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Home My WebLink Aboutmin light commmission 12/22/04 ~ -\; " t: \ ..ft. j (' ('. \ C t- .: \'.\-' ~,~ \\ <; \ ~".~ \ ,J "'"'. \.,.':. "'. .... '. .' -", ",' \ \.,._S ~ \ u. ~" Mansfield Municipal Electric Department \,5:' ~t..'~ , . ';.. \~nutes of Light Commissioners Meeting ,.\ >{~'r \~~C,\S December 22, 2004 ,\',iJ,\ C~'v~t,.. ~c.~ J ,",~~.., 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; Line Foreman Gary D' Ambra; Procurement Clerk Bruce Dyke and Manager John D' Agostino Light Commissioners Meeting The meeting was called to order at 7:30 followed by the Pledge of Allegiance. Commissioner MacCaffrie spoke of a house fire at Ann Marie Diamond's house on Julia Lane. Ms. Diamond fortunately survived. However, everything in the house was destroyed. Mr. MacCaffrie informed the public that donations are being accepted in Ms. Diamond's name at the Treasurer's office. Director's Report r Director Gary Babin opened the meeting with a review of the 2005 MMED Operating Budget. Mr. Babin indicated that this proposed operating budget was for the six-month period from January '05 through June '05. Due to the MMED change in fiscal year from a calendar year to a fiscal year coinciding with the Town, commencing on July 1, 2005, MMED must first prepare a transitional six-month budget capturing operating costs for this time period. A full twelve-month operating budget covering the time frame of July I, 2005 through June 30, 2006 will be presented at a future meeting. This budget submittal requests approval from the Board of$12,205,448 for the six-month period from January 1, 2005 through June 30, 2005. Mr. Babin went on to explain the functional sections of the operating budget. Mr. Babin stated that 78% of the budget request represented power production (generation) expenses. The generation budget consists of 3 major components: (1) MMWEC Power Sales Agreements. MMED has entered into numerous generation projects as a member of MMWEC, for which MMED pays both the fixed cost to purchase the plant as well as the operating and maintenance expenses to run the plant. (2) The Calpine Contract. Several years ago, MMED entered into a favorable contract for purchased power with Calpine, which is in place through 2008. (3) Purchases on the spot market. Since the sum of MMED's power supply entitlements rarely match MMED's actual load during any hour, Mr. Babin indicated that MMED is always a net purchaser or seller in the spot energy market. (' MMWEC manages MMED's power supply as part of the benefits offered through MMED's membership in MMWEC. MMWEC also prepares for MMED an annual , .". r power supply budget each October for the following calendar year based on an analysis of MMED's load as well as the market conditions expected to be in place during the following year. The remaining 22% of the MMED operating budget request represents the costs associated with transmission of energy from the generating stations to the MMED system; the costs to distribute that energy within the Town of Mansfield; MMED's customer records expenses for billing and collections of revenues; and finally with the various administrative and general expenses (A&G) expenses of operating the utility. Mr. Babin reviewed some of the assumptions that were built into preparation of the budget. Labor costs are marked up 60% on straight time labor to account for the variable costs associated with maintaining a labor force (i.e. vacation time, sick time, holidays, pensions, health insurance, etc) and to allocate those costs across the different cost centers. These amounts are allocated across the board to various expense (and capital) accounts where straight time labor is expended. Energy sales were projected to increase at a 3% rate over the same time period last year. This is very conservative assumption for the Mansfield area given current economic conditions but represents a reasonable growth rate for budgeting purposes. Mr. Babin concluded his general overview of the operating budget and asked if anyone had any questions. r- Commissioner McCue asked why we were anticipating a loss in net income for March of 2005. . He wondered if it was due to the fact that we were coming out: of winter and settling into spring, which is typically not a big revenue month. Mr. Babin concurred that Mr. McCue's assessment was accurate and indicated that it also had to do with the way expenses (other than generation) are allocated on a equal basis each month for budget purposes. Mr. McCue also asked what percentage of High St. offices were occupied by MMED. Mr. Babin responded that four out of the ten units were occupied by MMED and that all four units were utilized by MMED as the operations of the department were consolidated into the 125 High Street facility from an adjacent site when the final two units were acquired by MMED a few years ago. Commissioner Amoruso asked if MMED had reviewed the budget with the Finance Committee, noting that he assumed that the department had done so. Mr. Babin informed Mr. Amoruso that he and Manager John D' Agostino had met with the Finance Committee the previous day to review a list of questions on the budget that the Finance Committee had generated and forwarded to Mr. Babin. Based on that discussion, Mr. Babin felt that all questions which the Finance Committee had posed to the MMED staff based on their review of the budget were addressed and answered to the Finance Committee's satisfaction. ~ r-- / Commissioner MacCaffrie asked if the employee pension and benefits/training line item of $38,000 included the increased amounts for pensions that occurred during the Town's FY05 internal transfer in July 2005. Mr. Babin indicated that pension costs were allocated across all of the cost centers and that the $38,000 item was for education and staff training. Mr. MacCaffrie then addressed the Finance Committee and thanked them for their participation. in the budget process. He then asked the Finance Committee for their comments. Mr. Goldberg addressed the Commissioners and agreed with Mr. Babin that the meeting of the previous day was productive. Mr. Goldberg said that all matters were resolved in a positive fashion and praised Mr. Babin for his detailed method of preparing the budget. Commission Chairman Achille was pleased with Mr. Goldberg's responses and that there had been a full and free exchange of information between the MMED staff and the Finance Committee. He commented on the greater level detail in the budget than in the past and spoke of how the budget process continues to evolve. Commissioner MacCaffrie commented to fellow Board Members about possibly having MMED's budget serve as a model for the other Town departments. r Mr. MacCaffrie then extended his best wishes for the holiday season to all employees at MMED and said that MMED was dramatically ahead of where we were in the process at this time last year. . r~ Motion: To approve the MMED Operating Budget recommendation for the six- month time period from January 1, 2005 through June 30, 2005 in the amount of $12,205,448, (Amoruso/McCue) Passes 5/0 Commission Chairman Achille thanked MMED and said that he was looking forward to seeing similar results in the new year. The next Board of Light Commissioner's meeting is scheduled for January 12,2005. Meeting adjourned. Respectfully Submitted by: Kimberly Stoyle 1/12/05 ~~~ )--Jl--(jJ Date of Approval r"' - -