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HomeMy WebLinkAboutmin light commission 07/06/05 r 05 SEP ! 5 MUD: 00 MI\SSA,[:Ht~~~ Present: Chairman Bernie Dolan; Vice Chairman Louis P. Amoruso; Clerk David ' t. TS McCarter; Commissioner Michael McCue; Director Gary Babin; Engineer Ann Langille; Line Foreman Gary D' Ambra; Financial Assistant Jacqueline Lee and Manager John D' Agostino Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting July 6, 2005 "1f:- IV I( tlFr.:/C'- ""', t Light Commissioners Meeting The meeting was called to order at 7 :30, followed by the Pledge of Allegiance. Motion: To approve the minutes from June 8,2005 (Amoruso/McCue) Passes 4/0 Director's Report Financial Statements for May 2005 - Director Babin presented MMED's May 2005 financial statements. The 2005 YTD net income through May was $723,039. Director Babin indicated that MMED's projected profits are right on budget, while revenue and costs, with the exception of purchased power, are both under budget. Director Babin also explained purchased power is up 13% from the same period in the r prior year, which is indicative of the rise in fossil fuel prices. Vice Chairman Amoruso questioned Director Babin as to whether he was watching power costs, so that if necessary, adjustments could be made. Director Babin responded yes, and at some point perhaps it would be necessary, but right now MMED is meeting its net income targets. He also reported that other operating expenses are below budget. He believes MMED has done a good job managing the overall situation. Vice Chairman Amoruso commented that the longer we hold off the better for the ratepayers. Director Babin agreed and said MMED's long term strategy is to keep rates as stable as possible. Retain Auditor for 2005 Audit of MMED - Director Babin reminded the Board that they voted in October 2004 to have MMED change its fiscal year to run coincident with the Town's fiscal year. In order to transition to this structure, MMED must have one six- month fiscal "year", which would be January 2005 through June 2005. It was discussed that after the 2004 audit it would be necessary for MMED to have either an 18 month audit performed or two separate audits; a 6 month and a 12 month audit. Director Babin said that of those financial professionals he has spoken with on this matter, most are of the opinion that the 6 month and 12 month option is the better option. r MMED staff recommended to the Board that it retain Nelson, Adam and Dickson for the 6 month audit, at a cost of $14,500. This is the same firm that is preparing the 2004 audit and after working with them, the MMED staff was impressed enough with their approach to recommend them again. r ]I r Direc10r Babin also noted that he will he meeting with Town Accountant Bea Kearney to help fonnulate a Request for PrOposals (RFP), as there will be a single audit function for the Town and MMED once MMED's fiscal year is aligned with the Town's fiscal Year. Direcror Babin said he Wants ro make sure the audiror can meet all of MMED's requirements so that MMED cao fulfill their fiduciary responsibility ro the ratepayers. Clerk MCCarter inquired as to whether MMED got proposals from anyone else for the six month audit Direcror Babin answered they had not He explained that after Goulet Salvidio and Associates declined to perfonn any more audits for MMED after the 2003 audit MMED needed ro retain a new auditor. He Contacted Nelson, Adam and Dickson, who he Was familiar with, explained the situation ro them and indicated ro them that he Was interested in retaining them ro perfonn 2 audits. Since the price Was again reasonable for the scope of services offered for the 2005 audit Director Babin is recommending them ro the Board for the 2005 audit Vice Chainnan Amoruso also believed it made sense ro have them again, rather than someone new, since they had conducted the 2004 audit. Motion: To authorize MMED to retain the services of Nelson, Adam and Dickson, P.C. to perform the 2005 audit at a cost of $14,500. (Amoruso/McCarter) Passes 4/0 Presentation of AWard to the Board from the Mansfield High School Robotics Club- Engineer Ann Langille introdUCed Dan Gracia, the upcoming student president of the r FIRST Robotics Club, along with his filther, Frank Gracia, the parent coordinator. She stated that Mansfield High School is eotering their sixth Robotic season. Dan Gracia reported that the team did pretty well this season, placing third out of 52 teams at the regional competition. He also said this was the first time their robot Was able ro perfonn all of the tasks. Seven of the students went ro the nationals this year and the team plans ro go again this year. Dan preSented a plaque ro Chainnan Dolan in recognition ofMMED's sponsorship of the FIRST Robotics team. Write-Off Poticy - Direcror Babin reviewed the write-off pohcy, which Was also discussed at the June meeting. The Board voted ro write off $2 7 I, I 87.48 as bad debt and remove those accounts from active accounts receivable. Director Babin said the final policy recommended ro the Board would inClUde a first step of a final bill going out when a CUstomer clOsed their account An attempt at COllection would be made at the time of rendering the final bill. Thirty days later a second notice would go out infonning the cusromer further collection activity would take place if the bill remained unpaid. When a bill becomes forty days past due, another letter would be sent notitying the customer that should their bill become fifty days past due, their account Would be referred to a collection agency and credit "'ting agencies would be notified of the bad debt At 50 days past due, the account Would be referred to collection and credit Ii J r rating agencies would be notified. Director Babin said that each letter would have more urgency than the last, as was suggested by Vice Chairman Amoruso at the June meeting. Director Babin stated that after one full year an account would be written off. For example, in January 2006, MMED would ask the Board to write off outstanding final accounts that existed on December 31, 2004. He explained that in this way, a debt viewed as uncollectible would be properly reflected on MMED's balance sheet. Commissioner McCue said that he had asked previously if it was necessary for the MMED