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HomeMy WebLinkAboutmin light comm 040907 RECEIVED .." . r'o c, V c n F f. \! r- \"..~"" 't~,~ r ',' .:..., ',',," c. " . > t . ,I ~ Mansfield Municipal Electric Departrit'~mt ' . f' Minutes of Light Commissioners Me~~A ~ \ 0 PM \: 58 April 9, 2007 __ _ __ _ ._ _ ,_ . i-"i t\ 'd ;) i- Ii:. L 0 MASSACHUSETTS Present: Chairman Michael McCue; Vice Chairman Lou Amoruso; Clerk George Dentino; Commissioner Ann Baldwin; Commissioner David McCarter; Director Gary Babin; Engineer Ann Langille; Engineer - Chris Cox; Line Foreman Gary D' Ambra; Staff Accountant Ken Thomson and Financial Assistant Jacqueline Lee Light Commissioner Meeting The meeting was called to order at 7:30 .PM followed by the Pledge of Allegiance. Motion: To approve the minutes of January 22, 2007 (Dentino/McCarter) Passes 3/0/2 (Amoruso and Baldwin abstain) Motion: To approve but not release the minutes of February 14, 2007 (Amorusoffientino) Passes 4/0/1 (Baldwin abstains) Motion: To approve the minutes of March 5, 2007 (AmorusolBaldwin) Passes 5/0 Motion: To approve the minutes of March 26, 2007 r (AmorusolBaldwin) Passes 4/0/1 (McCue abstains) . Director's Report Financial Results for February 2007 - Director Babin stated that MMED is maintaining a cash position of $2,448,989, which has improved significantly from last year. He also said that energy sales are down from last year, approximately 0.5% below FY06, explaining that the warm weather hurt sales. The. depreciation fund is $2.7 million, up from $1 million in February 2006. Director Babin also reported that the Calpine Rate Stabilization Fund has been drawn down by $3,005,342 in FY07~ Clerk Dentino asked how the depreciation fund got so low in February 2006. Director Babin said that MMED was still recovering from the expense of Gilbert Street Substation. Clerk Dentino commented that MMED sometimes funds the Town out of the depreciation fund and wondered if a sizable amount had been borrowed in either 2006 or 2005. Director Babin said he would follow up on that. System Reliability Summary for 2006- Engineer Ann Langille presented a report on MMED's system reliability statistics for 2004, 2005 and 2006. She began by pointing out a few items in the report. She said that the statistics are based on the outages for the average /""'"" customer. She explained the meaning of the terms. CAllI is response time to restore an n .-1_ ..... interrupted customer; SAIFI is the frequency of outages and SAIDI is the average duration of {" outages. Engineer Langille also explained that different utilities report their outage information in different ways. She then reviewed a list of four criteria that the Massachusetts DTE follows. One criteria excludes from the statistics any planned outages or any outages that last less than 5 minutes. Outages that do not involve a primary distribution circuit are not included. Also, outages that affect 15% or more of the total number of customers are defined as "Excludable Major Events". When MMED includes the "Excludable Major Events" in their statistics they fall into the average range for reliability. When these events are not included and an apples- to-apples comparison to other utilities is made, MMED fares far better statistically. Engineer Langille stated that MMED has 7 distribution reclosers and that there has been a significant reduction in recloser operations. She reported that 30 outages were due to animal contacts. There were no outages due to bad porcelain cutouts in 2006 because all of the suspect Chance cutouts had been replaced. Director Babin added that MMED has provided information on the porcelain cutout replacements for class action litigation; although he is not sure that MMED will ever see anything come of it. Engineer Langille reported that 26 outages in 2006 were due to equipment failures, which is a significant decrease over 2005. r- Director Babin shared some of his observations regarding reliability statistics. He said that trending is in the right direction and frequency of outages has reduced dramatically. He noted that there has been aggressive tree-trimming and that trees are second only to squirrels in causing the most outages. Due to the resetting of the relaying in the reclosers to make them less sensitive, momentary outages have decreased from nearly 3 outages to just over 0.5 outages per customer between 2004 and 2006. Director Babin also said that 70% of outages are due to squirrels or equipment failure. He noted that the summer heat puts more stress on the equipment. Clerk Dentino commended the line crew on the excellent job that they do. Commissioner McCarter was in agreement and added that the ratepayers get their monies worth from their municipal light department. 