HomeMy WebLinkAboutLIGHTCOMM MIN03012010
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Mansfield Municipal Electric Department
~jn.u'e) of Light Commissioners Meeting
. r) ..- March 1,2010
Present: Chairman Jess Aptowitz; Vice Chairman Kevin Moran; Clerk Ann Baldwin;
Commissioner George Dentino; Commissioner Sandra Levine; Director Gary Babin; Engineer
Chris Cox; Staff Accountant Ken Thomson; Financial Assistant Jacqueline Lee and Town
Manager William Ross
Light Commissioners Meeting
The meeting was called to order at 7:05 PM followed by the Pledge of Allegiance.
Chairman Aptowitz noted that no one had signed up for Questions and Comments.
Motion: To approve the minutes of the December 21, 2009 Light Commissioners meeting
(Baldwin/Moran) Passes 4/0 (Commissioner Levine had not yet joined the meeting)
Director's Report -Director Babin told the Board that he had spoken that day with Line
Foreman Gary D' Ambra who is currently out on sick leave. Director Babin reported that Line
Foreman D' Ambra is still recovering and doing much better.
Director Babin requested that the next Light Commissioners meeting be scheduled for AprilS,
2010.
Financial Report for December 2009 - Director Babin stated that MMED's operating cash
position through December 2009 was $5,056,308. This does not include the $680,663 owed to
MMED for undercollection of the Generation Charge. Year-to-date sales were down 7.3% due
to both the economy and cool summer weather in 2009. Director Babin said that MMED's
depreciation fund stands at $4,411,876.
Staff Accountant Thomson explained that in total all major controllable operating expense
accounts are approximately $176,800 under budget. He stated that Outside Legal expenses were
$72,000 under budget; Outside Engineering expenses were $62,000 under budget; Repair and
Maintenance of Vehicles was $19,000 under budget and Gasoline for Vehicles was $17,000
under budget. Staff Accountant Thomson also mentioned that MMED fared well in the FY09
audit that had been performed by R. E. Brown since the last Light Commissioners meeting.
Town Manager Ross joined the meeting at 7:15.
Commissioner Levine inquired as to whether MMED was currently using Rate Stabilization
money to reduce the Generation Charge. Director Babin responded no. Commissioner Levine
then asked if Rate Stabilization money is replenished through the Generation Charge. Director
Babin said it is not.
Chairman Aptowitz was concerned that the amount of gross sales is down and advised that
MMED should keep an eye on that.
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FYI0 Capital Budget - Engineer Cox told the Board that the original FYlO capital budget of
$1,655,946 was increased by $80,000 in June due to the need to replace the lift device on
Vehicle 21. He then reviewed the list of budgeted items for FYIO and highlighted some of them.
He explained that fewer transformers are needed because MMED hasn't had the business
development it projected. Also, the Town's new streetlight policy means fewer streetlights need
to be replaced. He explained that new vehicles budgeted in FY09 were delivered and paid for in
FYI0.
Director Babin then explained the need for the new vehicle MMED is requesting as part of the
FYlO capital budget. He said that the current vehicle is 14 years old and it's hard to get parts for
it so there is a question as to how much longer it will be operable. He noted that it is a heavy
duty work truck that typically has a life expectancy of about 15 years.
The amount originally budgeted for this material handler unit was $175,000. Bids were opened,
however, and the cost was much higher so the staff was requesting an increase in that budget to
$225,000. Town Manager Ross said that he did not think the cost was out of line for vehicles of
this nature. He cautioned that MMED should be keeping an eye on the maintenance history of
the vehicles before putting $20,000-$30,000 into them.
Vice Chairman Moran questioned the underground cable and wondered if there was that much of
a significant drop in expected work as he noted there was a fairly significant decrease in that
budget item. Director Babin said there haven't been many failures of underground cable and no
unforeseen projects have come up.
Vice Chairman Moran also noted a spike in the amount for computers and software and
wondered what the cause of that was. Director Babin said that it was due to some software
upgrades because of the new billing system as well as the purchase of some new personal
computers.
Commissioner Dentino stated that for pole replacement, 36 poles were budgeted and 31 poles
had been completed at a cost of $29,000. He questioned why, with only 5 poles left, MMED was
leaving $42,000 in the budget for that. Engineer Cox explained the extra money in the budget by
saying pole replacement is often a filler job for the linemen so it is good to keep additional pole
work as part of the budget.
