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HomeMy WebLinkAboutLIGHTCOMM MIN11082010 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting November 8, 2010 ,-, ("- ~, ,'i ~ r) '') -,j Present: Chairman Jess Aptowitz; Vice Chairman George Dentino; Clerk Olivier Kozlowski; Commissioner Douglas Annino; Commissioner Kevin Moran; Director Gary Babin; Engineer Chris Cox; Staff Accountant Ken Thomson; Financial Assistant Jacqueline Lee and Town Manager Bill Ross Light Commissioners Meeting The meeting was called to order at 7:03 PM followed by the Pledge of Allegiance. Chairman Aptowitz then stated that this meeting was being televised and taped by Mansfield Cable Access. Motion: To approve the minutes of the September 13, 2010 Light Commissioner's meeting (An nino/Kozlowski) Passes 4/0/1 (Moran abstained) Financial Report for September 2010 - Director Babin presented the financial statements for September 2010. He said MMED's net operating income year-to-date through September was $1,003,596 and cash on hand was slightly over $7 million. The over collection of the Generation Charge, which represents money owed to the customers, is $413,913. Director Babin reported that energy sales through September 2010 were up 13.2% from September 2009. He said the depreciation fund balance was $5,380,120 so MMED should be able to support a good amount of the cost of the East Mansfield Substation from depreciation and cash. Town Manager Ross inquired about projections on cash flow needs and projections on cash on hand. He believes the Board needs to know the impact on rates and borrowing. Director Babin said he will make a point to see the Town Treasurer now that she has returned from maternity leave and go over these items with her. Director Babin pointed out that the Profit and Loss Statement shows that sales revenue is up 30% because the Generation Charge has increased. Transmission costs are also up $340,000 from last year. Staff Accountant Thomson reported that the accounts receivable balance shown on the balance sheet is up almost $1 million, which is 31 % more than last year and this is due solely to the increase of 30% in MMED's sales revenues. Net income is $1,032,000 with a 2.7% rate of return and MMED is doing a good job controlling costs. MMED has spent $185,000 so far this year on capital expenditures. Staff Accountant Thomson explained that the metered sales revenue category called Miscellaneous-Interruptible is up 83.9% from last year. This is because ADM's generators were broken in July 2009 so their sales revenue came under the industrial category and once the generators were fixed the sales went back under the Miscellaneous- Interruptible category. ~ ~ Commissioner Moran questioned the transmISSIOn expenses and also the non-operating income and expense being 47.2% below budget. Accountant Thomson said this was due to miscellaneous jobbing projections coming in at $4,600 more than last year, and in addition, sales of scrap metal were $2,200 more. Commissioner Annino asked when MMED will start to give back the overcollection of the Generation Charge. Director Babin said that he will wait to see how October and November's Generation Charge over or under collection goes and then MMED will calculate the new Generation Charge for the first quarter of 2011, which is when the September's overcollection will be taken into consideration. Vice Chairman Dentino asked what makes up the Administrative and General expense. Staff Accountant Thomson said $13,000 was outside legal expense; $6,600 was property insurance; $10,000 was transportation repairs/maintenance; $10,000 was office supplies; $10,400 was computer hardware; $9,755 was computer software and $4,000 was GIS supplies. Vice Chairman Dentino said he was trying to understand how the $142,000 was budgeted and said he always likes to see the prior years' figures as well. Vice Chairman Dentino questioned the current and accrued liabilities as to why September 2009 was $2,475,382 and September 2010 was $3,469,835. He asked about the $194,236 under "Other Post-Employment Benefits Plan". Town Manager Ross explained that it was cash put aside specifically by the Light Department for the unfunded health care liability but the Light Commissioners have put a stop to any further funding of that account. Vice Chairman Dentino commented on the 2.7% rate of return and questioned how they would get it up to 6%. He wondered if MMED had undercharged the ratepayers and now needed to charge more. Chairman Aptowitz questioned AlP being high. Staff Accountant Thomson believed it was due to the MMWEC bill. Director Babin added that he thinks it is also a timing issue. Chairman Aptowitz wants to see a spreadsheet of payment plans for both commercial and residential customers. Director Babin said he could have that ready by the end of the following week. Chairman Aptowitz asked Director Babin if he would please explain line loss to the public. Director Babin said it was the difference between the kilowatt hours MMED purchases and the kilowatt hours MMED sells. Vice Chairman Dentino would like to see each individual obligation that MMED has and would like to know when that debt will disappear. Town Manager Ross suggested that since Director Babin is on the MMWEC Board, that he finds out if MMWEC has any plans for projects that will involve additional debt. Mansfield Electric Assistance Program - Director Babin said that each year the Light Department donates money to Social Services to help struggling families pay their electric bills. This year the MMED staff is requesting $40,000 for this purpose. 