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HomeMy WebLinkAboutmin light comm 030507 .. ~~~~IVED , }.; tl j"D p" r ! .r< r~ 07 APR II PH 2: 16' MA~1~td!j6~LD Present: Chairman Michael McCue; Vice Chairman Lou Amoruso; Clerk George Dentino; E:TTS 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 Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting March 5, 2007 Light Commissioner Meeting The meeting was called to order at 7:30 PM. FY07 Capital Budget Update Director Babin stated that MMED would first be asking the Board to approve an adjustment to the FY07 Capital Budget. He said the request would be to revise the authorized amount from $1,926,993 to $1,891,006, a reduction of$35,987. Line Foreman D' Ambra and Engineer Langille were on hand to identify increases and decreases in the original FY07 budgeted items. Clerk Dentino began by questioning the underground cable work on School Street. Engineer Langille said there were already three circuits on the pole line in the School Street area where MMED was working and a fourth circuit could not be added, although MMED requires another circuit in that area. This will require the fourth circuit to go underground. Engineer Langille also stated the cost of transformers went up by approximately 50% because of increased requirements. She added that MMED does not get reimbursed for transformers up to 500 KV A and that customers have to buy their own transformer only if it's over 500 KVA. The cost of installing new streetlights was also another increase to the FY07 budget. There has been one MMED customer, in particular, who has been very aggressive about reporting street lights that are in need of repair. Engineer Langille also said that when reviewing the budget, MMED realized that there was a requirement for additional tools. This was another unanticipated expense. Computers and software are exceeding the approved FY07 budget. An upgrade to Windows for MMED's billing system pushed this cost above budget. Clerk Dentino questioned line item "865" the primary conduit installation and where the resulting $146,000 overage would go. Engineer Langille explained that the budgeted amount had been reduced because Mansfield Crossing is actually doing a large part of the installation that had been part of the original 865 scope. Director Babin said that this overage would be applied to finishing the rest of the projects shown on the FY07 Capital Expenditures spreadsheet. Clerk Dentino stated that MMED is the only municipal, other than Wellesley, that doesn't use a calendar year for a fiscal year. He said that because MMED goes by a fiscal rather than a calendar year they push money to the very end. He believed that in the past when MMED was on the calendar year they knew their budget figures earlier, whereas now they don't know them until June 30. Director Babin stated that Reading is also on a July-June fiscal year. Clerk Dentino also asked how MMED's audit was going and whether that was done on a fiscal or calendar year basis. Director Babin responded that a discussion of the audit was not relevant to this meeting but that it is done on the fiscal year. Chairman McCue intervened that this was not the time to revisit the issue of calendar year vs. fiscal year. He said he did not want to go back and that there would be no more discussion of it. Commissioner McCarter stated that he was confused about the capital budget and doesn't remember it being presented like this before. He believed the budget should show what MMED is going to buy not how much it will cost to get a job done. Jim Lazarra of FinCom said that the members of the Finance Committee had the same difficulty that Commissioner McCarter was having. He stated that they were working with the staff to develop a more reader-friendly spreadsheet. He added that it doesn't mean that MMED is not spending its money correctly. He also stated that the nature of the MMED's business is to construct projects and that they don't implement their capital plan in the manner that the DPW does. Chairman McCue agreed that capital projects are done differently on the Town side. Director Babin said this is because MMED is an electric utility business entity. Engineer Langille explained to the Board that three of the budgeted items for FY07 are being deferred to FY08 because they need Verizon pole sets, which have not been done. She also explained there are some unanticipated capital items, such as the Branch Street upgrade, which were required due to field conditions but were not originally budgeted. There were also two FY06 carryover items. Director Babin stated that the MMED staff did sit down to review these items with the FinCom. Jim Lazarra told the Board that what they had was not the first draft because the FinCom members did have questions for the MMED staff on an earlier version. He said that they want