that for a protected account, MMED would just be compounding the residents problems. She thought the second lien option was best. Commissioner Levine said she had previously been against the liens but has changed her mind. She said that she was in favor of a lien at the Registry of Deeds on all of them as she believed doing it only at the Assessor's Office wasn't enough. Director Babin said that his recommendations to the Board would be to lien the unprotected accounts at both the registry and the Assessor's Office. Protected accounts he thought should be liened only at the registry. Commissioner Dentino wondered why letters had already gone out to residents when MMED had not been given any direction from the Board. Director Babin explained that he had the letters sent so that the residents would be aware that their accounts would possibly be liened. He said this is a requirement before the lien itself is placed to give the customer the chance to either pay it or set up a payment plan. Commissioner Dentino said that the way he understood it at the last Light Commissioners meeting was that they had not yet voted to send the letters. Director Babin answered that he just wanted to protect MMED's options because of the timing involved in placing the liens as well as the requirement to give the customer the opportunity to pay. Chairman Baldwin supported Director Babin's logic. Vice Chairman Moran agreed with Clerk Baldwin that protected accounts should be liened through the Registry of Deeds. He then indicated that he thought MMED should lien the unprotected accounts as they normally would. Chairman Aptowitz thought that everyone should be liened at the Registry of Deeds. He said that even residents on payment plans should still be liened, pointing out how long it would take some people to satisfy their payment plans. Director Babin then reiterated his understanding of the discussion by saying that he understood the Board's directions to be that protected accounts should be liened only at the Registry of Deeds but that unprotected accounts should be liened at both the Registry of Deeds and also at the Assessors Office. He said he was not requesting a formal vote, simply a sense of the Board. Discussion of Power Supply Presentations - Chairman Aptowitz asked if any Board member would be willing to make a motion with regard to choosing the provider of power supply services for MMED beginning in 2010 from the three power supply vendors that had given presentations to the Board on August 31. Motion: For MMED to retain the power supply services of MMWEC for a period which will remain not term specific. (Baldwin/Dentino) Passes 5/0 5 - Director Babin had suggested to the Board that they may not want to go through this process on a recurring basis and felt MMED should let MMWEC know that MMED is really on board with them for the long haul. Commissioner Levine said that she doesn't want to go through this evaluation process every year. She suggested they make it for a two year time period. Chairman Aptowitz thought that leaving it non-term specific showed MMWEC that MMED is on board. Commissioner Dentino said that based on the fact that the Board almost voted MMWEC out, he would rather show them support for just one year and see what they can do in that year. He pointed out that MMED is with MMWEC now only because they cut their costs. Chairman Aptowitz told Director Babin that he thought it would be very important to have someone from Mansfield on the MMWEC Board. Gilbert Street Land Acquisition - Director Babin stated that MMED needs to either purchase National Grid's land at the Gilbert Street Substation outright or MMED would be put in the position that it would have to purchase an easement because it has constructed the Gilbert St. substation with MMED equipment located on the land in question. He said that MMED had negotiated the price down to from the original $200,000 appraisal to $75,000 for the land and that it is the staffs recommendation to purchase the land. Director Babin indicated that an easement may cost even more in the long run and referred to the handout in the Board package that explains all of the reasons that an outright purchase made sense. He said that he would like the endorsement of the Board so that MMED can move forward with this at Town Meeting. Motion: For MMED to move forward with the purchase of the land at the Gilbert Street Substation from National Grid for $75,000 subject to Town Meeting approval. (Baldwin/Moran) Passes 5/0 Generation Charge for 4th Quarter - Director Babin told the Board that MMED's energy sales projections for June, July and August were 66 million kWh but actual sales were only 55.5 million kWh. He said that MMED still has to cover the fixed costs associated with its debt service no matter how much power is sold. As a result, the Generation Charge severely undercollected power supply costs in the 3rd quarter because not enough kWh were sold to cover these fixed costs. As a result, an increase of over 3 cents in the Generation Charge was required, from 9.13 cents in the 3rd quarter to 12.25 cents in the 4th quarter. 