2 - Gale Farrugia and Pam West from the Mansfield Social Services Dept. were in attendance and Ms. Farrugia told the Board that last year they helped 368 families using various resources as they do work with other agencies and organizations as well. Ms. West said that she receives calls every day for help and it is very disheartening. She sees a lot of catastrophic illnesses. Motion: That the Mansfield Municipal Electric Department contributes an amount of $40,000 to the Town of Mansfield for the purpose of donating this money to the Mansfield Electric Assistance Program in order to provide funding for FYI1. (Moran/Kozlowski) Passes 5/0 Installation of Solar Energy Facilities in Mansfield - Resident David Oberlander of 47 Wilson Place told the Board that he has been considering putting solar panels on his roof. He has spoken with Director Babin and Engineer Cox about a net metering policy, which is the price MMED will pay to purchase energy from the customer. He explained that during the daylight more energy than he needs would be produced and that the extra energy would go back out into the grid. Mr. Oberlander noted that other light departments also have rebate programs which encourage people to purchase solar equipment. He is trying to determine at this point if this project makes sense for him. The process is very expensive and MMED's policy will affect his decision. Director Babin explained that there has been significant interest in solar energy (Photovoltaics or PV) and that the state has established rules which initiated some valuable incentives for solar energy projects. The State has established a market for sale of Solar Renewable Energy Certificates (SRECs), which are auctioned off like a commodity and help support the cost of projects, and that there are federal income tax grants or credits available. Director Babin told the Board that there has been interest in solar energy in Town from both commercial and residential customers. He explained that the State has adopted a net metering policy but said that municipal light plants are excluded from the State's policy and can develop their own policy. Director Babin told the Board that they will need to address the net metering policy and tariffs. He also said it is very important to know how much energy is exported to MMED's system from these facilities and the Board would also need to decide how to reimburse for the energy that is sold back. Director Babin then said there were two issues for the Board to decide. The first issue is whether the Town landfill would be available to construct a solar array with a private developer, which is happening in many towns, and whether this issue would have to be brought to Town meeting. The second issue is that for a landfill project, a purchase power agreement would have to be approved by the Board so power from the facility could be sold back to MMED. Commissioner Moran questioned the effect that the installations would have on transmission costs. Director Babin said they probably not have a big impact on MMED's transmission costs. 3 ~ ~ Clerk Kozlowski wondered if MMED could own the facility and be the ones to sell the SRECS. Director Babin said yes but explained that MMED is a non-taxable entity so the tax breaks that accompany construction of such a facility, and which make the project economical, would be meaningless. Commissioner Annino mentioned the involvement of the Zoning Board and Planning Board as this option of solar energy becomes more affordable and more residents become interested. Vice Chairman Dentino thinks this is a relative unknown and doesn't see how MMED could recover the operating costs on the smaller scale with the residential accounts. He believes that on the larger scale MMED would take a double hit because MMED would also be losing the revenue from those customers. He did say that the use of the Town landfill did interest him because it is so close to the schools, library, DPW, Council on Aging, Police Department and present and future Fire Department. Vice Chairman Dentino then said he would be interested in seeing Concord's and Rehoboth's policies as well as the IOU's policies. Town Manager Ross said he did have documents from Concord which he would share with Vice Chairman Dentino. He believes MMED will see more interest in this and that MMED needs to be prepared for more inquiries, which would be a good thing. Town Manager Ross said they need to have rates and tariffs in place to meet this need. He said MMED would supply the metering but he wondered about the cost of changing the meter socket. Director Babin answered that there would not be a great cost and that MMED does have the meters and the sockets on hand. More importantly he believes is making sure MMED personnel are electrically protected