HomeMy WebLinkAboutLCMIN11/16/2011Mansfield Municipal Electric Department rj {
, r.- p f r r)
Minutes of Light Commissioners Meeting 1, - 1- I E
November 16, 2011
2812 AN 12 A 11: 0 l
Present: Vice Chairman Kevin Moran; Clerk Olivier Kozlowski; Commissioner
Jess Aptowitz; Director Gary Babin; Town Manager William Ross l'f:
Absent: Chairman George Dentine, Commissioner Douglas Annino
Light Commissioners Meeting
The meeting was called to order at 8:00 PM. Vice Chairman Moran stated that this meeting
was being televised and taped by Mansfield Cable Access.
SOLAR RFP FOR TOWN LANDFILL UPDATE — On August 24 the MMED staff opened
proposals for development of a solar facility to be built by a private developer on the site of
the landfill at East St. and Pratt St. MMED has entered into negotiations with the most
favorable proponent in order to complete a Purchased Power Agreement so that MMED can
purchase the output of the facility.
EAST MANSFIELD SUBSTATION UPDATE — The MMED staff will update the Board on the
( status of the East Mansfield substation project. The construction of the Bird Road duct line is
essentially complete. The bid for the construction of the station itself will be issued on
November 17 with bids due back on December 15, 2011.
Financial Statements — September 2011
1) Net Income — Net operating income year -to -date through September is $965,842
while non - operating expenses are $32,425.
This figure has also been adjusted to account for the FY12 over- collection of
Generation Charge revenues of $792,043. In other words, the $792,043 over -
collection is not considered when computing net income.
2) Cash Position — MMED's operating cash position through September 2011 was
$9,174,145, which, when adjusted for an Accounts Payable of $332,946 for monies
owed by MMED to its customers for an over- collection of the Generation Charge,
makes available operating cash $8,841,199.
Operating cash was $7,145,680 for the same period in FYI I which, when adjusted for
an Account Payable of $413,913 for monies owed by MMED to customers for an
over - collection of the Generation Charge, made available operating cash $6,731,767.
3) Generation Charge Accounts Receivable — MMED has a line item in the Current
and Accrued Liabilities section of the Balance Sheet entitled "A/P Over - collection of
Generation Charges ". This item reflects as a liability the over- collection of the
Generation Charge, which is money owed by MMED to its customers. Through
September, that payable stands at $332,946.
This amount is not calculated by fiscal year but reflects the over /under collection of
the Generation Charge since the Generation Charge was introduced and started being
collected in the new rates in January 2008. Any over- collection or under - collection of
the Generation Charge over a 3 month period is then carried over and reconciled in the
calculation of the Generation Charge for the following quarter.
4) Energy Sales — Energy sales (kWh) for September 2011 are down 9.3% from
September 2010. Year -to -date sales are down 6.6 %. ADM Cocoa's load year -to-
date is down 84% from FYI 1. Of the 6.6% reduction in overall sales, approximately
half of that amount is due to the closure of ADM.
5) Depreciation Fund — MMED's depreciation fund balance stands at $6,390,278. This
money will be used to help offset the cost of the East Mansfield substation while also
supporting other capital improvements.
Minutes of October 19, 2011 MMED meeting
Motion: (Moran/Kozlowski) 3:0 passes
The Board of Selectmen, acting as Electric Light Commissionets, directed me to work with Marco
Crugnale to reach an agreement on the cost of relocating certain electric lines improving both the
appearance and reliability of electric services in the area adjacent to Mr. Ctugnale's new project on
Rumford Avenue adjacent to the Route 106 underpass.
You will recall the original estimate for the project that involved strictly Mr. Cmgnale's work was
approximately $35,000.00. You will also recall that when the project was revised to clean up the
area, place underground wires and remove a great deal of the overhead electric service in the area,
the estimates from Mr. Crugnale's share of the cost dropped to approximately $16,000.00 while die
overall project increased. I indicated in a previous memorandum that it was my recommendation
that the Town Manager be authorized to negotiate with Mr. Crognale on a higher share of the
enhanced project.
