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HomeMy WebLinkAboutmin light commission 03/09/05 - (', Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting March 9, 2005 L fJr~F iC;E" Pi"l ?: ':: co " \, ,J ;' j r " j c. L 1J t,''llli C' c:; " (':.~ I! I~ E. T 1- S : t 1 '-.. '.....- I '''--_ 'i.,j i i t} ~) - Present: Chairman Roger Achille; Vice Chairman Louis P. Amoruso; Clerk Bernie Dolan; Commissioner Mike McCue; Commissioner Steve MacCaffrie; Director Gary Babin; Engineer Ann Langille; Engineer Chris Cox; 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 February 9, 2005 Motion: To approve (MacCaffrie/Dolan) Passes 5/0 Director's Report r Director Babin began by informing the Board that MMED has hired a temporary accountant subsequent to the resignation of Kimberly Stoyle, MMED's former Chief Financial Officer. Director Babin explained he is holding off on presenting the December 2004 financial statements until the numbers are confirmed, as they are year-end figures. The financial statements will be prepared in time for the April meeting. Director Babin did review some of the numbers with the Board, however. In 2004, net income was $2,042,434, down 13 % from prior year. MMED had a healthy sales growth rate relative to 2003 with kWh sales up 2.6%. Total revenues were up 0.5%, which was primarily due to the PPCA increase from $0.0265 to $0.0365 in October 2004. Implementation of Fully Deregulated Electric Market - Director Babin pointed out there has been much information in newspapers lately regarding the deregulation of the electric industry. When the industry was first deregulated on March 1, 1998, it meant a 15% rate decrease for customers of investor-owned utilities (lOUs). This did not apply to municipal light plant (MLP) customers, however, as MLPs were exempt from the provisions of the deregulation legislation. r- This worked out well for all concerned because the 10Us wanted to be deregulated while MLPs wanted to maintain the status quo. Standard Offer Service, which was a subsidized rate for the cost of the power component of the bill, was provided to all IOU customers at the start of deregulation and it was through the pricing of the Standard Offer that the 15% rate reduction was achieved. Any new customers or anyone that moved was placed on 1"" ... .' r default service, which was not a subsidized rate and more reflective of the cost of power in the marketplace. As of March 1, 2005, Standard Offer service ended and everyone was forced to go to default service, which had been renamed by regulators as "Basic Service". This has created rate increases for IOU customers on the order of 3% to 13%, depending on the utility, effective on 3/1/05. MMED's rates remain unchanged. The results from deregulation have been mixed. Some real savings have been achieved by large industrial and commercial customers, who have been savvy enough to leverage the size and characteristics of their load to their benefit in purchasing power. Some groups have been adversely affected, however, such as small commercial and residential customers, who have lacked the ability to aggregate their load in a cohesive manner. Another reason those customers have not seen the savings predicted is that the entities who sell power don't want to assume the overhead costs associated with selling to small customers to receive a marginal profit, if any, in a high volume - low margin business. r- Director Babin presented a chart comparing MMED's rates to IOU rates. For a typical 500 kWh residential customer, an MMED customer currently pays $55.23, while a Massachusetts Electric customer pays $63.43 for the same service, or 14.8% higher than the MMED customer. An NStar customer (in the former Boston Edison territory) pays $79.53 for the same service, or 44.0% higher than the MMED customer. Director Babin pointed out that MMED has not been adversely affected by deregulation and it's rates are competitive compared to 10Us. In the future, MMED should be able to continue to provide electric service to its customers for less than the 10Us. Information and Requirements for Electric Service Policy Manual - The third and final policy manual, entitled Information and Requirements for Electric Service, was included in the March Board package for the Board's review. MMED staff will request that the Board vote to approve this policy at its next regularly scheduled meeting on April 13. Director Babin commended Engineer Cox for the work he has put into the three policy manuals, noting that finding out what other companies do, drafting the MMED policies, coordinating all of the internal meetings to review the drafts created and revising the documents is not an easy job. Fiscal Year 2006 Capital Budget - A copy of MMED's FY06 Capital Budget was distributed to the Board for review. MMED will come back before the Board on March 30, 2005 to answer any questions the Board may have as well as seek approval of the Fiscal Year 2006 Capital Improvement Program. Director Babin stated the budget request is for $1,620,700. r- Director Babin explained that this is the first budget submitted since the Light Department has changed to a fiscal year coincident with that of the Town. The 2 l" ... f' FINCOMM has received copies of the proposed budget and will be meeting with MMED in the next few weeks to provide their feedback. Old and New Business Commissioner MacCaffrie suggested the Board establish a policy to automatically have a Manager change the locks to their facility if an employee resigns. Clerk Dolan said he was fine with that. Chairman Achille said he was unsure, and his initial opinion is to leave it up to the Manager and Director. Commissioner McCue stated he would like to think about it. Vice Chairman Amoruso stated he didn't disagree with the intent but felt the level of the employee that was leaving should be considered, as well as what keys the employee had. He believed he would be willing to support such a vote if it were worded properly. Chairman Achille said they would discuss the matter again at the next meeting. f' Clerk Dolan asked Line Foreman Gary D' Ambra if there had been any power outages the previous night, as there had been inclement weather and news stories had indicated other utilities had problems. Foreman D' Ambra answered that no, there had been no outages, only two instances where the electric service had pulled away from the house. Director Babin followed this up by noting that MMED had adopted an aggressive tree trimming program, trimmimg the entire town on a three year cycle, and believed this contributed to the lack of outages the previous evening. He also noted that Foreman D' Ambra and his crew have built a very solid system, which minimizes outages in bad weather. Questions and Comments George Dentino, 2 Gladiola Terrace, stated he would be speaking about the subject of fiscal responsibility, or fiscal irresponsibility. He began by mentioning the woman who provides cleaning services for MMED. He brought to the Board's attention that she is making pre-1999 wages for doing three times the work. He commented that the Board believed this was a great savings to the Town. Mr. Dentino then said he wanted to talk about the hiring of Gary Babin into MMED. Director Babin, a 19 year veteran, came from Wellesley where his salary was a little over $80,000, and was hired in Mansfield at a salary of $116,000, a 45% increase. He also received five weeks vacation upon being hired. Mr. Dentino remembered a conversation he had with Town Manager D' Agostino, who told him he was able to give former Director Jack Beliveau only three weeks vacation, as he couldn't give him more than anyone else. Both Mr. Babin and Mr. Beliveau received five personal days. Mr. Dentino asked the Board how much they knew of this. He told the Board they were supposed to be fiscally responsible people looking out for the Town's money. He asked the Board what they had to say about that kind of raise. Chairman Achille responded first to Mr. Dentino's comments about the cleaning contract. He believed the Board owed a greater responsibility to the Town's employees than it did f' to contractors. He stated that MMED was now paying the market rate for those services and the Board spends the ratepayer's money as best they can. He explained that the 3 r ~ r r r '. , cleaning woman is not an employee of MMED, and that the money is now being used more efficiently. Regarding Mr. Dentino's comments about Director Babin, Chairman Achille explained that it's a delegation of duty. He said he is not privy to all conversations regarding attracting and retaining qualified people. He commended Director Babin on the professional job he has done since he's been with MMED. Chairman Achille also said he's not sure what that market is like, but Mr. Babin's salary may be the competitive rate for a senior executive with 19 years of experience. Adjournment Motion: To adjourn the Light Commissioner's meeting at 8:00 Passes 5/0 Respectfully submitted: Jacqueline Lee 4/13/05 ~~(;;;f Sl~ /. nature ofC ..- ~j) J~ LrLlJ e of Appro I 4 17 r,.