1.5 cents of the 12.25 cent Generation Charge was just to recover the 3rd quarter undercollection. The 12.25 cents was what was charged in October. Director Babin pointed out that the Board has the ability to mitigate the impact of this increase for November and December, however, by voting to use MMWEC Reserve Trust Rate Stabilization money. He noted that this is exactly what Rate Stabilization money is for and recommended that the Board vote to use it. 6 - Motion: To transfer $686,000 from the MMWEC Reserve Trust Rate Stabilization Fund to operating cash for the purpose of reducing the Generation Charge for the months of November and December 2009 from 12.25 cents to 10.25 cents. (Baldwin/Levine) Fails 1/4 (Baldwin in favor) Commissioner Dentino thought that the Generation Charge should not be adjusted now as the ratepayers would just be paying further down the line. He thought it best to just leave the Generation Charge at 12.25 cents so the reserves are not depleted. Commissioner Levine asked if MMED overcollects, would the overcollection go to the Rate Stabilization Fund. Director Babin answered no, it would be taken into account through the calculation of a future Generation Charge and be returned to the customers. Motion: To transfer $360,000 from the MMWEC Reserve Trust Rate Stabilization Fund to operating cash for the purpose of reducing the Generation Charge for the months of November and December 2009 from 12.25 cents to 11.25 cents. (Moran/Baldwin) Passes 3/2 (Dentino and Aptowitz against) Chairman Aptowitz then inquired as to when the Board wanted to schedule the next Light Commissioners meeting. It was agreed to meet on November 16. Old and New Business - Clerk Baldwin said she had heard some things she would like Director Babin to verify. She wondered if the Light Department was involved in a condo association that held monthly meetings. She asked if it were true that the Light Department was the only one to send a representative to the meetings to take the minutes. Director Babin answered yes, that is accurate. Clerk Baldwin questioned why none of the other owners shared that responsibility. Director Babin said that it was already set up that way when he started at MMED and that he was the Treasurer of the condo association. Clerk Baldwin then asked why another owner couldn't be appointed as Clerk and their responsibility would be to take the meeting minutes. She said that she believed every owner should do their part and take some responsibility. Director Babin said he would raise this issue at the next condo association meeting. Commissioner Levine inquired as to whether there would be any discussion regarding the engineer's position. Director Babin said that he was planning on bringing it up tonight since there was a full Board. Chairman Aptowitz, however, suggested finishing the Light Commissioners Old and New Business first. Commissioner Dentino brought up the subject of the streetlights. He asked MMED's total cost for turning off every other streetlight. Director Babin said it was approximately $35,000. He also said that the DPW's original streetlight budget for FYIO was $160,000 but it was reduced to $100,000 with all of the streetlights shut off He noted that the cost to shut off the lights ended up being about $29 per streetlight. Commissioner Dentino asked if MMED had kept track of the manhours and truck hours. Director Babin said he would get that information. 7 Commissioner Dentino stated that he had a copy of a Murphy, Hesse, Toomey & Lehane invoice and questioned why he could see a staple mark in the corner of the sheet but yet it did not have any back-up accompanying it. Director Babin said that he does not like having the back-up data attached when the warrant packet is circulated around the Light Department for review of the invoices for accuracy. He does not believe it should be public information. He did indicate that he does send the information to the Town Accountant so they have that backup information for their files. Chairman Aptowitz agreed with Commissioner Dentino, saying that he too noticed the staple mark and perhaps it could lead someone to think there was something to hide. Commissioner Dentino wondered why it would be something the Light Commissioners couldn't see. Clerk Baldwin suggested keeping a "confidential folder" just for the Light Commissioners which would include the back-up for the invoices. Commissioner Dentino said that he had a breakdown of litigation costs for the Beliveau and Stoyle matters. Director Babin clarified that he had compiled that summary based on a citizen's request and provided it to Commissioner Aptowitz. Commissioner Dentino said that he would like a breakdown of Attorney Lehane's bills which totaled $46,000. Commissioner Dentino questioned numerous legal bills, commenting on how much time each attorney spent in the court room. Director Babin clarified that he wasn't involved with the litigation strategies and had little to do with the trial. He said that the bills went through the Town Manager's office who then forwarded them to the Light Department for payment. Commissioner Dentino requested back-up for some of the legal bills, among them @Ilmarin, LLC; Merrill Communications; WIN