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HomeMy WebLinkAboutmin light comm 012207 f' . f?Ef~!VfD "c IT (> ('; 1: 07 APR / I PH 2: /6 fA ~ ., ... MA Ihtl:.Jt U:.LD Present: Chairman Michael McCue; Clerk George Dentino; Commissioner Dav~~~FTTS Director Gary Babin; Engineer Ann Langille; Engineer Chris Cox; Line Foreman Gary D' Ambra; Staff Accountant Ken Thompson; Office Manager Laurie Anderson; Financial Assistant Jacqueline Lee and Town Manager John D' Agostino Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting January 22, 2007 Light Commissioner Meeting The meeting was called to order at 7:35 PM. Motion: To approve the minutes of November 20, 2006 (McCarterlDentino) Passes 3/0 Motion: To approve the minutes of December 11,2006 (McCarterlDentino) Passes 3/0 Director's Report Financial Results for November 2006 -Director Babin presented the November 2006 financial report. He stated that Net Income Y ear- To-Date through November was $1,879,677. Jobbing Revenue was $519,814, of which $483,226 was a deposit made for site work at Mansfield Crossing. Jobbing revenue had the effect of over-inflating net income because no expenses had been charged against the Mansfield Crossing revenue. MMED's free cash position through November 2006 was $2,369,555. MMED's target for free cash is $1.5 million which represents three months of operating expenses, excluding purchased power. Director Babin reported that energy sales were down year-to-date and added that last year sales were also down. He stated this is primarily weather related. He also said that while energy sales growth was slow, 2006 peak system demand increased by 6%. Clerk Dentino asked what would be the cost of the East Mansfield Substation. Director Babin answered that he believed a cost of approximately $9 million had been used previously. Engineer Cox said he would have to look for that information in order to be more exact. Clerk Dentino asked how much purchased power is bought on the spot market. Director Babin said it varies by month but is approximately 20%, depending on the month. Calpine Rate Stabilization Fund Drawdown Schedule - Director Babin said he wanted to make it clear that the difference between the Calpine and the Dominion contracts would have a zero impact on MMED's ratepayers. He said he performed a cash flow analysis to illustrate what is drawn down each month from the Ca1pine Rate Stabilization Fund, which was If provided in the Board package. He then walked through the spreadsheet. provided to the Board by columns. He explained that he had inquired at MMWEC as to the average rate of return received on MMED Calpine funds on deposit with MMWEC since July 1, 2006 and that MMWEC had responded that a 4.25% rate of return was a conservative figure. He stated that as of November 30, $6,586,479 remained in the Calpine Rate Stabilization Fund. Chairman McCue asked if anything could affect this projection. Director Babin answered only an interest rate change would impact the projection as the pricing of the two contracts are fixed dollar amounts. Commissioner McCarter questioned the fluctuating numbers in thedrawdown column. Director Babin explained that MMED didn't buy the same amount of power each month and that the price of power each month varied so that the cost is not the same each month because of those two factors. Clerk Dentino said he didn't understand how the numbers could do what Director Babin said they were doing. He stated that Calpine is 3.77 cents all the time while Dominion varies each year. Director Babin explained that the 3.77 cents is a weighted average over time. Clerk Dentino wondered what happened to "January 2006-June 2006" as part of the Calpine contract and asked why this six month period had been left out of Director Babin's calculations on his spreadsheet. Director Babin answered that he was using the "fiscal year". Clerk Dentino pointed out that this six month delta might not make the $178,000 balance of the Calpine Rate Stabilization Fund look so good. Residential Conservation Services and Appliance Rebate Program Results for 2006 - MMED Office Manager Laurie Anderson explained to the Board that MMED is required to spend ~ of 1 % of operating revenue on residential conservation services. The total of MMED's Residential Conservation Services (RCS) expenditures for 2006 was $84,479. MMED's target expenditure based on the ~ of 1 % was $71,327. Office Manager Anderson reported that there were 438 customers in 2006 that participated in the rebate program which included a total of 457 appliances. She said that 24 customer requests were declined, either because the customer had already earned the maximum $100 credit for the year or the product for which reimbursement was being sought was not an Energy Star appliance. Commissioner McCarter asked Office Manager Anderson if she had any recommendations for any changes to the program. She did not recommend any changes. Clerk Dentino questioned the $8,034 for salaries in the breakdown of MMED 2006 RCS costs. Office Manager Anderson explained that number was 1% of Director Babin's salary, 1% ofthe Staff Accountants salary, 5% of her own salary and $500 was part of the linemen's salary. Director Babin interjected that this is allowed under the law which established the RCS program. Clerk Dentino said he did know that and was actually just looking for the proportions. , Clerk Dentino