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HomeMy WebLinkAboutLight Comm Minutes 9/29/1997Board of Light Commissioners Minutes of Meeting September 29, 1997 13J OCT -7 P1 3: 37 - c.LQ S ", ;. `.,"U1 S TT3 Present: Chairman Colella, Commissioners Madan and Mahana *Commissioner Robinson arrive at 8:08pm * *Commissioner Royle was absent Meeting called to order at 7:32pm MOTION: To table approval of the Minutes of September 24, 1997 until the next meeting, since the Board just received these minutes. Madan/Mahana Vote 3 - 0 Manager's Financial Presentation The Manager informed the Board that for the first six months of 1997, the Electric Department had a net loss of $72,055. At the September 24th meeting the Board criticized the Manager for not keeping the Board informed of the financial status of the Electric Department. The Manager recapped for the Board the following information: June 2, 1997: The Manager informed the Board that as of March 31, 1997 the purchase power bills have included the additional billing to accumulate funds for the stranded investment costs. Our financial reports indicate a net income for the first quarter of 1997 of $174,791. The Manager stated at this time he still does not think it is necessary to implement the 2 1/2% increase. June 16, 1997: The Manager indicated that he is very comfortable with the numbers through'the first quarter of 1997 and he would recommend that the Board go forward at this point in time with no rate increases. We can track our income on a monthly basis, and if we need to implement a rate increase we can do so at any time. July 7. 1997: The Manager noted that we lost $9,000 in the month of April due to low kwh sales which is expected in this month. However, even with the $9,000 loss for the month, the year to date net income is still over $165,000 which is good. July 21, 1997: The Manager advised the Board that we lost quite a bit of money in the month of May and it appears that we will also lose money in the month of June. The May financials will be finalized and sent out to the Board this week. The Manager asked the Board not to panic and to wait to see what the July financials look like. If there is not significant change in the July financials, we will need to increase rates. August 44, 1997: Mr. Mahana suggested that the Board consider raising the rates 2 1/2 %. The Manager again stated that he would like to see July's financial reports prior to increasing the rates. The Manager also advised the Board that we are paying extra to MMWEC on the purchase power bills so that at the end of twelve years we will have built up a 12 million dollar stranded investment fund. September 8, 1997: The Manager presented the Board with the June 30th income statements and advised the Board that through the first six months of the year, the Department has lost $72,055.79. The Manager recommended that the Board increase the PPCA by 2 1/2% which would be an increase of $1.25 on a 500 kwh bill. The Manager summarized that he was not trying to hide anything from this Board and that he had in fact informed the Board of increases to Purchase Power Bills as well as the monthly financial status of the Department. The minutes that.the Board approved clearly indicate this information. The Manager also stated that the Electric Department is a non - profit organization. The department needs income because our accounting rules specify that we can not expense certain items. Ideally the operating income would be 8% of net plant value. Any donations, or payments to the town must be deducted from this figure. We need to finance our plant growth with our operating income. The Manager identified four options available to reduce the current deficit. 1. Increase Income - In order to accomplish this, the PPCA needs to be increased. The Manager also suggested that we could look at increasing fees, but did not feel that this would have a significant impact on the bottom line. 2. Decrease Expeenses - The Manager stated that the Board currently approves all purchases over $1,000. The Manager suggested that perhaps the Payment in Lieu of Taxes payment be lowered. If the Department were taxed as a commercial account, we would only pay $86,100 per year to the Town in taxes. The Manager also suggested that perhaps the cost accounting used to determine what portion of Town Salaries the Department pays should be reviewed. The Manager pointed out that 85 -90% of our budget is purchase power costs. The Manager does not feel we can reduce manpower since we have less employees now than we did in 1983 and we have 60% more customers than we did in 1983. We have two apprentice lineman which we hired purposely to staff ' for the future when employees retire. Reducing Overtime - The Manager explained that through June 30, 1997 we spent less than $50,000 for overtime and the budget projected $60,000. With very little exception, overtime in the department is due to trouble calls and scheduled outages. The Manager advised the Board that he provides monthly Line department reports which list all overtime and he would be more than happy to discuss these reports in detail with any board member. The Manager also indicated that engineering services is increased now due to the substation expansion, but this will decrease next year. The Manager also advised the Board that he had looked into automatic meter reading, however at this time it would cost more to implement than what we are currently paying our meter readers. 3. Take money out of the bank The Manager explained that we currently have $3,907,706 in the MMWEC Prepayment fund and $2,826,350 in the Depreciation Fund. The substation expansion project, which will be presented at the next meeting will cost approximately three million dollars and will be funded from the Depreciation fund. 4. Reduce the need for revenue The Manager suggested that the Board continue to investigate fiber optic telecommunication sources of revenue. The Manager advised the Board that his recommendation was to increase the Purchase Power Cost Adjustment (PPCA) by 2/12 % to .0025 which would increase the average 500 kwh bill by $1.25 per month, effective October 1, 1997. Mr. Mahana stated that it is his opinion that when the rates were reduced in January of 1996, the rates were lowered too much. Mr. Mahana also stated that he is astounded that the Manager can not predict what the net income will be for the fiscal year. Mr. Mahana stated that it is absolutely outrageous that the Manager suggested that the Department dip into its savings account to offset the deficit. He will not allow this option while he is on the Board. Mr. Mahana read a list of 1995 Electric Light Department employee salaries and stated that it is his opinion that no one in the Light Department is underpaid. Mr. Mahana questioned the Manager as to what scheduled overtime is? Mr. Mahana asked the Manager why he has not looked into