On October 24, 2011, Nick Riccio and I met with Marco Cnignale to discuss the relocation of the
electric lines in the area of his project at 124 Rumford Avenue, We went through the proposal fox
relocating lines and improving the area. This is the same proposal that was made available to the
Board of Selectmen. We discussed the two cost estimates that had been made, one for the -initial
relocation cost which would have involved us moving poles and one for the work that would
permanently remove the overhead wires from in front of Mr. Clugnale's location along with
improving reliability of service in the entire area and seducing the amount of oyenccad wires. We
discussed the cost comparisons and benefits. After considerable discussion of the cost, we
tentatively agreed that Mr. Cmgnale would pay $23,000.00 toward die total cost of die project. I
would add that because of the need to relocate some of these lines for the ramp project for persons'
with disabilities that is related to tie underpass, the MBTA will be payhhg approximately 55,000.00-
2
$6,000.00 toward the cost of this work. This reduces the town's investment by between $11,000.00 -
$12,000,00. Nick Riccio, Gary Babia and I believe this is a reasonable compromise which both
benefits the town long -term and improves the appearance of a portion of the downtown area,
We recognize that the electric depattment will be paying a large amount of the cost of the project,
but because of the participation of the two private parties, that cost will be significantly lower than it
would have been if the town had undertaken the project on its own, Therefore, we recommend the
Board of Selectmen acting as Light Commissioners accept the offer of Marco Crugnale to pay
$23,000,00 toward the cost of die improvements in the Rumford Street /Route 106 area.
Motion: To accept the offer of Mr. Crugnale to pay $23,000.00 towards the cost of
improvements in the Rumford St. / Route 106 area. (Aptowitz/Kozlowski) 3:0 Passes
Options for Use of MW Operating Cash for Board Consideration
At the July 20 Board meeting, the overall cash position of MMED was raised during the financial
reporting discussion. At that time, it was noted that MMED had approximately $15 million in cash
available in different funds and that a method to return some of that money to the rate payers should
be adopted.
For the record, through September 30a' the available cash balances in the different funds are as follows
Operating Cash
$9,174,145
Depreciation Fund
$6,390,278
MMWEC Reserve Trust Fund
$1,630,619
Total
$17,195,042
It should be noted that the MMWEC Reserve Trust Fund is cash deposited at MMWEC that is
invested by MMWEC on behalf of MMED to produce a return. The fund was originally established as
a rate stabilization fund that would be available for municipal light departments (several participate in
such funds) to use when the industry was deregulated in 1998 because it was thought at that time that
the investor -owned utilities (National Grid, NSTAR, etc) would be able to reduce rates well below
those of the municipalities. History has proven otherwise.
With respect to use of this money, the following must be considerations by the Board:
❖ Depreciation money is dedicated by statute to be used for capital improvement projects and
cannot be used for anything else. A minimum level must be maintained for emergencies (i.e.
hurricanes)
The Board must determine a minimum level of cash to maintain in Operating Cash before
deciding how much might be available to return to customers. The rule of thumb is a
minimum of 90 days of operating expenses exclusive of purchased power. This would be
approximately $2.4 million.
3
❖ How much of the new East Mansfield substation should be paid from Depreciation, Operating
Cash and/or borrowing. The current estimate for the station cost is approximately $7 million.
❖ How much money to actually return to customers and a mechanism to do so.
MMED staff has developed several ideas for the Board's consideration to determine a method(s) to
return the value of these funds to the ratepayers. These include:
1) Dedicate a fixed amount to be returned to ratepayers over a specified period of time in equal
amounts each quarter through the Generation Charge. For example, a reduction of 1 cent per
kWh in the Generation Charge for one year would require about $2.2 million in cash.
2) Dedicate an amount to reduce rates on a one -time basis for a particular month. If $2.2 million
were earmarked, this would provide a roughly two- thirds reduction in the overall billing to
customers in that month.
3) Undertake a cost of service study and dedicate a portion of the money to be returned through
the rate design, which would then be used to create an overall rate reduction over the long
term.
4) Dedicate a sum of money to various energy conservation and energy efficiency programs. For
example, among the ways that this could be implemented might take the form of paying for a
portion of a customer's commercial energy audits; making rebate money available to
customers who undertake energy efficiency measures; making money available to help offset
the cost of residential solar projects, etc. A large number of options exist that the staff could
summarize for consideration by the Board.
5) Dedicate a sum of money for implementation of remote meter reading.
6) Dedicate money to pay off some of the debt associated with the MMWEC projects each year
to lower power supply costs, in effect lowering the Generation Charge.
The board discussed the options for awhile and decided not to vote on any of the options until a full
board was present. Mr. Ross saw possibilities in each option and will work with Mr. Babin on the
ones the boards favor.
Electric work on Otis St. NEED MORE INFO
Motion: To authorize bidding on project. (Kozlowski /Aptowitz) 3:0 passes
Mr. Babin briefly summarized the situation that they assisted in with the Town of Groton.
He is very proud of the MMED staff and the service they provide to the community.
C!
It was agreed that the next meeting of the Light Commission will held on December 15, 2011.
Motion: To adjourn the Light Commissioners meeting at 8:53pm
(Kozlowski) 3:0 passes
oVEVler W=Lowsld
Signature of Clerk
5
NoVevu.ber
Date of Approval