HomeMy WebLinkAboutBOS Executive Minutes 12-05
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CONFIDENTIAL
Town of Mansfield
Board of Selectmen/Light Commissioners
Executive Session Minutes of December 21, 2005
Present:
Light Commissioners Chairman Bernard Dolan, Commissioner Louis Amoruso and
Commissioner Michael McCue
Light Department Manager John D' Agostino
Light Department Director Gary Babin (arrived at 3:20pm)
Mr. Kenneth Barna, Rubin & Rudman, MMED Power Supply Contract Attorney (via
speakerphone)
Mr. Mayhew Seavey, MMED Electric Rate Consultant (via speakerphone)
Mr. Dolan opened the emergency Board ofSelectmen/Light Commissioners meeting at 3:00pm.
Motion: To enter into Executive Session for the purpose of discussing power contracts and return to open
session for the sole purpose of adjournment.
(Amoruso - McCue)
Roll Call Vote: Amoruso, aye; McCue, aye; Achille, aye
Vote: 3-0 Passes
Mr. Amoruso asked if the contract is cancelled ifCalpine files for bankruptcy and Mr. D'Agostino replied
that it does.
Having connected via speakerphone with Mr. Barna & Mr. Seavey, Mr. D'Agostino asked for a synopsis
of where we are with the issue concerning Calpine.
Mr. Barna began by saying that the power supplier and guarantor filed for bankruptcy today. Under the
power agreement, Calpine was obligated to provide us with margin and we have free and unrestricted use
of the margin and we do not have to return it. He noted that bankruptcy is an event of default. He added
that MMED has an escrow agreement with Mellon Bank and only Mansfield has the ability to disperse
these funds. We have drafted letters to Calpine regarding settlement funds. Mr. D'Agostino asked that
the amount of the settlement account and Mr. Seavey replied that it is approximately $10.5 million.
Mr. Barna said that we have contracts with three other entities that we could enter into: Dominion, WPS
and Constellation. The contract would go until 2008. Mr. Barna said that Calpine is in court right now
stating that they will honor the free petition trade contracts, honor the margins, and will assume the
contracts. If this happens, Mr. Barna said that the letters will not be sent.
Mr. Amoruso asked if Calpine is filing Chapter 11 bankruptcy and Mr. Barna replied that yes, they are
filing Chapter 11. Mr. D'Agostino asked what does the Town and the Light Commissioners need to do
and Mr. Barna replied that the Light Commissioners should give the Town Manager the authority to send
letters and sign contracts to protect the ratepayers/taxpayers.
Mr. McCue asked Mr. Barna and Mr. Seavey if they did a risk assessment analysis that says that staying
with Calpine is a good idea. Mr. Barna replied that we would have a court order that says that Calpine
has to honor the contracts. He said that if Mr. D'Agostino and Mr. Babin want out of the contract with
Calpine, the termination letters will be sent. Mr. D'Agostino pointed out that MMED has $10.2 million in
escrow. Mr. Amoruso asked if we will lose the escrow if Mansfield signs the document and Mr. Barna
replied that no, the margin will stay in place.
Mr. Babin arrived at 3 :20pm.
Board of Selectmen/Light Commissioners Executive Session Minutes of December 21,2005
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) Mr. Amoruso expressed his concern about spending too much time thinking about what to do and Mr.
Barna said that the decision needs to be made tomorrow. Mr. D'Agostino pointed out that whatever
motion is made, that he be allowed to enter into a new contract and either he or Mr. Babin can sign the
termination letters to Calpine. Mr. Barna agreed.
Mr. Barna summarized the events thus far for Mr. Babin and Mr. Babin asked about Standard & Poors
and MMED's credit rating should we go into a new contract. Mr. Seavey said that Standard & Poors is
fine with Mansfield and we have the appropriate credit rating. Mr. Babin noted that MMED would draw
down escrow for the time being and perhaps need to raise rates in 2008.
Mr. Seavey noted that of the three power companies that MMED could enter in a new contract with,
Dominion is the lowest bidder.
Motion: To authorize the Light Department Manager to sign into contracts exclusive to the Calpine issue.
(McCue - Amoruso)
Roll Call Vote: Amoruso, aye; McCue, aye; Dolan, aye
Vote: 3-0 Passes
Mr. Barna noted that the reference in the Massachusetts General Laws relating to Executive Sessions to
discuss power contracts is Chapter 164, section 47D.
Mr. McCue asked if this bankruptcy announcement was expected to happen and Mr. Barna replied that
no, this was not expected. Mr. Barna went on to discuss the problems with deregulating electricity and
how things are much more difficult than ever expected. He also noted that some local communities, like
Braintree, are going to build their own generators.
Motion: To close the Executive Session and return to open session
(McCue - Amoruso)
Roll Call Vote: Amoruso, aye; McCue, aye; Dolan, aye
Vote: 3-0 Passes
Motion: To adjourn at 3:40pm
(Amoruso) 3-0 Passes
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Signature of Clerk
Date of Approval
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Date of Release clcr/'~ 'C(~t/~
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Board of Selectmen/Light Commissioners Executive Session Minutes of December 21,2005
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