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HomeMy WebLinkAboutmin light commission 01/18/06 ~ 1, '" r Mansfield Municipal Electric Department Minutes of Light Commissioners Meetin~(\ r.j.!i I G Pl1 2: 13 January 18, 2006 \. '. f ,,_I, f' 1.\" ,-.J ::'. f t~ t_ 0 ~1 it\, S S j;, CliUSE. T1 S Present: Chairman Bernie Dolan; Vice Chairman Louis P. Amoruso; Clerk David McCarter; Commissioner Roger Achille; Commissioner Michael McCue; Director Gary Babin; Engineer Ann Langille; Financial Assistant Jacqueline Lee; Office Manager Laurie Anderson and Town Manager John D' Agostino r\ !':'$",l ~ . Light Commissioner Meeting The meeting was called to order at 7:45. Motion: To approve the minutes from December 14,2005 (Amoruso/Achille) Passes 4/0 (McCue abstains) Director's Report Financial Statements for November 2005 - Director Babin presented MMED's financial statements for November 2005. He reported that net income for the month was $76,103, down significantly from $256,829 in November 2004. This difference is explained in large part, however, because the accounting adjustments from the 2003 audit which were reflected in the November 2004 financial statements. These accounting adjustments alone increased net income for November 2004 by $206,163, making net income from operations for November 2005 (actually more than net income for November 2004. Director Babin also stated that net income year-to-date is down approximately $240,000 from November 2004, primarily due to the increase in power supply costs in 2005. Director Babin said that MMED's cash position remains healthy at 1.51 million, or nearly double what it was in November 2004. He also reported that energy sales are still robust with a 5.7% growth rate year-to-date. Sales revenue is up 15% due to the two increases of the PPCA on August 1 and November 1. Purchased power costs are up 25%, however, relative to the same period in 2004. Calpine Corporation Bankruptcy - Director Babin stated that Calpine Corporation filed for Chapter 11 bankruptcy protection on December 20,2005. At the time, MMED was purchasing 25% of their energy from Calpine and the contract ran through 2008. During the life of the contract Calpine was required to fund an escrow account once its credit rating fell below investment grade, which now has a balance of over $10,000,000. This escrow account is calculated as the difference between the current market price for MMED's energy and the price for which MMED contracted the power from Calpine. Director Babin further explained that Calpine's filing for bankruptcy constituted a breach of contract under the terms of the agreement. Accordingly, MMED terminated its power supply r contract with Calpine and has requested a $9.968 million payment from the escrow account to cover the difference in the contract price and the current market cost for that power. Calpine has r protested the release with the escrow agent, however, saying that MMED's calculation methodology is flawed. Since both parties have to agree on an amount to be released by the escrow agent, no funds can currently be released. Director Babin explained there are three reasons why MMED is at an advantage in this situation: (1) The contract with Calpine was written so that administration of the agreement is outside of any bankruptcy. (2) The contract designates MMED as a Forward Contract Merchant, which means the contract is not subject to administration by the bankruptcy court. (3) Both Calpine and the bankruptcy court recognize these first two points. Director Babin believes MMED will eventually get a good chunk of the money but the disputed amount will end up in litigation for MMED to obtain the balance. After the contact termination, MMED immediately went to bid and solicited three bids to replace the exact amount of power that Calpine had provided. The successful bidder offering the lowest price was Dominion Energy Marketing of Richmond, V A. Director Babin pointed out that the fact that since MMED went to bid so quickly and obtained a low bid contract, that this is a true indication of the market cost of power at the time of contract termination and will serve to validate MMED's claim from escrow in its legal case against Calpine. Town Manager D' Agostino cautioned the Board that this will likely go to litigation. He suggested that the Board convene an executive session to discuss the matter. Clerk McCarter asked what this will mean to the ratepayer. Director Babin answered that it means about a $300,000 increase in power supply costs monthly. He also indicated, however, r that MMED should get money from Calpine under the terms of the contract. 'He said the first payment to Dominion wouldn't be due until late February and by then MMED should have received an undisputed amount of money from Calpine. In the meantime, MMED could begin to draw down its rate stabilization fund until such time as money is obtained from Calpine. He also pointed out that this is exactly the type of situation that the rate stabilization fund is designed to cover; mitigating sudden, dramatic increases in power supply costs. The rate stabilization fund, if used in its entirety to cover the Calpine shortfall, should cover about 10 months of increased power supply expenses due to the Calpine bankruptcy. Director Babin said he firmly believes MMED will get money from Calpine and there should be no impact on the ratepayer. 