to review this again to see how MMED actually does. Overall, the FinCom didn't have any problems moving forward with this, as long as documentation following this is more descriptive. Commissioner McCarter questioned why the Board needs to know this kind of information. Although he said he was not complaining, he wondered why they needed to know about the day to day running of the business. Mr. Lazarra answered by saying the FinCom discussed with the MMED staff the nature of this presentation and that it helped the FinCom know what was an operational and a capital expense. He said that they wanted to have this level of detail available. ,r ,...j Clerk Dentino asked why the actual costs were reported only through December 2006 and, therefore, it wasn't current. Director Babin answered that he directed the staff to perform the analysis in this manner and that next time he would use the most recent data. He explained that he thought a six month period would be easier for everyone to understand. Motion: To approve the revision of the MMED FY07 Capital Budget from $1,926,993 to $1,891,006 (AmorusolBaldwin) Passes 4/1 (Dentino against) Clerk Dentino stated that he was voting against this revision of the budget as he didn't think the Board should be voting on a budget that is five months away from being completed and because ofthe change in the fiscal year at the Light Department. MMED FY08 Capital Work Plan - July 2007 to June 2008 - Director Babin told the Board that the MMED staff also met with the FinCom regarding the FY08 Capital Work Plan. Engineer Chris Cox then reviewed the cost summary with the Board. He started with an explanation of the four assumptions which were made while compiling the budget. The first was that labor was priced out at an average rate of $33.48 per hour with an overhead rate of 80% applied. The second assumption was that vehicle time is priced at $15 per hour. The third assumption was police details are priced out at an average cost of $300 per day. Lastly, a stores expense is allocated at a rate of 17% for material drawn out of inventory. Included in the Capital Work Plan Cost Summary were projects carried over from January 2005 to June 2005. Engineer Cox explained that MMED is waiting on Verizon pole sets and MMED staff wanted these projects originally from 2005 budget to be included in this budget. Vice Chairman Amoruso wondered if MMED should be putting pressure on Verizon. Line Foreman Gary D' Ambra answered yes, as MMED is being held hostage by them. He added that unfortunately, MMED cannot get them to respond. There are also projects deferred from FY06 budget included in this cost summary. These two projects are also waiting on Verizon. Clerk Dentino questioned where the money goes that was previously budgeted for these projects and how it is spent. Director Babin answered that MMED does not encumber money from year to year and that most of their labor is reallocated to other capital projects. Director Babin stated that MMED is different altogether than the rest of the Town because it is a utility. Clerk Dentino commented that it doesn't make sense to go through this process. There are also several one time projects included in the budget. With respect to the large one time projects Clerk Dentino asked what happened to the former policy where on a dollar for dollar basis, revenue was offset by the cost of doing the work. Director Babin answered that the policy was for billable work and not for capital. He stated that MMED now requires the estimated cost for MMED to perform the work for a customer installation to be provided up front. rI Clerk Dentino pointed out that because of the new mall and the Fairfield Green project, MMED has maxed out Gilbert Street Substation and now has to build a new substation. He believed that MMED did have a policy in the past that has apparently been abandoned for the large customers and did not include residents. Director. Babin answered that MMED has an obligation to provide service to those who request it and will eventually recuperate its investment off the customer through billing them for the cost of electricity. He added that MMED has not abandoned the policy which Clerk Dentino is referring to, but rather, has modified it. MMED requires under the policies voted by the Board for payment to be made up front. Another one time project discussed is the purchase of security cameras for Gilbert Street Substation. Engineer Cox noted that this is due to the fact that there have been two break-ins at the substation. Included in this budget are some recurring projects. An example of this is the pole replacement program which has been going on for a couple of years. Based on a system survey to detect decaying poles, approximately two poles per month will be replaced and the project should be completed in about four years. Special projects