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HomeMy WebLinkAboutmin light commission 07/14/04 RECEIVED \i:( (:' C"p~{, OFFICE .,.." ,... \....' . r Minutes of Light Commissioners .fifjflgJ 6 PH ,: 3 , July 14, 2004 f'lANSf'jELD MASSACHUSETTS Present: Chairman Roger Achille; Vice Chairman Louis P. Amoruso; Clerk Bernie Dolan; Commissioner Mike McCue; Commissioner Steven MacCaffrie; Director Gary Babin; Chief Financial Officer Kimberly Stoyle; Engineer Ann Langille; Engineer Chris Cox; Office Manager Laurie Anderson; Line Foreman Gary D' Ambra and Manager John D' Agostino Light Commissioners Meeting The meeting was called to order at 7:30 followed by the Pledge of Allegiance. Minutes of June 16, 2004 Motion: To approve Passes 5/0 Questions and Comments Chairman Achille announced questions and comments would be held until the end of the meeting. r Director's Report Financial Report - Chief Financial Officer, Kimberly Stoyle, reviewed the profit and loss statement and the balance sheet for May. Total metered sales revenue for May was $1,891,837. Total power production expense was $1,415,749. Net income before payments in lieu of taxes for the month was $25,371. There was an after paYment in lieu loss of $14,629, which was expected for the month of May since it is not overly hot or cold. A greater loss was actually expected. CFO Stoyle reported the value of Net Utility & Plant is fairly even with last year's figure. She explained cash is declining because of the costs associated with the Gilbert Street Substation upgrade and also the Town internal transfer payment that was made in June. Clerk Dolan questioned the increase in cash on hand from $22,963 in May 2003 to $916,473 in May 2004. CFO Stoyle responded that more cash has been accrued in anticipation ofthe purchase of equipment for major projects. r-- CFO Stoyle reviewed graphs showing the sales revenue trend, which is affected by the PPCA, and purchased power cost trend, which is not as predictable. Commissioner MacCaffrie wondered why the sales revenue trend for the current year went up but purchased power dropped substantially? CFO Stoyle explained there is not necessarily a correlation between the two and reiterated that revenues reflect the PPCA, which was decreased from 3.65 cents in 2003 to 2.65 cents currently. Director Babin added that the r ... ~ . r major component of purchased power is fixed costs, which are pretty steady, while variable costs represent a smaller piece of the total. Fixed costs are adjusted once each year in accordance with debt service requirements. He also explained that increased energy sales in summer and winter mean larger profits. Retail Rate Comparison - Director Babin explained that the retail rate comparison analysis he had performed, using information provided by MMWEC, shows how Mansfield's rates compare with other utilities in Massachusetts. The Town is generally at the statewide average rate for virtually all classes of customers in the comparison while being consistently below Mass Electric's rates. Mansfield's residential rates are significantly below those of Boston Edison, although commercial rates are slightly higher. Investor-owned utilities are typically at the high end in these types of rate analyses, which would indicate that deregulation, which was introduced in 1998, has not resulted in lower rates despite predictions that it would. Municipal utility customers have fared far better by being exempt from the provisions of the deregulation legislation during this period. Investor-owned utilities have done well financially but their residential customers have not. Director Babin added that when MMWEC project debt is paid off over the next ten to fifteen years, MMED rates will be even more competitive. He also stated o/.i of a utility's cost are driven by power supply, so if power supply is managed effectively it will have a huge impact on the rates. r Vice Chairman Amoruso commented that MMED relies on a great amQunt of nuclear energy and wondered if there was anticipation of a short life span for any of the nuclear power plants? Director Babin said he couldn't be certain but did not have any reason to think any would close. Operating licenses for power plants expire after thirty years and re-licensing is an on-going process. Commissioner McCue questioned whether the possible strike at Pilgrim would have had any effect on MMED? Director Babin stated it would have had an effect on power prices in the open market from which MMED obtains some of its power but that the strike had been averted through a settlement the previous day. Appliance Rebates - Office Manager Laurie Anderson had two recommendations to make regarding proposed changes in the Appliance Rebate Program. Chairman Achille first asked her to review the current program. She explained that current MMED customers are eligible for either a $100 rebate on a refrigerator or clothes washer, $75 on a dishwasher, $50 on a window air conditioner or $25 on a programmable thermostat if the appliance is a qualified EnergyStar model. Commissioner MacCaffrie reported he was in Home Depot and they were unaware of MMED's rebates. Ms. Anderson said Advantage Appliance in Mansfield had the rebate information and forms and she would make sure Home Depot received them as well. r-- The first recommendation for the Board's consideration was to add two appliances to the eligibility list; $100 rebate on central air conditioners (with a SEER of 13 or greater) and $50 rebate on dehumidifiers. The second recommendation was to change the allowance from one rebate per customer per calendar year to a maximum $100 total per customer per calendar year. Manager D' Agostino thought the program would encourage customers 2 ? - r-- to purchase appliances. Director Babin believes the current program is advantageous and that the 89 rebates that have been granted in 2004 represented a good penetration rate. Motion: To add the following appliances to the eligible rebate list: Central Air Conditioners (with a SEER of 13 or greater) $100 Dehumidifiers $50 Passes 5/0 Motion: To change the allowance from one EnergyStar rebate per customer per calendar year to a maximum $100 total per customer per calendar year. Passes 5/0 Reliability - Engineer Ann Langille reported on system reliability statistics for the first six months of 2004 and how they compared to previous years. She explained the ways to measure reliability are through statistical measures called SAIDI (duration of outages), SAIFI (frequency of outages) and CAIDI (response time). She stated all MMED outages are counted, whether it affected one person or 2000 people, and even if it