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HomeMy WebLinkAboutmin light commission 12/11/06 >! (' Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting December 11, 2006 . RECEIVED , i""'~ ;"'T)t( J.;. t"' 1-r- , ., "...'~ rICE 07JAN23 PH 1:57 r',1 ( j,::' ','-. ! E! 0 L4d '~"Jg j L' MASSA CHUSETTS Present: Chairman Michael McCue; Vice Chairman Louis P. Amoruso; Clerk George Dentino; Commissioner David McCarter; Commissioner Ann Baldwin; Director Gary Babin; Engineer Ann Langille; Engineer Chris Cox; Line Foreman Gary D' Ambra; Financial Assistant Jacqueline Lee and Town Manager John D' Agostino Light Commissioner Meeting The meeting was called to order at 7:30 PM. Motion: To approve the minutes of October 16, 2006 (AmorusolBaldwin) Passes 4/0/1 (Commissioner Dentino abstained) . Motion: To table the minutes of November 20, 2006 (Dentino/Amoruso) Passes 5/0 Director's Report (' Financial Results for September and October 2006 - Director Babin stated that MMED's Net Operating Income thru October 2006 was $1.3 million, up slightly from the prior year but still 40% below budget. He said the current balance in the Calpine Rate Stabilization Fund is $6.9 million and that $1.49 million has flowed from the Calpine Rate Stabilization Fund through the Income Statement through October to offset the increased costs of the Dominion contract versus the Calpine contract. He also stated energy sales are down 2.5% YTD and believes this should reverse itself if we have a normal winter this year since last year was so warm. On the Profit and Loss Statement for September 2006, Clerk Dentino questioned the Municipal Sales prior year actual figure of $169,970, the FY 07 YTD actual figure of $173,475 and the fact that the amount that was budgeted for FY 07 was $297,031. . He wondered what would make the staff think the new figure for FY 07 would be $130,000 more than prior year. Director Babin was unsure and said he will look back at that and research it. Clerk Dentino also inquired about the Miscellaneous figure under Sales of Electricity for prior year actual at $55,153, the FY 07 actual figure of $59,077 and why the FY 07 budgeted amount is $303,358. Director Babin answered that it is because one-third of the fiscal year had passed. (' Clerk Dentino asked about the $1,901,418 figure for Other Power Supply Expense and why it was so much higher than the prior year figure. Director Babin explained it was because MMED entered into the Dominion contract, which was more expensive than the Calpine contract. He then distributed a hand-out to the Board that he had prepared showing the drawdown of the Calpine Rate Stabilization Fund and how there was no adverse financial C~ , . (' impact on MMED ratepayers because the difference between the value of the Dominion contract and the Calpine contract was flowed through the income statement by drawing down the Calpine Rate Stabilization fund. He stated that the Dominion contract is not adverse to the ratepayers because the increased cost is completely offset each month from the Calpine Rate Stabilization Fund. Clerk Dentino took exception to this statement and questioned the draw doWn of $1.4 million from the Calpine Rate Stabilization Fund, asking what the actual draw down agreement is. It was also his understanding that money was going to be put into an account to earn interest but he doesn't see that it ever happened. Director Babin clarified that interest was not shown on the hand-out he had prepared but that the money is on deposit at MMWEC earning interest. He stated that based on his analysis, everything is on target for MMED to be made whole. Director Babin pointed to the analysis he had distributed to the Board to illustrate his point that ratepayers are being made whole and he ensured them that the mathematics is correct. MMED has enough money in the Calpine Rate Stabilization fund to cover the difference in the two contracts through December 2008. (' Clerk Dentino pointed out that the impact of trading up from a contract for 3.7 cents per kWh for electricity to 11.3 cents per kWh because of the Dominion contract is in fact affecting the School Department, DPW, Town, etc., and because of that, their budgets don't work. Director Babin reiterated that there is a zero impact and that the hand-out he had just distributed is based on facts and supports his point. He stated that MMED staff had projected the Calpine Rate Stabilization Fund balance and that there is zero impact on customers through the end of 2008. As Clerk Dentino disagreed, he offered to do an analysis of the information. Director Babin said he would also perform an analysis for the Board and present it at the next meeting. Clerk Dentino questioned the $52,365 prior year actual figure for Maintenance Payroll- Expense and why the amount budgeted for 2007 is $112,000, which is double. He also inquired about the $137,804 prior year actual for Administrative & General Expense, the $88,255 for FY 07 Y-T-D actual and why the FY 07 budgeted amount is $184,150. Director Babin offered that when he was first hired he did a lot of job cost reallocation but that he would take a look at both of those areas and report back. Commissioner McCarter asked, as far as income, was MMED on target for the year. Town Manager D' Agostino responded that it was a little down. Director Babin elaborated on that by saying that metered sales were down but revenue was up about $400,000 from last year. He believed MMED to be on target. Mansfield High School Robotics Program - Director Babin gave a brief introduction to the Mansfield High School Robotics Program. He stated that over the last several years, MMED has made fmancial contributions to this program. He also said that MMED Engineer Ann Langille has been an active participant working with the students and advisors over the last few years. Director Babin then introduced MHS Robotics faculty advisor Jim Carver-Brown. (' ~ . ",. (' Mr. Carver-Brown began by saying the Robotics team started off the season with a very small budget of$1,200. They are in need of $6,000 for fees for the Boston Regionals although they