Loading...
HomeMy WebLinkAboutmin light comm 091707 /'[\r-!\!"O f, : l.. ,~.. v t L. Mansfield Municipal Electric Department Minutes of Light Commissioners Meeting September 17, 2007 (" ~~ to 1 r~ F OloeT 17 Pr"1l1:34 :, , i,,:LU t '. "\' " I '(J5ET '111'_.. ~ ,) 1~1. L: (1 , T S Present: Chainnan David McCarter; Vice Chainnan George Dentino; Clerk Ann Baldwin; Commissioner Lou Amoruso; Commissioner Sandra Levine; Director Gary Babin; Staff Accountant Ken Thomson; Engineer Ann Langille; Engineer Chris Cox; Financial Assistant Jacqueline Lee and Town Manager John D' Agostino 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 July 16, 2007 (Amoruso/Dentino) Passes 3/0/2 (Levine and Baldwin abstained) Motion: To approve the minutes of August 28, 2007 (AmorusolLevine) Passes 4/0/1 (Baldwin abstained) Fiscal Year 2007 Financial Results- Director Babin stated that the $1.89 million Capital Budget for fiscal year 2007 was approved by the Board on March 5. When adjusting that budget for items that were unable to be completed, MMED had come in under budget by $177,220. Engineer Ann Langille then gave a report on the five areas in which the bulk of the capital money had been spent. The first area was underground construction which includes the costs of conduit, manholes and cable. She told the Board that over a mile of brand new underground cable has been installed. The second area in which a large portion of the capital money was spent was overhead construction. New spacer cable replaced the old open wire in many locations. The primary wire upgrades on School Street and Coral Street were also completed. The third area was transformers and meters. MMED spent double their original transformer budget, approximately $100,000 of which was spent on service to the Mansfield Crossing. There was also a significant amount of money spent on meters for Heron Crest. The fourth area where capital money was spent was Engineering and Operations Management. This was the cost of time spent on Capital projects by Engineer Langille, Engineer Cox, Line Foreman D' Ambra and Director Babin. The fifth area was transportation where a new bucket truck was purchased. The vehicle had actually been ordered in FY06 but was not delivered until FY07. As a result, the cost for the truck was included in the FY07 budget. Jim Lazzara from the FINCOMM addressed the Board stating that MMED's starting point for FY08 would be in carrying over $420,969 of projects. Director Babin indicated it would actually be only $250,000. He eXplained that the $420,000 would be reduced by $177,000, the amount by which MMED was under budget, so MMED would only be carrying over approximately $250,000 of projects. Vice Chairman Dentino questioned why the money was not in an interest bearing account such as the MMWEC account. He also questioned whether the streetlights at the Rt. 106 bridge were owned by the State or the Town. Director Babin answered that the State told MMED that the lights were not their responsibility but rather that the town was responsible for maintenance. Vice Chairman Dentino could not understand why, if they were not Town lights, MMED took care of them. He did not believe MMED should be repairing something owned by the State nor should the ratepayers money be spent on these repairs. He suggested telling the State that someone would end up getting hurt and then perhaps, they would be forced to do the repairs. Director Babin stated that rather than waiting for someone to get hurt, MMED took care of the repairs. He also pointed out that in his experience it was not uncommon that on state roads the municipality performed the maintenance work. Engineer Cox said, however, that the project design for the Route 106 bridge has already been completed and that the lights will be replaced at a cost of approximately $25,000. MMED FY07 Operating Budget Summary- Director Babin said that the overall operating budget for FY07 was $31 million, of which $25 million (81 % of the budget) was spent on purchased power. Net income for FY07 was $2,832,556. Energy sales were down 0.4% from FY06. Director Babin also reported that MMED's cash balance at year end was $1,732,928. The Calpine Rate Stabilization fund had a balance of $4,656,718 and the Depreciation fund balance was $3,313,598 at year end. Jack Goldberg from the FINCOMM told the Board that the FINCOMM had previously forwarded their questions to the Light Department and had already gotten their answers from Director Babin. He said they had wondered whether revenues were seasonally adjusted and MMED confirmed that they in fact are. The FINCOMM had also questioned the flush of funds. They now understand it's similar to a rebate and the money goes into surplus. Commissioner Amoruso questioned the 51.8% decrease in the sales for commercial customers. Director Babin explained that a large number of commercial customers had been reclassified as demand customers based on an analysis by the staff, which reduced revenues. Commissioner Levine questioned the meter reading costs. Director Babin said that the meter reading costs were understated and that more of the Meter Foreman's time had been spent reading meters than had been budgeted. Clerk Dentino asked how energy sales could be down 0.4% from FY06 when Total Metered Sales Revenue increased 6.3%. Director Babin answered that there had been an increase in the PPCA during the year. Clerk Dentino questioned why the MMWEC Reserve Trust Account amount of $3,398,899 was previously carried as both an asset and a liability and now is listed only as an asset. Mr. Goldberg answered that this is as it always has been. He said it is not possible to be both an asset and a liability. Chairman