Commissioner Dentino questioned the amount of transformers that may be necessary. Director
Babin said that they keep many on hand, in part because during the hot weather linemen will be
replacing failed units. Town Manager Ross pointed out that there may be emergencies, a heat
wave, storm, etc. so MMED needs to keep several types of transformers on hand for emergencies
to fill a particular need.
Commissioner Dentino then questioned the number of streetlights under the budget item, "Install
New Streetlights". He thought that the streets were well lit even with the new streetlight policy,
which cut the amount of streetlights by about 40%. Director Babin explained the intent is just to
replace existing lights that fail, not to install new ones.
Commissioner Dentino believed MMED had saved a greater amount of money than was showing
in the budget by not filling the engineer vacancy. Director Babin will revisit that number.
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Motion: To approve MMED's amended FYI0 Capital budget in the amount of $1,481,395.
(BaldwinlMoran) Passes 5/0
FYll Capital Budget- Engineer Cox stated that the budget request for the FYll Capital Budget
is $1,353,174. Engineer Cox then reviewed the assumptions that went into the analysis. He said
that labor will be priced out at an average rate of $35.51 per hour. He explained that the
overhead factor was being increased from 80% to 90% because of the "Other Post Employment
Benefits" account MMED is now funding. Vehicle time will be priced out at $15 per hour.
Police details will be priced at an average of $350 per day. Stores expense will be allocated at a
rate of 15% for inventory.
Engineer Cox reviewed the projects proposed for FYll; 4 one-time projects, 2 recurring projects
and 1 special project. There are minimal projected reimbursable customer projects at this time.
He then reviewed the cost summaries by plant account.
Director Babin then said his intention was to go through the FY11 Capital Budget and then go
through the FYll Operating Budget and then invite Jack Goldberg from the FinCom to make his
comments, after which the Board would be asked to vote on both budgets.
Chairman Aptowitz asked if the Board had any questions or comments on the FYll Capital
Budget.
Commissioner Dentino said he was displeased with the increase of the overhead costs from 80%
to 90%. He doesn't know how to justify it in this economy.
FYll Operating Budget - Director Babin reported that the total operating expenses for the
FYll Operating Budget are $31,140,005 and total operating revenue is $33,159,824. He said the
rate ofretum has been reduced from 5.89% for FYI0 to 5.43% for FYll. He explained that the
operating budget is broken into two segments; controllable expenses and expenses beyond
MMED's control.
He began by reviewing the uncontrolled expenses. Director Babin told the Board that the
Generation Charge is comprised of the cost of generation and transmission. The level of the
quarterly Generation Charge is calculated based on the projected cost of these items over the
three month period and also by either the overcollection or the undercollection of Generation
Charge revenues in the prior quarters. He then reviewed the FYll budget cost summary for
uncontrolled expenses, noting that transmission costs are the most rapidly increasing portion of
the budget.
Director Babin then reviewed the controllable expenses for which there are 3 categories: (1)
Distribution (2) Customer Accounts and (3) Administrative and General. The Distribution
expenses are the costs for maintenance of the distribution lines and include labor costs for
lineworkers, meter personnel and all other operations personnel. There is a $28,919 increase
from FYI0. The Customer Accounts expense of $866,818, which includes customer service,
meter reading and billing, makes up 2.8% of the total budget and decreased from FYI0.
Administrative and General expenses, covering legal and consulting costs and labor, are
budgeted at $963,678 or 3.1 % ofthe total budget. This is also a decrease from FYlO.
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Director Babin added that training and out of state travel has been kept at a bare minimum per
the Board's request. The only training that is being budgeted is what is required for operating
personnel.
Once the MMED staff had finished their presentation, Jack Goldberg from the FinCom told the
Board he thought that the capital budget seems to be less ambitious than previous years. He
noted that in regards to the operating budget, sales are down and that he did have one issue he
wanted to discuss. He said that he believes the spike in the overhead is an issue of concern.
He told the Board that he thinks there has been a disconnect between what was talked about and
agreed upon in the fall with the Selectman and what has occurred in this budget with regards to
funding the post retirement health care. An actuarial study was done and the Light
Commissioners voted to fund an auditor recommended amount of $194,000 during FYI0.
For FYll, Mr. Goldberg believes the current amount of $104,000 from the actuarial study
should be used instead of $194,000 and that only 20% of that should actually be funded by
MMED, or approximately $21,000. His reasoning is that there are other things that the money
can be spent on, such as the new substation, and that since the FinCom is recommending that the
rest of the Town only fund the liability at 20% of the current amount so should MMED. He does
not agree with MMED funding this account at the proposed level as he feels it is too aggressive.
