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HomeMy WebLinkAbout2020-01-23 RMLD Board of Commissioners Minutesw. nrnr �_ Town of Reading .? ,. Meeting Minutes `s iTt i •: �aooxvow Board - Committee - Commission - Council: RMLD Board of Commissioners Date: 2020-01-23 Building: Reading Municipal Light Building Address: 230 Ash Street Purpose: General Business Attendees: Members - Present: Time: 07:30 PM RECEIVED TOWN CLERK READING, MA. 2022 MAY 19 PH 5: 05 Location: Winfred Spurr Audio Visual Room Session: Open Session Version: Final David Talbot, Chair; John Stempeck, Vice Chair; Thomas O'Rourke, Commissioner; David Hennessy, Commissioner; Philip B. Pacino, Commissioner Members - Not Present: Others Present RMLD Staff: Coleen O'Brien, General Manager; Hamid laffarl, Director of Engineering and Operations; Charles Underhill, Director of Integrated Resources; Wendy Marklewlcz, Director of Business, Finance and Utility Technology; Tracy Schultz, Executive Assistant George Hooper, Citizens' Advisory Board Vanessa Alvarado, Select Board Mark Dockser, Select Board Karen Herrick, Finance Committee Sean Jacobs, Finance Committee Minutes Respectfully Submitted By: Philip B. Pedro, Secretary Pro Tem Topics of Discussion: Call Meeting to Order Chair Talbot called the meeting to order and read RMLD's Code of Conduct. Chair Talbot announced that the meeting is being videotaped at the RMLD office of 230 Ash Street, for distribution to the community television stations in North Reading, Lynnfield, and Wilmington. Chair Talbot asked Mr. Pacino to serve as Board Secretary. Public Comment Mr. Dockser stated that the Select Board met on the 219 of January and reviewed the discussion regarding the Town payment and stated their desire for a joint meeting with the RMLD Board of Commissioners, Mr. Dockser stated that the RMLD and the Town should be working collaboratively and that there should be discussion before any decisions are made. Concerns have been raised about one of the options which would result in a substantial decrease in both short and long -tens payments to the Town. Further, Mr. Dockser indicated that the Town and school budgets are built around planned revenues and a cut of several hundred thousand dollars would require cuts. The town's Fiscal 2021 budget is currently being discussed and will be going to Town Meeting in April. Page I 1 Public Comment The Select Board doesn't feel that Option One is a reasonable option. Mr. Dockser stated that he looked into the Energy New England study, which referenced utilities that pay over one million dollars: in the study there were six. The average payment was 4.4 percent of revenue. By that calculation, RMLD is at 4.3. The Select Board appreciates that there is more than one proposal, but Mr. Dockser stated that the proposals don't fully reflect the needs of the Town and that one or more additional options should be on the table for discussion. Mr. Dockser stated that the Select Board also discussed the need for increased capital funding and improvements. One of the advantages that the Town of Reading brings is the ability to mise debt. The Town just raised $1.6 million at 1.06 percent interest. Mr. Dockser concluded by stating that the Select Board would welcome a meeting with the RMLD to move the process forward. Chair Talbot stated that he would be happy to call a joint meeting. Vice Chair Stempeck stated that the Board of Commissioners share the Towns concerns. Vice Chair Stempeck stated that RMLD serves four towns. Ms. Alvarado stated that the Select Board is hopeful about moving the discussion forward. Mr. Pacino stated that the other Towns also need to be considered. Mr. Pacino stated that he has been a Commissioner for thirty-three years and when he joined the Board the Town of Wilmington was considering leaving RMLD because they felt that everything was being operated for the benefit of Reading. There were two votes at Town Meeting regarding whether to withdraw from RMLD. Mr. Pocino said he and the General Manager negotiated with Select Board members from Wilmington and came up with the Twenty -Year Agreement, which created the CAB and other items that insured the peace and success of the RMLD for over the thirty-three years. General Manager's Report Ms. O'Brien provided updates on the roof repair and condemned deck/patio renovations and RMLD's emergency generator replacement. a. NextEra Energy Marketing Public Power Summit Ms. O'Brien stated she has been asked to be a speaker on smart microgrids. Mr. Pacino made a motion, seconded by Mr. Hennessy, that the Board approve Ms. O'Brien's travel to, and attendance at, the NextEra Energy Marketing Public Power Summit, in Manalapan, Florida, from February 2 to February 5, 2020. Motion Carried: 5:0:0. b. APPA Legislative Rally Ms. O'Brien stated she is not planning on attending this year due to other commitments. Ms. O'Brien's evaluation Six -Month Adjustment to Reflect Change from Fiscal Year to Calendar Year Vice Chair Stempeck made a motion, seconded by Mr. Pacino, to increase Ms. O'Brien's salary by 1.75 percent beginning January 1, 2020, to be representative of the period from June 30, 2019 to December 31, 2019 with an additional bonus of $2,000, with the option to apply the bonus