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HomeMy WebLinkAboutmin light commission 09/15/04 ~,l~CEI\lEQ 'r~'~. (91\ S OFF ICE _ Minutes of Light Commissioners Meetiq,g., ~... 9: '3 r September 15, 2004 04 Gel Z1J ,n !'"r...hSF IELO MAS~J\CHUSETTS Present: Chainnan Roger Achille; Vice Chairman Louis P ~ Amoruso; Clerk Bernie Dolan; Commissioner Steven MacCaffrie; Director Gary Babin; Chief Financial Officer Kimberly Stoyle; Engineer Ann Langille; Line Foreman Gary D' Ambra; Financial Assistant Jacqueline Lee 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 July 14, 2004 Motion: To approve (Dolan/Amoruso) Passes 4/0 Chairman Achille recommended setting a schedule for the three remammg Light Commissioner's meetings in 2004, which would provide a degree of certainty for both the Light Department and the Board. Director Babin suggested the following dates; October 13, November 10 and December 1, which were agreeable to the Board and will be posted by the Selectmen's secretary Linda Paquin. r Chairman Achille inquired as to how Lineman Shawn Curran was doing ,after his recent motor vehicle accident. Director Babin answered that he was doing well, was uninjured and did not miss any work due to the accident. Director's Report Financial Report - Chief Financial Officer, Kimberly Stoyle, reviewed the profit and loss statements and the balance sheets for June and July. Total metered sales revenue for June was $1,930,456. Total power production expense was $1,512,270. Net loss before payments in lieu of taxes for the month was $51,121. There was an after payment in lieu loss of $106,121 which was significantly lower than in June 2003. The June 2004 figures were also behind what had been budgeted for 2004. Total metered sales revenue for July was $2,252,723. Total power production expense was $1,598,137. Net income before payments in lieu of taxes for July was $171,785. There was an after payment in lieu increase to surplus of $114,785. This is behind July 2003 as this July was not as hot as 2003 and July is typically a banner month. For YTD July 2004, there was a net increase to surplus of $524,859 which is down from last year. There was nothing significant to report on the balance sheet. CFO Stoyle did inform the Board that MMED will be paying a large invoice for Gilbert Street Substation, which Engineer Chris Cox is currently reviewing. r-' r Vice Chairman Amoruso questioned whether MMED's financial performance was behind this year because of the price of oil? He also added that usually once a year MMED sees a plant close down which also has an effect on income. Director Babin offered that energy sales and revenues had really been affected by weather. He also noted that overall energy sales for the year are up 3.9% because of growth in Mansfield, despite the fact that energy sales decreased 3.7% in July and 7.9% in August compared to 2003 due to the cooler weather. Director Babin stated that the biggest negative impact on net income is when unscheduled plant outages occur on units in which MMED has an ownership interest. The fixed cost associated with the plants must still be paid, despite the fact that there is no plant output during these unscheduled outages, while MMED must also pay the cost to replace that power on the open market. Chairman Achille inquired about Financial Assistant Donna Sirois, whose retirement was mentioned in the Light Commissioners report. Director Babin stated she had worked at MMED for two and a half years but had worked for the Town for approximately twenty years. Motion: To send a letter of appreciation to Donna Sirois recognizing her years of service with the Town. (MacCaffrie/Amoruso) Passes 4/0 MMED Payment for Verizon Pole Line Removal - North Main Street f- Director Babin stated that on August 6, 2001, the Board voted a not-to-exceed figure of $206,348 r to pay Verizon to relocate their overhead facilities to underground on North Main Street. The project commenced in late 2001 and was completed late in 2003. In June 2004,' Veriion told MMED they had calculated the cost of their work to be closer to $400,000 but were willing to accept the $206,348 + 10% (which would be $226,982) to finalize the project. Verizon indicated that in their June 22, 2001 letter summarizing the project, the total cost ofthe project was indicated to be $206,348 +/- 10%. Director Babin explained that MMED told Verizon they were willing to recommend payment of the $226,982 to the Board, provided that MMED could pay the full amount in four quarterly payments with no interest accrual over the next year. Verizon agreed to MMED's proposal. Director Babin then recommended to the Board they vote to increase the amount payable to Verizon from a not-to-exceed amount of $206,348 to $226,777.30, which was the final amount invoiced by Verizon. Commissioner MacCaffrie stated he did not want to pay more than $206,348. He had reservations as to why Verizon would do $400,000 worth of work and be willing to accept only $226,777.30. He also questioned whether anyone signed anything. Director Babin indicated that he did see a construction contract in the file on this matter but did not have a copy of that contract with him. This is the Reimbursable Construction Contract that Verizon referred to in their June 22, 2001 letter, which was included with the Board summary on this matter. Director Babin said he would come back to the Board with a copy of that contract for the Board's review at next meeting. Chairman Achille r 2 r r'" r suggested the Board have a look at the contract and any other documentation and then discuss it at the next meeting. Vice Chairman Amoruso raised the question as to whether it would be worthwhile to have a representative of Verizon attend the