said that the Energy New England (ENE) "800" number was on a work day schedule and not 24/7, and wondered why the Light Department staff couldn't handle the 300 phone calls in-house instead of paying $10,000 to ENE. He suggested MMED staff take the call, and then, if necessary, send them to ENE. Director Babin answered that MMED staff doesn't have the expertise to handle energy efficiency inquiries and also said that ENE performs other services as well for MMED. Clerk Dentino pointed out that ENE is then getting the business generated from the phone call. Director Babin said MMED has to provide these services and pay for them under the law. Chairman McCue asked if the regulations state that MMED has to provide an "800" phone number. Director Babin said we do. Clerk Dentino questioned ifMMED could be paying for other communities phone calls. Direct Babin said that the municipal light plants involved pay for their own calls. Clerk Dentino wondered if anyone had ever asked how many calls came in from Mansfield. Write-Off Summary for 2006 - Director Babin said that according to the Board's policy, MMED has to write-off balances from closed accounts that are over one year past due. He reported that for calendar year ending December 31, 2005, $40,731.19 was written off in accordance with the Board's policy. An attempt is still being made to collect this money, however, by Action Collection Agency of Boston. Commissioner McCarter asked how the account balances had gotten so high. Office Manager Anderson answered that much of the write-off amount was for DTE protected accounts, which cannot be terminated for non-payment. Director Babin stated that MMED's uncollectible debt is 0.14% of operating revenues while the New England municipal utility average is 0.22%. He said that MMED's uncollectible debt is only 2/3 of what the other municipal utilities are. He noted that $15,000 will be written off for just one customer alone in 2006 due to bankruptcy, although he believed that MMED had worked very hard to collect on that balance including exploring going to court. Clerk Dentino wondered what happens if a balance would be written off one year then collected the following year, thereby necessitating an adjustment to the books. He believed nothing should be written off until all attempts to collect had been exhausted. Direct Babin said every effort at collecting had been made and that you wouldn't retroactively change your books for prior years for such a small amount. System Reliability Summary for 2006 - The MMED 2006 System Reliability Measurement and Statistics report was to have been presented by Engineer Ann Langille but unfortunately, she was unable to attend the meeting. Director Babin stated that he believes the response time of Line Foreman D' Ambra and his staff has been excellent in restoring service to affected customers. He also noted that momentary outages were only approximately 25% of what they used to be due to changes MMED made in system protection. He then said he would let '. Proposed East Mansfield Substation Project - Update on Request for Proposals- Engineer Cox stated that he had been asked to provide maps of the potential sites for the East Mansfield substation at the prior Board meeting. He then distributed copies of those potential sites and reviewed each of the parcels for the Board. Parcel 39-8 is owned by the Town and managed by the Conservation Commission. This is the "parcel of last resort" under the law which designated the land as conservation and the Conservation Commission is unwilling to lift the current restrictions on this parcel. Parcel 39-38 is actually two parcels and is owned by National Grid. Parcel 39-10 is owned by Jess Realty Trust and they had plans to develop this into a sub- division. The homeowner at Parcel 39-67, who did not want his name used, had discussed selling MMED the back portion of his property. Parcel 39-27 is owned by the Town but has no frontage on any street. Engineer Cox also told the Board that with respect to the RFPs, MMED did get a third bidder when it reissued the RFP. The three bidders are Power Line Models (PLM), Greenman- Pedersen, Inc. and EPRO and the staff is evaluating those proposals. Update on Canal Generating Unit Settlement Discussions - Director Babin informed the Board that MMED will be going to litigation regarding the Canal Generating issue. He explained that under the current settlement proposal, MMED would have had to sign off on their rights for two years and that this wasn't acceptable to the municipals involved. He said that the Board would have to agree to sign off on any possible settlement agreement. He also explained that NStar was unwilling to make the necessary transmission improvements to improve reliability to Cape Cod, which is the basis of the case. Legal Opinion Regarding MMED Contributions to the Town - Director Babin stated that at the last Light Commissioners meeting the Board approved a donation to the Mansfield High School Robotics Program of $5,000. He added that this donation has been made every year for several years. He provided to the Board a legal opinion from Rubin and Rudman dated October 8, 1999 regarding MMED's contributions to the Town. Clerk Dentino stated that this opinion goes back to 1999 when Mike Lawless worked for both MMED and for the Town. Dianne Royle, Chairman of the Board at the time, asked for the opinion regarding