Interact, Inc. and Melanson, Health & Co. Commissioner Dentino mentioned Director Babin's letter to withdraw his intent to apply for the position of Manager of the Light Department. Commissioner Dentino then suggested posting an ad for a Light Department Manager as he did not think they'd find a Town Manager with an electrical engineering degree who was also a Registered Professional Engineer. The Board discussed the issue of whether the new Town Manger should also be the Light Plant manager. There was not a consensus and several members of the Board were open to that idea depending on the qualification of the candidates. Vice Chairman Moran questioned whether the Board intended to create a new full time position and fund this position. Clerk Baldwin commented that they would be going from a $10,000 stipend to be given to the Town Manager to a full blown salary. Director Babin stated that he had no intention to bring this matter up this evening. He clarified that he was interested in the position but that it was getting awkward because the Board had never really gotten back to him in the 5 months since his application. He also stated he never intended for this to be a big issue for the Board He also stated several times that he felt that he was helping the Board because they were about to interview candidates for the Town Manager job and that he felt the Board should 8 ." define and make clear to the candidates the scope of work involved with the position, which would include the Light Plant Manager job. Both Chairman Aptowitz and Vice Chairman Moran believed the Board should wait to address this issue until they have finished with the Town Manager search and have seen how that process went with respect to the new Town Manager being named the Light Plant manager. Commissioner Levine departed at 9:50. Director Babin had provided the Board with an analysis of the Calpine issue in the Board package. He also used a chart that he showed to the Board and to the audience at home to explain this analysis. Director Babin reviewed the circumstances where Calpine had filed for bankruptcy in December 2005 and MMED elected to terminate the contract with Calpine when they filed for bankruptcy. He said the staff maintains that the Town was made 97% whole financially when it received a $9.2 million cash payment from the escrow account that MMED required Calpine to maintain to address such a situation. Clerk Baldwin left the meeting at 10:00. Director Babin said that after the contract termination, MMED went out to bid for the exact same amount of energy, 188,362,400 kWh, as the Calpine contract was scheduled to deliver from 2006 through 2008 and that Dominion was the lowest bidder. He explained that the replacement contract with Dominion Resources cost MMED $17,377,485 for that contract, or $10,192,678 more than the Calpine contract. The total cost of the MMED's damages as a result of the bankruptcy was established at $10,192,678 and this is what MMED used as a basis for compensation when it went to the New York Bankruptcy Court to seek damages. Director Babin stated that MMED's total cash benefit received from Calpine in the settlement was the $9.2 million payment; $484,225 in interest on that $9.2 million; and $194,330 saved toward the December 2005 Calpine invoice for energy delivered. The total cash benefit to MMED was $9,878,555. Director Babin summarized by saying that when you offset the increased $10,192,678 cost of the Dominion contract against the $9,878,555 cash payment that MMED received from Calpine, the impact on the MMED ratepayers was $314,123. In the end, he stated that MMED rate payers paid 3.98 cents per kWh for the 188 million kWh of energy delivered. Commissioner Dentino did not agree with this analysis and gave his own interpretation of the situation. He stated that when Calpine filed for bankruptcy they never said they were going to stop producing electricity. He pointed out that it was MMED that breached the contract because Calpine was in fact still producing electricity. Commissioner Dentino said that MMED received the escrow monies only because they chose to release Calpine. Commissioner Dentino went through his analysis and stated that you cannot take into account what MMED would have paid Calpine when calculating damages. He stated that the only relevant figures were the $17.4 million that MMED paid to Dominion and the $9.9 million 9 - MMED received from Calpine. He said he believed that the damages were actually over $7 million by his method of calculation. Vice Chainnan Moran pointed out that MMED would've ended up paying Calpine $7.2 million anyway for the same amount of energy so the difference in the two amounts represented the damages. Commissioner Dentino believes it doesn't matter what Calpine would have been paid. He said ifMMED had remained with Calpine, it would've cost $7.2 million but that it ended up costing $17.5 million in order to recoup the $9.9 million shown in Director Babin's analysis. Motion: To adjourn the Light Commissioners meeting at 10:20 (Dentino) Passes 3/0 Respectfully submitted: Jacqueline Lee 11/16/09 cUU)~" Q~ Signature of lerk ~ Date of Approval 10 -