McCarter noted that Operations Payroll was up 10% and Administrative- PayrolllBenefits was up 27.3%. He wondered how MMED could sustain this. Vice Chairman Dentino also commented that A&G was the highest dollar amount but had the least amount of people. Director Babin explained that in FY06, the CFO position was budgeted but was vacant for nearly the entire year. In FY07 MMED hired a staff accountant which explained the increase in costs from FY06 to FY07. Commissioner Levine asked if there was a CFO position at the Light Department. Director Babin answered no, that MMED had collectively bargained with the IBEW Professional Unit and that position had been replaced with a Staff Accountant. Commissioner Levine then asked if the pay for the staff accountant was less or more than that of the CFO. Director Babin said that it was less. Vice Chairman Dentino said he believed the long range plan was to have one CFO over both the Town Accountant and the Light Department Accountant which would end up costing the town more money. Town Manager D' Agostino said that it had been discussed with the FINCOMM but probably would not be implemented for some time for a variety of reasons. FY08 Operating Budget Request for the Period October 2007-December 2007 - Director Babin stated that the proposed three month budget is necessary because of the ongoing rate study which the Board had approved. He indicated that the Board had previously approved a three month budget for the July to September period and the proposed October to December budget would transition MMED to the new rate structure. Director Babin said he anticipated that MMED would return to the Board with a 6 month budget for the period January through June 2008 once the decision on the new rates had been made. Director Babin also told the Board that the MMED staff has been working with the billing software company since June in order to convert the system to an unbundled billing format. The software for the proposed rates is being run in parallel with the existing billing to make sure the billing would be calculated correctly and to determine if the newly proposed rates would impact rate revenues as had been forecast. He said that the month of September would be MMED's first month of parallel billing. Chairman McCarter requested that the Board members receive their packets of information for the next Board meeting one week prior to the meeting. He believed they would need this time to review all the information they will be given on the rates. Director Babin told the Board that he is requesting the Operating Budget for October- December to be approved in anticipation of new rates in January. He said that the budget was computed with the PPCA set at 5 cents for those three months. He also notified the Board that the expense of the Beliveau lawsuit will be shown on the August financial statements. Motion: To approve the MMED FY08 Operating Budget for the period October 2007- December 2007 (Amoruso/Baldwin) Passes 5/0 Financial Results for July 2007- Director Babin reported that July was a strong month with a net income of $466,425. Energy sales increased 0.1 % from July 2006. MMED's depreciation fund has a balance of$3,454,847. Staff Accountant Ken Thomson addressed an issue with Transmission expenses. He explained that there were two bills in June and no bills paid in July. He explained that this is because MMED accrued July's bill in June. Advisory Opinion Response from Massachusetts DPU on Robotics Donation- Director Babin stated that every year the Board is asked to vote on a donation for the Mansfield High School Robotics team. In March 2007, former Selectman Mike McCue had requested that Director Babin obtain an advisory opinion on this donation from the Massachusetts Department or Telecommunications and Energy (DTE). He noted that the DTE had been renamed the Department of Public Utilities (DPU) under the Patrick administration. Director Babin received a response from DPU Deputy General Counsel Yvette Begue in August. He prefaced his remarks by stating that the DPU had indicated they were not issuing an advisory opinion but were offering the letter for evaluation of this issue based on prior DPU decisions. Director Babin read aloud to the Board directly from the letter stating that if a donation is classified as a PILOT it does not go against Department's regulations. The letter also said it's at the Board's discretion as to how money is spent that is classified as net income and is below the line. Vice Chairman Dentino said that the problem doesn't lie with the Light Department donating the money, but rather, it's the acceptance of the money on the Town's part. He said that he has asked numerous times to have the Town Accountant come in front of the Board to address the subject of the Town accepting donations from a public utility. He believes the problem is with the DOR and that's where you need to get the approval. He reiterated that he would like the Town Accountant brought in to address this at a Board meeting. Town Manager D' Agostino said that he thought they had received something in writing from the DOR. Director Babin said that he had previously given the Board information on two DOR opinions. Clerk Baldwin asked for a copy of the opinions. Commissioner Levine asked for a copy of the letter that the Town Accountant had received. Chairman McCarter questioned whether they should be going by the DPU or the DOR. Town Manager D' Agostino believes it's the DPU. MMWEC Membership Issues- Director Babin began by gIvmg some background information on MMWEC. He said that it was an organization founded by an act of legislature in 1976 so that municipal utilities could join