MMED forces working for the Town. Clerk Dentino pointed out that this opinion dealt with "labor" services not "money" services. He said that this opinion says MMED can't do things like hang banners, Christmas lights, etc., unless the Townbcompensates MMED for it. If ~ He also pointed out that previously when MMED provided funds for the Mansfield Utility Assistance Program, those funds were going to be used for resident's gas, oil and electric bills and former Director Jack Beliveau wouldn't sign as the money should be used for electric bills only. Another example Clerk Dentino gave was when MMED had to withdraw their pledge to make a donation to the homeless veterans. Also, MMED can no longer support any Little League teams. Director Babin responded that there isn't anything wrong with MMED hanging banners, Christmas lights, etc., as long as it's accounted for as a below-the-line expense and it benefits the ratepayers. Clerk Dentino said that he had asked at the last meeting for the DTE opinion and the DOR opinion. Director Babin answered that he did bring the DOR opinion which states that MMED cannot make donations to private charities and that MMED money can't be used for anything other than public purposes. He then said that the homeless veterans shelter was a private donation and that the Mansfield High School Robotics Program is a public purpose. Clerk Dentino said that at the last meeting he had asked that the Town Accountant look at the DOR opinion. He added that he thinks there's another opinion from Ken Barna regarding donations. Director Babin gave the examples of snowplowing and installation of fiber cable optic as work MMED does for the Town and for which it is reimbursed by the Town. He said he has gone by past practice in determining what should and should not be done. He also added that the Robotics donation is voted to the Town and accounted for as a below-the-line expense from unappropriated earned surplus, which is money which can be expended at the Board's discretion. Chairman McCue asked Director Babin to get a DTE advisory opinion if they will give one and also the Littleton DOR opinion that Clerk Dentino had previously mentioned. Chairman McCue said he would then speak with Director Babin and Town Manager D' Agostino about the opinions. Clerk Dentino questioned where in the Rubin and Rudman opinion anyone would get the impression that MMED could do whatever they want as long as it's below the line. Chairman McCue answered that he did not say "anything" but that he said he was comfortable with the Robotics donation. Clerk Dentino said he wants the Town Accountant's opinion on donations being made from the Light Department's funds. He also believes there's another Rubin and Rudman opinion floating around. Old and New Business- Director Babin wanted to address some questions Clerk Dentino had raised regarding the financial reports at the last meeting. Director Babin said that municipal sales had been reported previously in the financials as well below budget. He stated that the budget was based on a report he received internally. He explained that Municipal Sales were budgeted as sales of electricity for municipal accounts but the actual cost reported in the financials also includes streetlights. Also, in regards to Miscellaneous Sales, one customer is being billed under the interruptible rate and Director Babin had budgeted that customer as "miscellaneous sales". Director Babin said there were a few reasons why the amount budgeted for payroll expense for operations and maintenance was different from the fmancials. One was salary increases. The second was that MMED increased the overhead from 60% to 75% from FY06 to FY07. The staff also allocated more money to capital in FY06 than FY07 so the operating budget for FY07 was higher. Clerk Dentino had also asked in regards to the A&G budget, why the actual cost was so much less than the budget. Director Babin said that legal expenses were significantly below budget, about $50,000 less. Outside engineering services were about $17,000 below. Maintenance costs for equipment were approximately $15,000 lower also. It was decided not to have a Light Commissioner's meeting in the month of February. Meetings were scheduled for March 5 and March 19. Clerk Dentino said that back in October when Mayhew Seavey had attended a meeting, but Clerk Dentino was not present, Director Babin made a statement that prices in the power supply market were dropping but that the staff did not have the authority to lock in prices and enter into a contract. Director Babin explained that prices are good for one day when solicited because of the nature of the market and that the Board would need to give Town Manager D' Agostino the authority to execute a contract. Clerk Dentino asked how Town Manager D' Agostino had been able to enter into the Dominion contract without a vote from the Board. Director Babin said that an emergency board meeting had been called to authorize the Town Manager to execute that contract. Clerk Dentino wondered how a meeting could occur without public knowledge and said that he couldn't find the minutes from this meeting. Chairman McCue stated that nomination papers for the May election are out now but announced that he would not be seeking re-election. Adjournment Motion: To adjourn the Light Commissioner's meeting at 9:35 Passes 3/0 ~tt \ 01 Date of Approval .,