2006 Massachusetts DTE Report- Director Babin said that all electric utilities in Massachusetts are required to submit an annual statistical report to the DTE, which is based on calendar year information. This is a statistical summary of energy sales, operating expenses and equipment. MMED's report was completed by Staff Accountant Ken Thomson. MMED formally requested from the DTE a time extension for submittal of the report from March 15 to April 30, which was approved. Director Babin said he was seeking Board approval of the report for submission. r Clerk Dentino commented that the report was prepared by in-house staff and asked if MMED r had an audit for calendar year 2006. Director Babin answered that MMED did not audit calendar year 2006 data but that the DTE doesn't require an audit. Clerk Dentino stated that even though this report is not backed up by any audit numbers, MMED asks the Board members to sign it. He didn't see how any Board could do that. He added that previously, when MMED was on a calendar year, there was an audit for that year to back up the numbers. Director Babin reiterated that the DTE does not impose an audit requirement for this submittal. Clerk Dentino said he couldn't sign anything unless it had audited numbers to back it up. Motion: To approve MMED's 2006 Massachusetts Department of Telecommunications and Energy (DTE) Report (AmorusolBaldwin) Passes 4/1 (Dentino against) Update on East Mansfield Substation - Engineer Chris Cox said that the kick-off meeting with MMED's engineer, PLM, was held on March 6,2007. He has reviewed system design criteria and has taken Mr. Rice, the engineer from PLM, on a tour of the prospective parcels. Engineer Cox has also been collecting information on Town by-laws for Mr. Rice who has been running some numbers and evaluating parcels. Engineer Cox believes the study should be completed by mid-July. Clerk Dentino wanted to know the cost of the study. Engineer Cox answered approximately $58,000. Clerk Dentino asked if MMED didn't already do this study and believes this is /""'"" redundancy on the Light Department's part at a cost of $58,000. Engineer Cox said that before Gary Babin was hired there had been one neighborhood meeting and since he had been hired there had been a second neighborhood meeting. He said that MMED decided to independently justify the need for the substation and obtained an outside consultant because it's such a huge project. He believes MMED could not perform the study in-house at the level of technical and analytical detail that is needed to satisfy all of those concerned. Director Babin added that the consultant's level of expertise is worth the cost. He also believes the comfort level of their planning study is money well spent since it provides an independent view ofMMED's load growth from an expert. Clerk Dentino stated that in 2003 MMED knew there was a need for another substation and they believed that it would be completed in 2008. He said along with neighborhood and Town input at the time, there was also a study done back then and money was to be put aside. He wondered why MMED was starting at the beginning again. PLM doesn't have any more knowledge of the 5 parcels than anyone else. Director Babin said that when he joined MMED in 2004, he couldn't find any study or back- up for the building of the substation. He also noted that he could not find a line item on the balance sheet when he arrived showing any savings for the substation. Director Babin believed MMED needed to show due diligence in both planning for and justifying the substation. Chairman McCue said he thought it was money well spent. r Dr .._ Cost of Service and Rate Analysis Proposal - Director Babin provided to the Board a r- proposal which was prepared by Mayhew Seavey for conducting a Cost of Service Study and Rate Analysis for MMED. Director Babin said the last study was done in 2002 - 2003, which produced the rates in place today. He explained that the study would tell MMED if the money MMED is collecting through base rates is adequate to cover the costs of running the Light Department. He also pointed out that unbundling electric rates was discussed recently in a Board meeting at which a presentation was made by Mr. Seavey. Director Babin indicated that if new rates were to be designed, there are three rate design alternatives. The first design would produce a uniform rate of return from all classes of customers. The second design would produce a uniform percentage rate increase across each class. The third design would evaluate MMED's rates versus investor-owned utility competition in the area across all classes and adjust accordingly. Director Babin said the entire process to conduct the cost of service study, design new rates and implement them was 3 to 4 months. Once the cost of service study was complete, MMED staff would come back to the Board and present the results of the study so they could let MMED staff know how to proceed. He believes they would be looking at August I for new rates. Director Babin said if the Board elected to go forward with this, they would have to discuss how to proceed with the budget because the rates wouldn't change on July 1 but would probably be ready for August 1, if approved. He said he was looking for approval from the r- Board this evening to go through with the study proposed by Mayhew Seavey. Commissioner McCarter asked if the Board agreed to unbundle the bills, would the rate go back up. Director Babin answered by saying there are several charges but the key one is the "distribution charge" which is the one charge where MMED would actually make money, . everything else is just a pass-through. Commissioner McCarter stated that the rate was lowered because the PPCA had been lowered and the 1.43% projected rate of return