staff to keep coming before the Board to authorize write-offs. Director Babin answered that the MMED Board, as part of the policy, could authorize the MMED staff to write-off the debt as a matter of practice and then inform the Board of this action. Under this scenario, the staff would not require a vote. Commissioner McCue also wondered about sending someone to collections after fifty days as he thought ninety days was the standard, and asked for other opinions. Vice Chainnan Amoruso said refening debt to collections "ASAP" gives you the best chance of collecting. He said he was pleased to see the accelerated approach. He also suggested that MMED write-off during the fiscal year, rather than waiting until after that fiscal year was over. He gave the example that if someone hasn't paid in six months, it is probably safe to assume the debt should be written off, but MMED should still attempt to collect it. r Clerk McCarter questioned the part of the policy which read "attempt" to collect when the final bill is calculated. Director Babin explained that MMED does not always have leverage and that sometimes a tenant just disappears. He reiterated that MMED wants a formal process in place so there are no questions for the staff on this matter. Vice Chairman Amoruso wondered if this policy applied to both residential and business accounts. Director Babin indicated that it did apply to both. Motion: To approve the MMED Write-Off Policy which would become effective immediately (McCarter/McCue) Passes 4/0 Deposit Policy- Director Babin stated that currently MMED does not take deposits. The deterrent has been that in the past Massachusetts State law required that 6% interest had to be paid by MMED if the deposit was kept for more than six months. This dated back to the passage of this law in the early 1980's when interest rates were around 15%. Clearly, MMED would have lost a significant amount of money over the last several years with an aggressive deposit policy by having to pay 6% interest. .--- In early 2005, the law was changed to tie the interest rate on deposits to the annual interest rates on U.S. Treasury notes. Interest is then credited one time per year to the account. Director Babin also pointed out that previously, deposits were returned after one year. After reviewing the accounts that had been written off, it was noted that approximately $42,000 in deposits had been returned to customers after one year, who then left outstanding balances once the accounts were closed. I: "I (' MMED is recommending three levels of deposits: $150 for a small electric account, $300 for a typical electric account and $500 for an account with electric heat. Director Babin stated that the money would be held until the account was closed. If the customer moved within town, the deposit would follow them. If the customer moved somewhere with electric heat and MMED held less than a $500 deposit, the customer would need to pay the difference. He explained that the policy would apply to residential renters and that it was not necessary to collect deposits from homeowners as MMED could lien them. Director Babin suggested that if approved by the Board, this policy would go into effect on July 15,2005. This would then allow MMED the opportunity to notify landlords who had rental units by letter (attaching a copy of the approved policy) so that this could be taken into account when they spoke to prospective tenants. Currently, MMED has identified 312 landlords with whom they have done business in the past who will receive this letter. . Director Babin stated that in 2001 the staff recommended eliminating deposits. Vice Chairman Amoruso believed that deposit elimination made sense at the time due to the 6% interest factor. He also said that some small business owners were being asked for rather large deposits which caused some discussion at the Board level. --- I Commissioner McCue asked Director Babin if he knew what percentage of renters electric bills were covered by the tenant and what portion were covered in the rent by the landlord. Director Babin believed the majority were in the tenant's name directly. Commissioner McCue wondered if there were programs available that would help people who might not be able to pay the deposit, and was this taken into consideration when making these assessments. He did not want to preclude certain people that might not be able to afford the deposit from getting an apartment. Manager D' Agostino said the Town does have a Social Services Department that offers assistance for first and last months rents and suggested they might help. Director Babin reminded the Board that MMED donated $30,000 to Social Services and suggested that some of this money could also be used for deposits, which he said he would discuss with Social Services. Director Babin stated that in the fall he would come back to the Board with a proposed commercial deposit policy. Motion: To approve the MMED Residential Customer Deposit Policy to become effective July 15, 2005 (McCue/Amoruso) Passes 4/0 Old and New Business r Vice Chairman Amoruso inquired about the newsletter he saw regarding the shake-up at MMWEC and wondered if the Board should be worried about that. Director Babin explained the General Manager and Manager of Power Supply were terminated by the MMWEC Board of Directors in response to concerns from municipal utilities about how E 1 r MMWEC was being run. An external auditor had performed an evaluation of the organization and came up with a suggested list of improvements for MMWEC, which the Board had acted upon. Vice Chairman Amoruso asked if, as members of MMWEC, the Board would be able to see a copy of the report. Director Babin said he would get a copy to the Board. Director Babin said there would be no formal Light Commissioner's meeting in August, based on his discussions with Chairman Dolan. However, he said he might attend a Selectmen's meeting in late August to present the MMED 2004 audit with the auditor. Director Babin will get a copy of the 2004 audit report to the Board a few weeks ahead of time so the Board can review it before the audit presentation. Adjournment Motion: To adjourn the Light Commissioner's meeting at 8:18 Passes 4/0 Respectfully submitted: Jacqueline Lee 9/14/05 ~IM- Signature 0 Clerk Date of Approval r r U I