meeting. Director Babin suggested that since MMED had made the first quarterly payment and since increasing the authorized amount would only impact the final payment, due on July 15,2005, that it was not necessary to bring Verizon in at this point. Proposed East Mansfield Substation - Director Babin said the second resident meeting to discuss the East Mansfield Substation was held on July 20, 2004. In attendance were Commissioners Amoruso and MacCaffrie, members of MMED staff and approximately forty residents. Also in attendance was Kevin Costas, Senior Epidemiologist, from the Commonwealth of Massachusetts Department of Public Health, Center for Environmental Health. Mr. Costas gave a presentation on EMF (electromagnetic fields) and the potential health issues related to them at the meeting. While the first residents meeting, held on April 20, 2004, focused on the potential Bird Road site identified by MMED, this meeting focused on the three additional potential sites which MMED has identified. Chris Cox gave a presentation to the audience utilizing the Town's GIS system to locate and discuss the sites. As a result of this meeting, the MMED staff made four recommendations to the Boatd regarding the future direction of this proposed project: (1) That the staff evaluate each parcel for alternative substation designs, including ways to minimize visual impact, EMF, noise, etc., before any more meetings are scheduled. (2) That future meetings be posted as public meetings, in the hopes of preserving decorum. The informal settings at the previous meetings led to a lack of crowd control. This would also eliminate the need for MMED to send out letters personally to each resident in the area. (3) The location seemingly preferred by the majority of the residents is a fifty acre parcel of land off of Bird Road and is conservation land owned by the Town. It is set back from the road and is not visible. Since it is conservation land, however, MMED believes a presentation should be made to the Conversation Commission so that they fully understand MMED's consideration of this site. Director Babin acknowledged that this parcel, due to covenants on the land, is the site of last resort. (4) The final recommendation was to remain non- committal to an offer of land made by Captain William Dowd. MMED has not yet evaluated the offer but will consider it and bring it back to the Board once the evaluation as outlined in recommendation 1 is completed. The Board concurred with each of the staff's recommendations and instructed them to proceed accordingly. 3 r-' MMED also acknowledged that it had performed several EMF readings for residents of the area as a result of an offer made at that meeting and had found that EMF levels vary widely from spot to spot. System Reliability - Engineer Ann Langille reported the outage statistics for the month of July. The bulk of the outages for the month occurred on July 2 due to a violent lightning storm. Approximately fifty percent of MMED's customers were affected by the lightning storm, which had a huge impact on MMED's reliability statistics. The remainder of the outages were primarily due to squirrel contacts. Chairman Achille asked what the average number of outages per month was. Engineer Langille answered that approximately 10-20 reportable outages per month were experienced by MMED. Policy Manuals - Director Babin then spoke about the two new policy manuals that were included in the Board package for the Board's review. Engineer Chris Cox had authored these documents with significant input from the staff over the course of several meetings. The first policy manual is Customer Service Terms and Conditions, which covers MMED procedures for application of service, disconnecting service, types of available service, liability disclaimers and various fees. r-- The second policy manual is Construction Requirements for New Developments - Residential and Commercial/Industrial, which summarizes various. MMED, requirements and fees applicable for electric service to residential subdivisions, commercial and industrial developments and residential developments. Director Babin stated these manuals were very comprehensive, combining various MMED written and verbal policies implemented over the years, and that virtually every aspect of MMED's customer related policies can now be found in a written policy. He suggested that the Board review them over the next month, and should anyone have any questions, to call him. Director Babin would then ask the Board to formally vote to approve these policy manuals at the next meeting. Director Babin pointed out one major change in the handling of billing for commercial developments, the cost of which had in the past been supported by MMED. Previously, MMED would project the revenues to be received within the first year from the development, and would be willing to invest that amount of money in the project's electrical service. If, at the end of the year, there was a difference between revenue projected and revenue received, the developer would then be asked to make up the difference. One problem with this approach is the developer would often no longer be the customer of record as the account would be turned over to a retail customer. Another consideration was the negative impact on customer relations of having to go back to a customer and tell them they owe MMED money. The new policy states that the developer or contractor must pay for their share of the work up front. Commissioner MacCaffrie said that amongst the electric departments he has done business with, this is their policy as well. r 4 r Article of Interest - Director Babin reviewed an article from the July 13 Boston Globe entitled "Tangled up in View". He said he thought