adding more staff? Mr. Mahana stated that when he suggested this option, the Manager informed him that it was cheaper to pay overtime than to hire additional staff. In addition, Mr. Mahana stated that he suggested the idea of split shifts to reduce overtime costs. Mr. Mahana feels that the Union is not cooperating. Mr. Mahana also stated that if we had not segregated the Depreciation Fund as he instructed, the Light Department would not have received $75,000 in interest and would -have an even larger deficit. Mr. Mahana asked why the Manager is not looking out for the Electric Department's best interests. Why isn't the Electric Department operating cash in a separate fund which earns interest, like the Depreciation Fund. The Manager stated that under the statute this is being handled perfectly correctly. The Manager advised the Board that if the Board would like the operating cash in a separate fund he will discuss this with the Treasurer to find a method to accomplish this. *Commissioner Robinson arrived at this time (8:08 pm). Mr. Mahana stated that we owe MMWEC over 135 million dollars, he asked the Manager what would happen if the Town allowed outside electrical providers in to service the Town. The Manager advised that if our rates stay where they are nothing would happen, unless a provider low- balled their rates which would put MELD into a death spiral. The Department would be forced to file Chapter 9. Mr. Mahana asked who would be responsible for the Electric department debt in this situation and the Manager advised the Board that the Town would be liable. Mr. Mahana also expressed concern over turning away TCUs $68,000 offer. Mr. Mahana also questioned why we did not put any special emphasis on the industrial park three or four years ago, why now ?? The Manager advised that we had no particular reason to put special emphasis on the industrial park three or four years ago. Mr. Mahana asked if anything was ever done regarding complaints by Stomel and Shaw. The Manager advised that he had talked to both compaies as well as had a meeting with all the industrial customers. Mr. Mahana stated that he expects the Manager of the Electric Department to provide the Board with a five and ten year plan for personnel, growth in the department, servicing the industrial park so that the Board is informed and prepared for the future. Mr. Mahana then discussed Safety concerns regarding the Line Department crews. The Manager advised the Board that the only time the Line Department worked sixteen hours a day was during the April lst snow storm. It is standard operating procedure for the Electric Department to try to restore everyone's electricity before going home for the evening. Mr. Mahana then asked what progress the Manager had made regarding the transfer of the Electric Department's financial records to the Town Accountant. The Manager advised the Board that we had met with the Town Accountant last spring after the initial motion was made. We provided the Town Accountant with a chart of accounts, reviewed the accounting practices and procedures of the department, provided her with monthly financial statements and advised her if she needed any further information to let us know. The Manager reminded the Board that he has no authority over the Town Accountant, that she reports directly to the Board of Selectmen. The Manager also stated that we met with the Town Accountant on September 25th and that she had sent a memo regarding her assessment of the situation. The Manager advised the Board that we will be more than happy to give the Town Accountant anything she requests and will cooperate fully. Mr. Mahana then asked the Manager why he had not been informed of any lawsuits pending against the Department. The Manager advised Mr. Mahana that he had in fact informed the Board of the two pending suits one with the MCAD and the Workmen's Compensation suit. Mr. Mahana said he had no knowledge of either, the Manager advised that this had been discussed and that he would provide Mr. Mahana with a copy. Mr. Madan asked if we charge customers who request shut - downs. The Manager responded that if the crew is already in working and a customer requests a shut -down, we don't charge them. If a crew has to be called in specifically at a customer's request, then we do charge the customers. Mr. Madan asked if the line crew schedules routine work for Saturdays. Mr. Bregnard advised that we try to work around the customers schedule in order to avoid disruption of service at the industrial park. In addition, Mr. Bregnard advised that the crew will not get in a manhole unless the equipment has been de- energized. The Manager then cautioned Mr. Mahana not to discuss union contract negotiations on cable. Mr. Mahana stated he did not care, he feels the public should know. MOTION: To increase the Purchase Power Cost Adjustment (PPCA) 2 1 /2% to .0025 per kwh effective October 1, 1997. Mahana/Madan Vote 3 - 1* *Chairman Colella was opposed. MOTION: To instruct the Manager of the Electric Department to no longer allow free electrical work for customers in the industrial park. Any time spent on industrial customers is billable time and should be charged to the customer. Madan/Mahana Vote 3 - I* *Commissioner Robinson was opposed. MOTION: Institute a policy to eliminate all scheduled overtime without prior approval of both the Light Department Manager and the Chairman of the Board of Light Commissioners. Madan/Mahana Vote 3 - 1* *Commissioner Robinson was opposed. New Police Station Mr. Madan asked the Manager if we would be paying the water department for the use of its backhoe, since our backhoe was not operating. The Manager indicated that it was unlikely. We usually help out other town departments and vice versa. Mr. Mahana suggested that in the future Mr. Larch should think twice before volunteering his department's time, help or resources. Mr. Mahana would like to see the Manager stop committing its help to other departments. Consolidated MMWEC Billing The Manager advised the Board that by consolidating the MMWEC billing, the Department would be able to get out the monthly financial statements faster. In addition, there would be less paperwork for all departments. The Manager recommended that the Board vote to adopt consolidated billing. The Board requested that this issue wait until the next meeting. MOTION: To instruct the Manager to supply the Town Accountant with all necessary information and equipment in order for her to perform the function of accountant for the Electric Department in compliance with her job description. Madan/Mahana Holiday Lighting Vote 4 -0 Mr. Mahana asked the Manager to look into the possibility of providing extra holiday lights on the common. He feels that the current lights are old and very sparse. The Manager said he would look into this MOTION TO ADJOURN AT 8:50pm Mahana/Madan Vote 4 - 0 Clerk's Signature and Date