to ICMA. Discussion ensued about the reasons for the increase. The Commission expressed their fellings that the General Manager was performing well and deserve the increase Motion Cabled: 5:0:0. The Commission then applauded the General Manager Page 1 2 2020 Board and GM Goals Chair Talbot explained that a table matrix was assembled by Ms. Schultz based on what the Board members sent in. Mr. O'Rourke stated that Ms. O'Brien has a large number of goals and these are additional priorities. Mr. Hennessy added that it's important that Ms. O'Brien's input is considered. Mr. Pacino stated his goals for Ms. O'Brien are reliable power at the lowest cost. Chair Talbot then read the goals that each Commissioner submitted, and Ms. O'Brien addressed potential barriers to each goal. Ms. O'Brien asked that the Board submit agenda items in a timely matter for each meeting. Ms. O'Brien stated that the Board needs to decide on the renewable energy policy. There was discussion regarding whether the intentions of the Town regarding the land where the RMLD headquarters is located should be a goal. Doing quick research to determine the value of the buildings, current location, etc. was discussed. Having a scorecard for alternate revenue streams, electrification, and reviewing RMLD's mission statement were also mentioned. The Board decided to vote on the goals at the next meeting. Report on Small Cell Siting Requests and Policy Ms. O'Brien explained that there was a customer who was concerned that a new pole would be Installed in front of their business for a small cell, which was being petitioned to the Town of Reading DPW. She indicated that the FCC has now deemed wireless small cell as a utility and the RMLD would need to allow the attachments with the exceptions of capacity and safety. That the RMLD is generating a comprehensive Small Cell Master Agreement which should dovetail into each town's aesthetic policy on small cell attachments. That the RMLD, upon notification that the town has issued a permit to the small cell wireless company, would work with the wireless company to evaluate the pole locations for potential attachments. Some pole location requests from the wireless company may not be acceptable due to reserved capacity, safety, etc. which could result in a new sole owned pole by the wireless company. Initial discussions with Verizon have indicated that they may have upwards of 40-50 locations in Reading. The RMLD will be sending a copy of its DRAFT Master Agreement to the towns to continue discussions and proper communications on this new FCC order. Chair Talbot stated technical standards will be needed. Integrated Resources Division a. Community Relations Update Mr. Underhill stated the historic calendar was released in conjunction with a coat drive: approximately 325 coats were collected and fumed over to Anton's Cleaners. The art contest award ceremonies will be scheduled for February. New homeowner information sessions will be coming up in March. The new IVR (spell out- check with Hamid) system and the importance of customers enrolling in the program to receive texts, emails, etc. for outage notifications, was discussed. Is. Power Supply Report Mr. Underhill discussed calendar year 2019: absent any adjustments issued by ISO in the following month, RMLD has the data for the previous year. RMLD was under budget. November and December actuals for power supply costs came in under budget. Energy costs were close: December energy costs were slightly above what was budgeted. Savings were in capacity and transmission. Capacity was about $1.5 million below what was budgeted. Actual transmission cosh in May, June, and July were below budget because the budget was prepared without an adjustment for the battery. Mr. Underhill stated that overall, loads were slightly below what was budgeted. Mr. Underhill stated that RMLD met with a member of the Reading Conservation Commission who owns a consulting company that looks at heat pump technology for Mass Save. He's going to draft a proposal to help RMLD in the evaluation and implementation of heat pump technology. General Discussion Ms. Herrick asked what metric a municipal light plant uses to determine if it is property leveraging its assets. Mr. Underhill stated that the system is divided into two operating characteristics that an MLP works against: power supply comprises approximately 75 percent of operating cost and the MLP targets finishing the year at zero. Therefore, MLPs are constantly adjusting to ensure what is collected from The ratepayers is what is needed to pay power supply bills. Ms. Herrick then asked Page 1 3 General Discussion within the industry, is there a gold standard. Mr. Stempeck replied that RMLD hied to keep the lowest possible rates for its customers and it's very different than the investor-owned utilities. Ms. O'Brien stated that there are a number of different metrics such as reliability, rate comparisons for all classes, operating ratio, etc. Chair Talbot added that geographic areas differ in the characteristics of customers so it's difficult to compare. Mr. Pacino added that Reading is unique because it provides service to four towns. Ms. O'Brien stated that loads differ; 80 percent of RMLD's customers are