Town Manager Ross said that he has wrestled with the issue of funding liabilities for health care
for 12 years. His experience is if you don't put money aside for this as aggressively as you can
afford, at some point in time it will eat into your future budgets because you eventually have to
pay these bills. His suggestion for an enterprise account is to fund as much as they can up to the
actuarial amount. He said it is important for MMED to start to get money into the fund now.
Town Manager Ross noted that there will be a rather large group of baby boomers all retiring at
once.
Commissioner Levine stated that she wants to leave the funding at $194,000. She wondered why
MMED would go backwards to $21,000 if they can afford to fund the $194,000.
Mr. Goldberg said that business is flat and that MMED doesn't have to spend this money now.
He feels it is more prudent to spend less.
Town Manager Ross told the Board that he has seen major corporations that elected not to put
the money aside to cover the unfunded health care liability go bankrupt because they didn't fund
it when they had the money. He said it would be inappropriate to put the Light Department in
that situation.
Director Babin pointed out that the Light Department has a healthy balance sheet and enough
operating cash to support this. He believes MMED should continue the funding at a rate of
$194,000 a year because they have the ability to do so.
Mr. Goldberg believes that MMED would be doing that at the ratepayers' expense. Director
Babin noted that MMED did not and would not have to raise the rates in order to fund this
liability. Chairman Aptowitz said he would rather see the rates lowered.
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Commissioner Levine pointed out that eventually this will have to be paid, if not now then later
down the line, so she questioned what the savings are by prolonging it.
Director Babin pointed out that if the funds were available on the municipal side, they too would
be funding the full amount. He wondered why the same approach wouldn't be taken with the
Electric Department.
Clerk Baldwin asked how Director Babin had arrived at the figure of $194,000. He answered
that he had given a copy of the actuarial report (the same report the FinCom had) to the auditors,
who in turn said MMED should be funding at the $194,000 level.
Clerk Baldwin then questioned Mr. Goldberg as to why the auditors told him MMED should be
using the lower amount of $22,000. Mr. Goldberg said that the auditors did not say that and that
the $22,000 was a number that was arrived at by the FinCom. He said that the auditors make no
comment on the funding because that is a policy issue.
Commissioner Dentino said that by funding the $194,000, the employees of the Light
Department would be protected but he does not feel that it is fair to protect the employees of the
enterprise accounts when the same can't be done for the municipal employees. He said that he
agrees with Mr. Goldberg and that he is hard-pressed to isolate employees because some have
the ability to raise rates. He warned that the enterprise accounts should be careful because the
Board could take the position that they'll take money from the enterprise accounts and use it
across the board to fund everyone's pension. He said he can't justify protecting pensions when
there are roads in need of repair. Commissioner Levine pointed out that you can't use the
enterprise money for that purpose.
Town Manager Ross stated that the Town has a liability for all of these employees and just
because you put money in the fund from one operation doesn't mean those employees are better
protected or less protected. He does not believe the Board would be discriminating by allowing
the Light Department to fund this account. Town Manager Ross thinks for the Board to say we
don't want to put money in the account from one group to benefit another doesn't make sense
because in the end it is the Town itself that is ultimately liable for these bills.
Vice Chairman Moran believes based on the conversation last fall with the PinCom that the
Board had done the right thing by allowing MMED to begin funding this account as the money is
there. He believes this is a unique situation where they could at least take care of one liability.
Mr. Goldberg said that he doesn't believe anyone will ever really meet these obligations. Vice
Chairman Moran asked whether Mr. Goldberg believed that down the road there would be
massive pension reform. Mr. Goldberg reiterated that he thinks there is no way any Town is
going to meet these obligations but that he did not want to speculate on anything.
Commissioner Levine asked why MMED couldn't pay into the fund now and if there was some
future reform then reduce the amount they're paying into it at that time. Mr. Goldberg said he
feared the disparity would put the Town at a disadvantage in regards to the reform but he didn't
think there was any point to speculate on any of this.
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Commissioner Levine then said she did not understand why they would be remiss in allowing
MMED to continue paying into the fund since they were in a position to be able to do so. Mr.
Goldberg said that in his view it would be putting the interests of the MMED retirees ahead of
the interests of the ratepayers. Commissioner Levine pointed out that if the ratepayers don't fund
it now, they'll have to fund it later anyway.