lasted for just a few seconds. The statistics show MMED has done very well in the first six months of 2004 as compared to the prior three years. SAIFI is slightly higher because recloser devices that MMED employs probably increase the number of times a customer's service is interrupted, although SAIDI and CAIDI have been considerably reduced because ofthe use of the same reclosers. MMED has also gotten better at tracking outages and determining how many customers are on all of the circuits by street. r Commissioner MacCaffrie inquired about the June 4 crane incident on Pratt Street and wondered whether MMED was collecting from the contractor's insurance company. Director Babin said the contractor would be billed, as they did not notify MMED that they would be working near the high voltage power lines as they are required to do. He added that OSHA and the Massachusetts Department of Public Safety were also formally notified of the incident and responded to the site. Director Babin stated that MMED wants to automate as many functions as possible, the use of reclosers being the prime example. While reclosing devices do not completely do away with outages and nuisances such as flashing alarm clocks, they do reduce outage time significantly. The July 2 lightning storm was also discussed. Director Babin noted the intensity of the lightning over a several hour period. At least five direct lightning hits to the system were recorded, knocking down wires and affecting several thousand customers because circuits had to be de-energized to allow for repair work to proceed. Commissioner MacCaffrie commented that Mansfield had their power back on before most surrounding towns. .- Vice Chairman Amoruso questioned whether MMED had anything to do with the blinking traffic light at the intersection of Forbes A venue and West Street? Director Babin explained it was a state contractor owned light and that a circuit board in the controls had been destroyed by the lightning storm, which is why it had been on flash. 3 r T .' Town Manager D'Agostino said the state contractor would either fix the circuit board or r-- buy another controller for $5,000. He added there have been two accidents at this location in the last forty-eight hours. Hydroelectric Power Entitlement - Director Babin spoke about the New York Power Authority (NYP A) Hydroelectric Entitlement. Massachusetts municipal electric utilities receive power from NYP A because the original terms of the operating licenses for the St. Lawrence and Niagara projects required they sell power to adjoining states. This is because both dams were built with federal funds. The current benefit to the MMED customers flows through to its residential customers as the Small User Adjustment, which is a credit on residential bills each month for $7.62, assuming 300kWh of energy use. During the discovery process for the St. Lawrence operating license renewal, it has been determined that the original terms do not specifically state that power must be sold to adjoining states, so the courts have ruled that NYP A is no longer required to do so. As a result, the St. Lawrence entitlement has been taken away from Massachusetts. The financial impact of this is an estimated $87,000 annual increase in power supply costs to MMED. This means that the credit on a typical residential customer's bill will be reduced by about $1 each month. MMWEC has requested a re-hearing of the ruling by FERC. r-- Capital Projects - Engineer Langille gave an update on capital projects. She said MMED is continuing. the addition of 477 spacer cables which helps with reliability. She also reported MMED's work is complete on the Williams Street bridge. .Commissioner MacCaffrie inquired about Williams Street and Verizon. Foreman D' Ambra answered that Verizon and Comcast are expected out on Williams Street in the ,next. couple of weeks. Engineer Langille said work would be completed by the end of the summer with . Williams Street and the Old Elm Street area, at which point MMED could continue upgrading the lW4 circuit on Jewel Street. Manager D' Agostino brought up the subject of the Rt. 140/Rt. 495 retail center and believed that a site plan review was going to be held shortly. Engineer Langille said it was going to be held on July 15, 2004 but thought it was just a department meeting and not a site plan review. Chairman Achille also mentioned that the neighborhood meeting for the proposed East Side Substation was going to be held on July 20, 2004. Questions and Comments George Dentino, 2 Gladiola Terrace, stated the Calpine purchase power contract was a tremendous reward to the ratepayers of the Town, at 3.88 cents per kilowatthour. He understands that ifCalpine's bonds go below investment grade rating, a payment is made to an escrow account. What he didn't understand was the statement about Rubin & Rudman working on a contract to address fall-outs if Calpine's bond rating does go down. He wondered why money was being spent on these lawyers and what protection could they provide that Calpine doesn't? ,-.. Director Babin responded that if Calpine defaults on its contract to supply the energy, MMED would be forced to go to the market and the money in the escrow account would 4 r 'J .., . . r-- be used to make up the difference between the contract price and the cost of power either in the open market or under any new contract that MMED would enter. The reason money is being spent on Rubin & Rudman's services is that MMED is one of many municipal utilities in the same position and the cost of Rubin and Rudman's services to develop and negotiate generic power supply contracts that would be ready for quick execution is being shared by several utilities. Should Calpine default on its contract with MMED, the ability to execute a power supply contract quickly (it usually takes several months) would provide protection for the ratepayers. Old Business There was no old business. New Business Commissioner MacCaffrie wanted to make sure the Light Dept. is continuing to make the PILOT and internal services payments to the Town and that actual costs are being used, not estimated costs. Director Babin said he was satisfied with Town Accountant Bea Kearney's methodology used for allocating internal charges. He stated he had back-up information for all charges and that all back-up material had been reviewed with the Town Accountant and made sense. The date for the next meeting will be determined at a later date. r Adjournment Motion: To adjourn the Light Commissioner's meeting at 8:40 Passes 5/0 Respectfully submitted: Jacqueline Lee 9/15/04 \ ': ~,~ -lgnafure of c'kV . 9-)l}-(}~ Date of Approval r 5 r I