2005 Residential Conservation Services and Appliance Rebate Program Summary - Director Babin explained that under the Massachusetts General Laws, municipal light departments are required to provide conservation services to residential customers. The law requires that 'l4 of 1 % of operating revenues be used for Residential Conservation Services (RCS) programs. Director Babin reported that MMED spent $72,073 on RCS programs for calendar year 2005, exceeding their 'l4 of 1 % of operating revenue target of$70,246. Some of the services MMED offers are the Energy New England (ENE) 800 line, which residents can call for energy conservation tips, as well as home energy audits. The biggest line item, accounting for $43,425 of the $72,073 spent, was for energy efficient appliance rebates. r ." ",-. Office Manager Laurie Anderson reported to the Board the specifics of the 2005 Appliance Rebate Program. She said that 538 customers requested rebates and 514 were accepted, totaling $43,425. A total of 24 requests were declined, 18 because the appliances were not EnergyStar rated and that 6 customers had already reached their cap of $1 00 in rebates for the year. Director Babin noted that 6% ofMMED's residential customers took advantage of the program in 2005. Director Babin reminded the Board that they had voted approval of the Appliance Rebate Program through 2008 and this was the annual update that the vote required. MMED Reliability Indices Results for 2005 - Because of a major storm condition on the day of the meeting, Engineer Langille began by giving the Board an overview of the outages MMED had experienced that day. She said that trees coming down on wires were the biggest problem and some customers had experienced outages of 3-5 hours. She explained that one of the Gilbert Street feeders was also out of service for about 45 minutes. Engineer Langille then reported on the MMED 2005 system reliability measurement and statistics. She said that in 2005, the average MMED customer experienced just under 2 outages during the year and that those who were affected had service restored in an average of 30 minutes. r She explained that the advantage of having system reclosers was to reduce the outage time to a minimum. A typical field recloser operation will restore service in 5 seconds if the problem is Cleared from the line. Reclosers break up the circuits by sectionalizing them, thereby dramatically reducing the number of customers affected. However, this does lead to an increase in momentary outages. Engineer Langille also reported that outages due to animal contacts are down from the prior year. In 2005 14% of all outages were due to animal contacts, primarily squirrels, while in 2004 the number was 33%. Outages due to bad cutouts were also down. MMED experienced only 4 outages due to bad cutouts in 2005, while there were 11 in 2004 and 22 in 2003. This is due to the cutout replacement program that has been ongoing since 2003. Over 1,000 cutouts have been replaced thus far and completion ofthis project is scheduled for June 2006. Engineer Langille reported that MMED experienced 49 outages due to equipment failures in 2005, a significant increase from 2004. This was due to the hot summer and the customers increase in their loads. She also pointed out that MMED's aggressive capital improvement program has resulted in increased reliability, due in large part to the installation of reclosers and spacer cable. Engineer Langille explained that the basis of her report are the outage statistics; CAIDI (response time for someone who experiences an outage), SAIDI (average outage duration for all customers) and SAIFI (frequency of outages for an average customer). In 2005 MMED's average customer experienced 2 interruptions (SAIFI) totaling 50 minutes (SAIDI) while the ",-. response time for those affected (CAIDI) was less than 30 minutes. She also said that based on a r survey done by Chicopee, MMED's results compare very favorably with the other 9 participants in that survey. Clerk McCarter asked how MMED compares to the IOU's (Investor Owned Utilities). Engineer Langille said that based on the last data she had from 2001, the IOU's had average outage duration time of 2 hours with a response time of 1 hour. She explained by saying MMED's employees are focal and can mobilize more quickly than an IOU. Clerk McCarter noted that a lot oftowns see the wisdom of what Mansfield has done by having its own light department. Engineer Langille explained that another measure of reliability is MAIFI (Momentary Average Interruption Frequency Index). This is a measure of outages that last five minutes or less (i.e. typically field recloser or breaker recloser operations). For 2005, MMED averaged 2 momentary outages per customer, down significantly from 2004. Engineer Langille said momentary outages vary widely from circuit to circuit so the impact of momentary outages depends on what part of town a customer lives. The 1 W6 had the highest number of momentary outages (7) while both the 1 W4 and 1 W5 circuits had no momentary outages in 2005. Director Babin commended Engineer Langille on the fine job she had done with her report, remarking on the depth of it. Commissioner Achille commented that every report Engineer Langille prepares is professional. All of the Board members echoed Commissioner Achille's sentiment by noting that Engineer Langille's work is always well done. Old and New Business r Clerk McCarter asked about the pole issues related to the Route 106 reconstruction. Director Babin said that Line Foreman D'Ambra was not at the meeting that evening because of the storm conditions that day but he believed that some, though not all of the issues had been resolved. Town Manager D'Agostino stated that he had been playing phone tag with Verizon's field engineer, who says they have committed to finishing the job in February. Vice Chairman Amoruso said he was at a telecommunications seminar over the weekend where he found people from other towns to be envious of the fact that Mansfield has its own electric department. He said it is a distinct advantage for Mansfield, as he heard others talk about how many double poles they have in their towns. He stated it is clearly desirable to have your own Light Department and that it's not something he'd consider giving up, as it is well worthwhile. Director Babin stated that municipal light plants promote lower rates, better reliability, more responsive service and outstanding customer service. Adjournment Motion: To adjourn the Light Commissioner's meeting at 8:29 Passes 5/0 r Respectfully submitted: Jacqueline Lee 2/15/06 ~~~~ Signature of Cler Date of Approval