have decided to pass on the Manchester Regionals due to lack of funds. He explained that they could not bring any equipment with them this evening because the team is in the process ofrebuilding their robot. He added that because of their financial situation, they are currently concentrating on fund-raising. Chairman McCue inquired about the $6,000 fee for the Boston regional. Mr. Carver-Brown explained the school receives approximately $10,000 in hardware and software in return for this entry fee. Clerk Dentino asked if the team gets any financial assistance from the School Department. Mr. Carver-Brown answered that funding is inconsistent. He said that last year the School Superintendent gave them money to cover housing costs when they went to Manchester. Clerk Dentino stated that he has always been a big believer in the Robotics program but he maintains that it should be in the School Department or Town budget. He believes that the Light Department cannot legally make a contribution to support this program. (' He then asked who suggested the wording of the motion for the Light Department to make a contribution to the Robotics program. Director Babin answered that he did, and that it was based on the legal opinion of Ken Barna of Rubin and Rudman. He added that money being appropriated for this purpose comes from below the line. Below the line funds are expended at the Board's discretion since they are not categorized as operating expenses. Clerk Dentino pointed out that Director Babin was using this as a donation which is different than a PILOT, to which Director Babin responded by reading aloud to the Board the suggested motion. Clerk Dentino stated that Investor Owned Utilities (IOU's) can make donations because they're privately owned but Municipal Light Plants can't. The example he gave was when the Board voted to make a donation to the homeless Veterans, then was informed by the Town . Accountant that they could not make the donation. Clerk Dentino said he would like to see the opinion which the Town Accountant got from the Department of Revenue (DOR). Chairm~ McCue said he recalled making this donation to the Robotics at least five times before. Clerk Dentino stated that he wants to get it as an appropriation, as it should be in the Town or School Department budget. Town Manager D' Agostino said we've been doing it this way for five years and doesn't know why we can't do it again. Vice Chairman Amoruso suggested that Mr. Carver-Brown fill out an application form from the Town Manager's office and apply for money which has been donated to the Town for vanous Issues. (' Motion: That the Mansfield Municipal Electric Department contribute $7,000 from unappropriated earned surplus, to be recorded as a below the line expense, to the Town of Mansfield for the purpose of donating this money to the Mansfield High School Robotics Program (' (BaldwinlMcCarter second while open for discussion) Clerk Dentino reiterated that he believes the contribution cannot be legally made. Vice Chairman Amoruso suggested that the Board revisit the issue and made a motion to amend the dollar amount in the previous motion from $7,000 to $5,000. Motion: That the Mansfield Municipal Electric Department contribute $5,000 from unappropriated earned surplus, to be recorded as a below the line expense, to the Town of Mansfield for the purpose of donating this money to the Mansfield High School Robotics Program Passes 4/1 (Dentino opposed) (' Mansfield Utility Assistance Program - Director Babin informed the Board that MMED has once again been asked to make a contribution to the Mansfield Utility Assistance Program. He explained that the screening process for qualifying for funds is done by Social Services, not by the MMED staff. He distributed copies of the guidelines for the program from last year and reviewed them with the Board. He said that to be eligible, the customer must be a regular payer of their electric bill and commit funds of their own in addition to the funds from the program. He said an additional use of the program's funds for this year is for the payment of customer deposits for those who have difficulty paying the advance deposit for electric service up front. Last year MMED contributed $40,000 to the program and that the Director of Social Services, Gail Farrugia, has asked for $25,000 this year. There is also a balance of $17,000 remaining in the account from last year. Clerk Dentino questioned using the money from this program to pay deposits for those who are new to Mansfield and would therefore not have a history. This makes him nervous. He also questioned the guideline that reads a customer will not be eligible for assistance for a period of 12 months if they have defaulted on any payment agreements. He believes that even after waiting out the 12 month penalty period, the customer should have to make their account current before receiving any assistance. Commissioner McCarter asked that if the balance of the Utility Assistance account was $17,000, why Miss Farrugia was asking that the account be brought back up to $40,000. Director Babin answered that last winter was expected to be far worse than it was. Commissioner McCarter inquired as to whether the Board could revisit this if the program ran out of money. Clerk Dentino said not until May, which is the problem. Motion: That the Mansfield Municipal Electric Department contribute $25,000 to the Town of Mansfield for the purpose of donating this money to the Mansfield Utility Assistance program (AmorusolDentino) Passes 5/0 (' Proposed East Mansfield Substation Project - Request for Proposals - Director Babin informed the Board that MMED staff has issued requests for proposals (RFPs) for engineering " (' services for the proposed East Mansfield substation project. Engineer Chris Cox stated that the RFP had been compiled in-house and was sent out to six firms. He said that he got two responses, one from Power Line Models (PLM) and one from Greenman-Pedersen, Inc. The responses will be reviewed in-house this week and meetings will be set up with the firms for next week to discuss their