it was particularly relevant as it told the story of several municipalities experience in trying to get overhead pole lines placed underground, similar to Mansfield's experience with Verizon's undergrounding of its pole line on North Main Street. The article was based on the experiences of the towns of Duxbury, Chelmsford and North Andover. The article discusses the difficulties that these communities have had with getting the various utilities (Electric, Comcast, and Verizon) to place their lines underground as well as the costs of doing so. The article mentioned an average cost of $1 million per mile. Director Babin pointed out that MMED paid Verizon's costs to have their facilities placed underground, which is highly unusual. This was done, he surmised, because of the length of the Town's dispute with Verizon. Director Babin pointed out that the normal procedure for utilities recuperating the cost of burying overhead wires underground is outlined in Chapter 166 of the Massachusetts General Laws. Once the governing body of a town directs a utility to underground their facilities, the utility is then allowed to pass through a 2% surcharge on all utility bills they issue in the town until the cost is fully recuperated. Director Babin said that the precedent that Mansfield has established for the North Main St. project is not recommended for future Mansfield projects as MMED ratepayers should not be required to pay for the undergrounding of other utilities lines. r-- Questions and Comments George Dentino, 2 Gladiola Terrace, stated that at a prior meeting Commissioner MacCaffrie asked Director Babin if he was comfortable with internal service charges for the Town for the fiscal year ending June 30, 2004. Mr. Dentino said that Director Babin had indicated that he was. Mr. Dentino indicated that he wanted to look at a few of these costs, the first of which was retirement costs. He said in 2003, the retirement costs to the Light Department were $144,940, and in 2004, the amount increased to $231,413. He asked how a 60% increase could be justified. Director Babin reiterated that what he had said at that meeting was that he went over the allocation methodology with Town Accountant Bea Kearney and was satisfied with the methodology employed. He explained that many of the employees in the Light Department have Group 4 retirement status, which means that an unfunded pension liability is created because Group 4 status accelerates the retirement time frame. Mr. Dentino responded by saying there was no way an escalated pension could justify this great of an increase. Manager D' Agostino added that the Bristol County pension system lost money in the market as a result ofthe downturn in the market. Director Babin explained the 2003 figure of $144,940 was based on a percentage of payroll, which was the method used in distributing pension costs that year. The FY 2004 figure was based on a new methodology; a combination of actual pensions paid by r 5 ~ - r-' MMED plus a portion of the unfunded pension liability that the Town is assessed by Bristol County. Director Babin indicated that this made sense to him as it employed actual pensions paid plus a portion of the unfunded pension liability distributed on a percentage of payroll. In addition, MMED pays a small portion of John D' Agostino's pension in his role as Light Department Manager. Director Babin added that very few pension systems are fully funded and almost all carry a contingent liability they are trying to recuperate. Mr. Dentino stated it took 3-4 years of arguing at these Board meetings to get the methodology changed so that the Light Department's retirement costs were based on a percentage of payroll. He believes it has now gone back to a process which is based on a faulty premise. He asked if the Light Department shouldn't be paying their fair share and not an inflated amount. He also believed the Light Department should not be paying Manager D' Agostino's pension, as he only receives a stipend from the Light Department and is not an employee. Chairman Achille suggested Mr. Dentino and Director Babin meet at another time to further address Mr. Dentino's concerns. Old Business Commissioner MacCaffrie asked Line Foreman Gary D' Ambra if the Light Department owned a portable generator which could be used at the sewerage treatment plant, the Town Hall or any commercial building which may have to be shut down temporarily. Foreman D' Ambra said the Light Department does own one but it's not big enough to handle what Commissioner MacCaffrie is suggesting. ,'! ~ Director Babin pointed out possible concerns about how the Light Department would prioritize customers for use of the generator if multiple businesses had outages. What would the legal ramifications be of giving it to one customer and not another? Another consideration is if there was an outage, workers would be busy elsewhere trying to rectify the outage and could not be involved with hooking up a portable generator which would serve only one customer. Foreman D' Ambra said due to the Board's past voting, a portable generator has been put to the bottom of the list of priorities. Currently, Foreman D'Ambra mentioned, the Light Department rents portable generators from Southworth Milton when they are needed. Chairman Achille requested this be put on a future agenda. Director Babin also informed the Board that Office Manager Laurie Anderson had followed up on Commissioner MacCaffrie's suggestion from the July Board meeting and had delivered appliance rebate applications to Home Depot. New Business There was no new business. r'" 6 r r r Adjournment Motion: To adjourn the Light Commissioner's meeting at 8:40 (Amoruso/MacCaffrie) Passes 4/0 / r/;~ <7- Date of Approval 7 r "T