together to purchase portions of power plants as a unit. There are currently 25 municipal light departments in MMWIIC and MMWBC acts as an interface between ISO New England and the utilities while representing their interests. Director Babin indicted that there has been a growing level of dissatisfaction with MMWEC among the members. One reason is the costs of membership have increased dramatically in the last several years. In MMED's case, MMWEC dues had doubled in the last year and quadrupled over the last 4 years. Six municipal light departments have either served their notice to leave MMWEC or were planning to do so. Director Babin explained that as municipals leave the organization the costs of membership will have to be supported by the remaining members. He also explained that if the Board voted to leave MMWEC it would not be effective until one year from MMWEC's receipt of the letter but during that year the Board does have the option of withdrawing that notice with no adverse impact. Director Babin suggested that MMED needs to think about protecting itself from being assessed a disproportionate share of costs by considering serving notice to withdraw. Director Babin also explained to the Board that MMED would have to replace those services provided by MMWEC with others who could provide the necessary services MMWEC was providing. He said MMED would have to identify the services and cost out those services and decide how to replace them if it left. He also offered to have the General Manager of MMWEC address the MMED Board. Chairman McCarter said he feels the Board needs something from MMWEC illustrating what the benefits might be. He said he's never heard anything negative about them other than the cost. Clerk Baldwin said she was willing to send the letter to MMWEC withdrawing from the organization and then cost out the other options. Commissioner Amoruso said it sounds like the MMWEC organization is not doing what they should. He commented that they are not controlling expenses. He questioned where the money was going and why the need for the additional personnel. He believes the Board needs to show them that they have real concerns. He has no objection to sending the letter and would like an explanation from them. Commissioner Levine stated that MMWEC works for us so why can't we as a collective group force them to cut their budget. Her other comment was if there are fewer communities involved (due to those that have dropped out) there is less work for them so why is the cost going up. Director Babin noted that MMWEC would still have labor and overhead costs but with fewer members to share those costs. Vice Chainnan Dentino requested a spreadsheet showing MMWEC and the costs of all the services they provide and then finding out who is out there that can provide the same services and what they charge. He doesn't want to play hardball until the Board knows what's out there. He believes the Board should know where MMED stands before sending the letter. Director Babin said he agreed with the due diligence approach suggested by Vice Chairman Dentino. He did reiterate that the letter withdrawing from MMWEC is rescindable. Town Manager D' Agostino said he would like to have someone from MMWEC come in and hear their vision. Commissioner Levine asked Director Babin for comparative prices if MMED were to pull out of MMWEC. Vice Chairman Dentino would like a comparison with other communities of similar size to Mansfield that have left MMWEC. Commissioner Amoruso commented he wants to ask MMWEC to come address the Board to see if they come willingly. Motion: To request that a representative of MMWEC attend a MMED Light Commissioners meeting and to authorize Director Babin to perform a comparative costing of MMWEC services. (AmorusolLevine) Passes 5/0 Commissioner Amoruso noted that he would like to decide whether or not to send the letter to MMWEC by December. Old and New Business Vice Chairman Dentino had questions regarding Light Department benefits. He asked Director Babin if anyone receives six weeks vacation at the Light Department. Director Babin said no one does. Vice Chairman Dentino asked Director Babin if he received six weeks vacation. He answered no. Vice Chairman Dentino asked who receives a 403B. Director Babin answered that he receives a 457 plan. Vice Chairman Dentino stated that would cost the ratepayers $14,000 for Town Manager D' Agostino's 457 and $12,000 for Director Babin's. Town Manager D' Agostino corrected him, saying it was not $12,000 from the Town for Director Babin's 457, only $6,000. The plan is an up to 5% matching plan. Vice Chairman Dentino stated that they're doling out double pensions. He asked the other Board members if they knew anything about this and did they think they should be giving out double pensions. Commissioner Levine said she would think about it. Vice Chairman Dentino suggested that the rest of the Board could think about it too. Commissioner Levine inquired as to whether there would be any brown-outs due to the new mall at Mansfield Crossing. Director Babin answered no, not on a routine day. He said some days there could be problems during peak load conditions but not necessarily because of the mall. Commissioner Levine questioned Mansfield's need for a new power station. Director Babin said that MMED has engaged in a study to investigate the possibility of a new substation in East Mansfield. He told the Board he would bring back a report before year end. . _ w _w. Chainnan McCarter set the date for the next meeting as Monday, October 15, 2007. Motion: To adjourn the Light Commissioners meeting at 9:55 (Amoruso) Passes 5/0 '1ft .. -..,. T' i 0 ) It ) 07 Date of Approval ~