proposals. Clerk Dentino wondered why only two firms responded and if there were any other qualified candidates. He said he was a firm believer in having at least three bids. Engineer Cox explained that this type of work is a niche market. Director Babin added that the RFP process doesn't require three bids. Town Manager D' Agostino said that as long as you advertise and follow proper procedure, even if you get only one bid, it is acceptable. Chairman McCue wondered if you'd have to reopen the whole bid process. Clerk Dentino reiterated that he wanted a third bid and asked what the proposal included. Engineer Cox answered the first part was the planning study to determine load growth, while the second part included the feasibility study for the substation itself. Clerk Dentino asked if he could have a map of the listed sites. Engineer Cox said he would get one to him and pointed out that page 2 ofthe RFP has information about the sites. Director Babin said that MMED wanted to have an independent study performed to see if "they see what we see". He acknowledged Engineer Cox's hard work on the RFP and congratulated the staff on the fine job they had done. r Clerk Dentino questioned the population projections found under Tab 1 of the RFP and wanted to know why nobody uses the Mullin report. He pointed out that the Town, the School Department and MMED had not used it with their projections. Town Manager D' Agostino believed the School Department decided to get their information elsewhere but said he would check on that. Engineer Cox said he got his information from Shaun Burke from the Planning Dept. Clerk Dentino had a question regarding system peak load growth projections located on page 6 of the RFP. He asked Engineer Cox where the 12 zone near the Tweeter Center was as he was uncertain that there was one. Chairman McCue answered by saying that the study must encompass the worst case scenario. Town Manager D' Agostino said that if you find out later that you didn't build to the fullest development capacity possible, you're back in front of the Board again ten years from now. You have to assume the highest use. Director Babin ended the discussion by saying the study included in the RFP was prepared by staff at MMED but that the staff are not qualified to perform a formal planning study. The purpose of distributing the RFP was to provide information to show the process is moving forward. Update on Status of Canal Generating Station Issue- Director Babin stated that MMED undertook an extensive campaign in regards to the Canal Generating Station issue. He said MMED had received a letter from John Kerry on October 20, 2006 giving notification that (' -. r MMED's request for action had been forwarded to FERC. On November 20,2006 MMED received a letter from FERC Chairman Joseph Kelliher defending the logic of their actions. Director Babin said that negotiations on this issue are on-going but confidential and he said this is not going to go away. He believes the best MMED can hope for is to have some of the cost reduced but that the charges would not be entirely eliminated. Vice Chairman Amoruso wants to respond to FERC Chairman Joseph Kelliher's letter and would like to know how to go around him as he did not think Mr. Kelliher's letter was satisfactory. Chairman McCue believed Barney Frank was the only one who seemed to understand the issue and suggested he should be contacted. Clerk Dentino questioned a section of Director Babin's hand-out, asking who is responsible for "expediting the transmission improvements required to alleviate to the extent possible the transmission bottleneck problem.. .". Director Babin said his understanding is that it is NSTAR's responsibility to construct those transmission improvements. Clerk Dentino also inquired as to how many times Canal runs out of merit, at which point RMR payments must be made. Director Babin answered he didn't know but that it was billed through MMWEC at approximately $150,000-$200,000 per month. Old and New Business- Director Babin wanted to point out to the Board that a Mansfield resident named Erica Bliss of Balcolm Street had forwarded to MMED a very extensive list of streetlights that were not working. He thanked her for all of her hard work in chasing this down and commented that her efforts had made MMED's streetlight repair work more (' efficient. (' Clerk Dentino said that at the October 25, 2006 Selectmen's meeting, Attorney Mangiaratti stated that $150,000 had been received from the insurance company and that it was his understanding that legal bills for the Stoyle case were being paid out of this. Clerk Dentino said he could not find a record ofthis money anywhere in the Town and that he had looked at the Light Department and had also asked Town Accountant Bea Kearney about it. Director Babin said that he would let Town Manager D' Agostino address this issue. Town Manager D' Agostino said he was not aware that Attorney Mangiaratti had said this but that the insurance company has set aside $150,000 to settle the Stoyle case and that the Town refused to settle at that amount. He explained that in the Beliveau case there was no money set aside for settlement because there was no insurance. He also explained. that if a judgment or settlement is below $150,000 in the Stoyle case, the insurance company will pay for it but ifit is above $150,000, the amount exceeding $150,000 is the Town's responsibility. Clerk Dentino wondered how legal defense funds can be paid out of something that he feels has been put on the table as a judgment. Both he and Town Manager D' Agostino were in agreement that there is no judgment. Clerk Dentino then said if the insurance company says the cap is $150,000 and they have now left the case then he has to believe the Town should be in receipt of the $150,000. Town Manager D' Agostino explained that the money is being ~ , (' (' (' reserved for settlement of the Stoyle case and that the Town had not received any money from the insurance company. Adjournment Motion: To adjourn the Light Commissioner's meeting at 9:25 Passes 5/0 . r T ~ , ,lzz/07 Date of Approval