include the East Mansfield Substation project and the Automatic Meter Reading System (AMR) project. MMED is moving forward with the East Mansfield substation project and has selected its consultant. Regarding the AMR project, MMED is trying to select the technology this year and will come back to the Board with a detailed scope of work and cost estimate before moving forward. There are three reimbursable customer projects listed in the budget. The first is the Green at Mansfield, which is a 176 unit apartment complex on West Street which should be completed by July 2007. The second reimbursable project is the Mansfield Crossing Project, which will include 40 tenants, and is on schedule with the developer's time frame. The third reimbursable project is the Town Fiber Optic Project which has been on-going for the last few years. Currently, MMED is waiting for the Town MIS Department to let them know when to proceed with the remaining phases. Clerk Dentino inquired as to how long it would take to amortize the Automatic Meter Reading System (AMR). Director Babin said he would come back at a later date with that information. Clerk Dentino also inquired about the reimbursement of the Town Fiber Project. Director Babin said that the Town is paying MMED for the cost of doing the work. Engineer Cox then reviewed the Cost Summaries by Plant Account. He said that additional poles were necessary at a cost of $125,182, requiring 700 hours of labor. Additional underground cable and conduit was also necessary at a total of $122,578 at 300 hours of labor. ~. New transformers are budgeted for purchase at a total cost of $130,000. About $75,000 of those will be for Fairfield Green, $25,000 will be for other reimbursable jobs and $30,000 will be used for MMED' s internal needs. Engineer Cox explained that of the $25,000 allocated to office equipment, $15,000 is for office renovations and $10,000 is for office equipment. He also explained that $282,988 is allocated to Engineering and Operations Management which is 50% of the salaries of Engineer Langille, Engineer Cox and Line Foreman D' Ambra and 20% of the salary of Director Babin. Clerk Dentino questioned the $5,000 each for Laboratory Equipment, Radio Equipment and Miscellaneous Equipment which was also asked for last year and never spent. He wondered if this request is made every year. Director Babin answered that it is contingency money and that it is budgeted in the event a need arises in those areas. Clerk Dentino asked about Truck #9 which currently has 112,000 miles on it and wanted to know how many miles were on it at the time MMED obtained it from the Police Department. Although the MMEDstaff was unsure of the exact mileage at that time, Line Foreman D' Ambra stated that MMED has sunk quite a bit of money into the truck due to its poor condition. Engineer Cox told the Board that none of the staff were willing to drive it outside of town because it is an unreliable vehicle. Line Foreman D'Ambra added that personal vehicles were being used by the staff and mileage forms were being submitted. Chairman McCue asked Mr. Lazarra for the opinion of the FinCom regarding MMED's capital work plan. He said that they were fine with what the MMED staff is proposing. Motion: To approve the MMED Capital Work Plan - July 2007 to June 2008 in the amount of $1,932,125 (AmorusolBaldwin) Passes 5/0 Vice Chairman Amoruso asked how the operating budget was coming along. Director Babin answered that at the March 19 meeting he anticipated conducting a meeting for routine MMED business and he would request a meeting for April 9 to specifically brief the Board on the operating budget and would seek approval at that time. He said he would also be requesting a meeting for April 23. Town Manager D' Agostino stated that they could provide the Board with the budget sooner but it wouldn't be accurate. Vice Chairman Amoruso said he would like it sooner, at the same time the Town submits their budget. He felt the Board should have had it this month. Mr. Lazarra said it is difficult getting the budget this late but that MMED is waiting on power supply numbers. He stated that 80% of MMED's budget is power supply. He also said he has a meeting this Thursday with MMED staff. Chairman McCue asked that Mr. Lazarra contact him after the meeting, on Friday, and he would consider moving up the April 9 meeting. Director Babin stated that the MMED staff could move up its time frame and provide the budget for the March 26 meeting. He said staff would review it with the Board and request approval at that time. Clerk Dentino commented that MMED staff was comfortable going out seven months with power supply costs in order to raise the PPCA but now weren't willing to do the same to get the budget completed quicker. Adjournment To adjourn the Light Commissioner's meeting at 9:30 4:\~\Dl Date of Approval