Motion: That MMED's current funding mechanism for "Other Post Employment
Benefits" in the amount of $194,000 per year remain in place.
(Levine/No Second)
Motion: To reduce MMED's contribution to "Other Post Employment Benefits" per the
FinCom's recommendation from $194,000 per year to $20,812 per year.
(Baldwin/Dentino) Passes 3/2 (Levine and Moran against)
The Board decided to hold off voting on the two MMED budgets until the next Selectmen's
meeting as changes would have to be made to the budgets because of the reduction in the
funding ofthe "Other Post Employment Benefits" account.
Commissioners Levine and Baldwin and Town Manager Ross all departed at 9:30.
New MMED Bill Presentation -Director Babin told the Board that the MMED bills have been
redesigned in conjunction with MMED using a new bill print service and that MMED will
realize a savings of $7,200 per year. He explained there was parallel billing with both the new
billing company and the former one in the month of February and that the new bills will begin to
go out to the customers in March. He then reviewed some samples of the new bills he had
distributed to the Board and invited feedback from residents on how they like the new bill
format.
First Quarter 2010 Generation Charge - Director Babin reported that the Generation Charge
for the 1 st quarter was set at 11.24 cents. Vice Chairman Moran said that he is bothered by the
volatility of the charge and wondered if there isn't something that could be built into this so that
the jumps aren't quite as big. Director Babin admitted there is some volatility but that customer
complaints are less frequent with this format than when using the PPCA because customers did
not really understand the PPCA. Director Babin believes the idea of the Generation Charge
showing what MMED actually paid for power is more readily understood.
East Mansfield Substation Update - Director Babin is hopeful that MMED will get approval
for the Notice of Intent (NOI) from the Conservation Committee when they appear before them
on March 8. He said MMED is coordinating, through Building Inspector Nick Riccio, the
municipal clearing house process. Mr. Riccio will pass his comments on to the Planning Board
and Director Babin did not anticipate any problems there. Director Babin also spoke with Shaun
Burke, Director of Planning and Development, about meeting with the Planning Board in April
for Site Plan review.
Director Babin said that MMED has put in a warrant article for the Town Meeting for an $8
million bonding authorization. Director Babin also reported that MMED is involved with on-
going issues with National Grid and those residents who have concerns with the transmission
line construction that National Grid is currently permitting need to address them with National
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Grid, not MMED. He believes that overall a good amount of progress has been made by MMED
in regards to the new substation.
Request for Improved Holiday Lighting on the North Common - Director Babin told the
Board that he received a letter from the owner of Step n Style beauty salon which is run by life
long Mansfield residents. The owner has asked that some of the holiday lighting be transferred
from the South Common to the North Common.
Director Babin believed that there were no holiday lights at the North Common because the
Town Electrical Inspector had said that facilities that had been used in the past did not meet
National Electric Code regulations. Commissioner Dentino pointed out that MMED has the
capability of taking care of that. Director Babin said that he would look into it and get back to
the resident.
Old and New Business- Vice Chairman Moran asked about the poles at Casa Drive and
wondered ifMMED would be cleaning up. Director Babin said he will check into it.
Commissioner Dentino said he had inquired about employee compensatory time a couple of
meetings back. He wanted to know what avenues are provided and written into the contracts.
Director Babin answered that when some employees work overtime, they can bank the time to
use at a later date. He noted that they try to use it in the same week so as not to build up too
much time. Commissioner Dentino would like Director Babin to show him in each of the three
contracts where it says that compensatory time is an option. Director Babin will get him that
information.
Chairman Aptowitz said that he had spoken to Line Foreman D' Ambra, who is currently out on
sick leave. Chairman Aptowitz said he wishes him and his family all the best and looks forward
to seeing him back at MMED.
Commissioner Dentino wanted to clarify that he believes that all the Board members were acting
this evening as Light Commissioners and not as Selectmen. He said his vote on the health care
liability issue was to protect the ratepayers and that was his rationale.
Vice Chairman Moran said that he doesn't think he was discarding the interests ofthe ratepayers
by voting the way he did. He said it's a bill that will have to be paid, either now or later. He
pointed out that Director Babin was able to put together a budget that allows for it to be funded
now so that is why he supported it.
Motion: To adjourn the Light Commissioners meeting at 10:00
(Moran)
Respectfully submitted: Jacqueline Lee 4/05/10
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Sigiature of Clerk
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Date of Approval
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