is based on the lowered PPCA. He wondered if the underlying rate was in need of adjustment, would that result in an increase in the rate. Director Babin answered that yes, rates would increase. If MMED is making a profit of only 1.43%, and not 8%, then MMED is undercollecting and the base rates would need to be raised. Vice Chairman Amoruso asked, if by approving the study, it meant they were approving the unbundling of the bills because he is not sure he is in favor of that. He wondered if this was the aim of the study. He said he was not sure he'd support "uniform rate of return design". He'd like to see the pros and cons of both sides and he's not against a study that's going to show both methods of rate presentation: the current method and the unbundled method. In regards to the cost of the study, he did feel that a cost of $1,000 for attending a Light Commissioners meeting was rather pricey. He also thought "two man days" for data /""'"" "'III ,.,.- ... gathering was a very short time. He reiterated he wants to see all sides of the issue, not just r one. Director Babin responded by saying MMED could go through Phase I and if the Board chose not to proceed, the process could stop right there. Clerk Dentino commented that this study is geared to raise the rates to make a profit. He reminded Director Babin that at the last meeting the Board asked for back-up for the past five years so that they could see the trends and spikes in the revenues and expenses. Clerk Dentino believed litigation costs and purchased power costs to be the greatest expenses. He added that he doesn't believe they need Mayhew Seavey to come do this study. He asked where they stood in getting the information they had asked for previously. Director Babin said that the Board would first need to decide what they want to establish as a rate of return. He said, in regards to getting the information to the Board that they requested, that they had met only two weeks ago, so he didn't have enough time to get the information out in fmal form. He said he would send the information to their homes by the end of the week. Vice Chairman Amoruso said he thought it would be worthwhile to do the first part of the proposal based on what Director Babin said about the project being severable. Motion: To approve the Cost of Service and Rate Analysis Proposal with the r understanding that it would be severable after the first $6,000 AmorusolBaldwin Passes 4/1 (Dentino against) Old and New Business Commissioner McCarter inquired as to when the Board would receive the information on the trending that they had requested. Director Babin said that he would mail it to them by the end of the week. Clerk Dentino said he had experienced a problem at the Light Department last Thursday when he wanted to attend a meeting but was not welcomed because he was told it would be inappropriate. He asked Director Babin by what authority did he have to do that. Director Babin responded by saying the Board is a policy making authority and that the staff is responsible for operations of the department. The meeting with auditors was to review a draft audit in anticipation of the final audit for presentation to the Board. Commissioner Baldwin noted that it was not a publicly posted meeting. Clerk Dentino pointed out that Director Babin said it was a workshop and that would be considered public. Director Babin said he did not think he called it a workshop, but that it was a discussion of the draft ofthe audit, which is the staffs responsibility. Clerk Dentino stated that the Light Commissioners have the right to sit in at a meeting before r everyone else gets the finished product. He is supposed to represent the people, acting as a n III. . , r check and balance. He stated that he has every right to be at that meeting and asked what Director Babin was hiding. Vice Chairman Amoruso stated that the decision not to allow Clerk Dentino to join the meeting was made by Light Plant Manager John D' Agostino. He then said that had the two FinCom members not been included at the meeting, he believes the decision to exclude Commissioner Dentino would have been correct. He is, however, surprised at this situation and feels it would have been appropriate for Clerk Dentino to attend the meeting. He said he was in agreement with Clerk Dentino and that, perhaps, the Board should have a discussion with Town Manager D' Agostino about how this should be handled in the future. Vice Chairman Amoruso stated that if the FinCom advisory board was allowed access to the meeting then the Light Commissioners should be allowed to sit in as well. Chairman McCue disagreed, saying that the presence of a Light Commissioner might have an effect on the meeting even if that person said nothing. He added that it wasn't a publicly posted meeting so he believed he would defer to the discretion of Town Manager D' Agostino. Commissioner McCarter believes that MMED is entitled to have a staff meeting without any Light Commissioners looking over their shoulders unless they have been invited. Commissioner Baldwin agreed with Commissioners McCarter and McCue. Adjournment r Motion: To adjourn the Light Commissioner's meeting at 9:10 Passes 5/0 r- Respectfully submitted: Jacqueline Lee 5107/07 5}7167 Date of Approval r n ... f.