from these installations. Town Manager Ross believes this should move forward. He questioned whether it would be advantageous for MMED to partner with a private corporation. He wondered if MMED should be involved in this matter. Chairman Aptowitz noted that MMED should not buy back the energy at 100% of the cost to generate. He pointed out that MMED would need to earn something in order to maintain their infrastructure. He suggested that MMED buy back at 90%. Town Manager Ross said that MMED should do some more research then come back to the Board. Charlie Canale from Pram Realty Trust represents a commercial customer interested in solar energy. He said that he is pursuing this now because he would like to take advantage of the money available and he's believes that 5% of the project must be in place by 12/31110 in order to earn the government incentives that are being offered. He said he currently has two things in place; financing and a vendor. Mr. Canale hopes that the Board will vote to put a net metering policy in place. Chairman Aptowitz asked the Board what they thought about the next meeting date for the Light Commissioners. It was agreed to meet again on December 6, 2010. Chairman Aptowitz would like to take care of both the issues of secondary policies and the solar energy. 4 ~ Standard and Poor Credit Rating - Director Babin told the Board that MMED is issued a credit rating annually by Standard and Poor's in order to participate in the wholesale power markets for ISO New England. The rating of A stable was assigned to MMED. Director Babin explained that MMED receives their own rating separate from the Town. He said that the credit rating allows MMED to enter into bilateral contracts, such as the contract with Constellation. East Mansfield Substation Update - Director Babin told the Board that NGRID filed their case for construction of the transmission line to feed the East Mansfield substation with the Massachusetts DPU. A public hearing on the filing was held in Easton. He said that MMED has responded to the information requests made by the DPU and a hearing should be held later in the winter. He hopes a decision will come by the summer so that MMED can purchase the substation equipment. He hopes the substation will be in service by summer 2012. Old and New Business - Director Babin responded to the question that was asked by Vice Chairman Dentino at the September 13, 2010 Light Commissioners meeting regarding the 8% net income threshold. Director Babin went back to the minutes of March 4, 2009 where it stated that the MMED Board had adopted a 6% rate of return target and the minutes show that MMED Board voted to return excess rate of return that exceeded the 6% target to the ratepayers. Director Babin told the Board there was a newspaper article in their packet about the lineman from Georgetown who lost both his arms in a power line accident. A couple of MMED linemen, primarily Shawn Curran, came up with an idea to challenge other workers at other municipal light departments to donate two hours of their pay to a fund called "Work 2 for Jim" which will be donated to the family in time for Christmas. Vice Chairman Dentino went back to his question from the last meeting about the 8% net income threshold that Director Babin had responded to earlier in the meeting. Vice Chairman Dentino referred to the mechanism that exists for returning money to the ratepayers and wondered how that relates to the DPU. Director Babin explained the mechanism was the Board's vote to establish a rate stabilization fund and money is then voted into that fund, which is earmarked to go back to the ratepayers. Town Manager Ross said he thought Director Babin was misunderstanding Vice Chairman Dentino's question. He believed he was asking by what mechanism is the money returned to the customer, through the purchased power adjustment or the Generation Charge. Director Babin said it is as it states in the motion. You create a rate stabilization fund and the money flows back through the Generation Charge. Commissioner Moran questioned whether there was anything that could be done at the North Common for the holidays. Director Babin said there would be just be a garland as there are no electric facilities to install lighting there. 5 - Vice Chairman Dentino, although he thought it was a DPW issue, mentioned that there was no light at the crosswalk from the Police Department to Fulton's Pond which he believes is used quite often. Town Manager Ross asked Director Babin to look into LED streetlighting. Vice Chairman Dentino said that he saw Town employees removing signs for an arts and crafts show from light poles. He pointed out that the poles should not have anything hung on them anyway. Town Manager Ross wi11look into it. Chairman Aptowitz will give Director Babin a list of approximately ten streetlights on North Main Street that are out. Chairman Aptowitz noted that he was pleased to see Director Babin hold a MMWEC meeting in the Mansfield Town Hall. Motion: To adjourn the Light Commissioners meeting at 9:55 (Kozlowski) Respectfully submitted: Jacqueline Lee 12/13/10 ~......~ ?~. ~... .... ~ ~ Signature of Clerk I ~ (t3// 0 Date of Approval 6 -