residential but that only comprises 20 percent of the load. 20 percent of RMLD's customers are commercial and industrial, yet they account for 80 percent of the load. APPA lists each municipal by revenue class because of these differences. Chair Talbot added that under Chapter 164, municipals can only make a return of up to eight percent of net plant. Ms. O'Brien added that power supply is a pass through; there is no return made on power supply. Mr. Underhill stated it's helpful to look at risks, such as the risk of volatility of rates, The risk of running out of cash, and the risk of losing load. Meeting dates were discussed. Ms. O'Brien suggested discussing renewables and RECs at one of the next meetings. Adjournment At 9:24 p.m., Mr. Pacino made a motion, seconded by Mr. Stempeck, that the Board go into Executive Session to consider the purchase of real estate and return to Regular Session for the sole purpose of adjournment. Roll call vote: Mr. Pacino: Aye; Vice Chair Stempeck: Aye; Mr. O'Rourke: Aye; Mr. Hennessy: Aye; Chair Talbot: Aye. Motion Carried: 5:0:0. The Board returned to regular session for the sole purpose of adjournment and on the motion made by Mr. Pacino and seconded by Mr. Stempeck, adjourned the regular session at 10:00 pm. Motion Carried: 5:0:0. A hue copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Philip B. Pacino, Secretary Pro Tem RMLD Board of Commissioners Page 1 4 Town of Reading Y Meeting Minutes TOWN NERK 'READiNG, MA. Board - committee - commission - council: 2019 MAR 20 PM 2: 48 Select Board Date: 2019-01-08 Time: 7:00 PM Building: Reading Town Hall Location: Select Board Meeting Room Address: 16 Lowell Street Session: Open Session Purpose: General Business Version: Attendees: Members - Present: Andy Friedmann, Barry Berman, Vanessa Alvarado, Dan Ensminger, John Halsey Members - Not Present: Others Present: Town Manager Bob Lelacheur, Executive Assistant Caitlin Saunders, Bill Brown, Nancy Docktor, Shannon Coughlin, Julie Thurlow, Elizabeth Gomez, Knstyn Kaunas, Glenn DeCesare, Cathy Hoodle, Crystal Hudson, Mike Foley, Kathleen Devine, Tom Gardiner, Jean Jacobs, Will Finch, Ben Ream, Kim ' Honetschlager, Megan Fidler Carey, Linda Antincro, Marianne Downing, Sarah McLaughlin, Anne Boffa, Anthony D'Artista Minutes Respectfully Submitted By: Topics of Discussion: Andy Friedmann called the meeting to order just after 7 PM. Recoonition - Julie Thurlow Julie Thurlow is the President and CEO of Reading Cooperative Bank, Mr. Berman wanted to recognize her for her 25 years of service to the citizens of Reading as a banker with Reading Coop. Julie's leadership, mentoring and role modeling have earned her accolades outside of Reading. Mr. Berman made a motion to recognize Julie Thurlow, with a second from Mr. Friedmann the motion passed with a 5-0 vote. Liaison Reports Mr. Berman noted Ms. Alvarado and himself have met and been working as the ad-hoc Human Rights subcommittee. They are almost ready to send out invites for people to join and start doing work. Also, as an FYI, on Monday, January 14`h, DA Marian Ryan will be at the Pleasant Street center talking about scam awareness with the seniors. Ms. Alvarado attended the Birch Meadow Master Plan Subcommittee earlier this evening noting they have the surveys back and will start to go through them and process the information. The cemetery board is working on and planning to update signage in the spring. Mr. Halsey explained that Post Mark Square has finally crossed their last hurdle last night so they should be starting to break ground any time now. The Boston Area Boy Scout council Page I r recognized all 2018 Eagle Scouts this past weekend and Reading had the most men in all of the communities. Mr. Friedmann noted on Christmas day the board got an email about construction noises and he wanted to make everyone aware of the Town's Bylaws which lay out the allowed construction times. He attended the Board of Health meeting where they discussed their new draft of pesticide regulations and will be coming to the board soon. He also noted he reviewed a violation log for the Board of Health going back a number of years and he noticed something that concerns him; there are no fines the past 2 years compared to previous years. It is concerning to him we haven't had any violations and It is something we need to keep an eye on. Public Comment BIII Brown asked for an update on recognizing Fronk Driscoll and Oakland Road. Town Manager Bob LeLacheur mentioned they are working with the family to decide how they want to recognize him and you should see more on that In February. Ms. Alvarado noted as a part of the Oakland Rd subcommittee, her and Mr. Halsey will be meeting next week to look Into this. Kristy Kaupas wanted to follow up on her traffic concerns regarding Haverhill and Timberneck. She understands that Haverhill Street is being looked into but she finds it very unacceptable that the traffic officer told her they won't be doing anything for Timberneck because there haven't been any accidents. Elizabeth Gomez wanted to follow up about getting a sign placed at the end of her driveway to slow people down so she can back out of her driveway. Cadance Thomases wanted to speak up again regarding her displeasure with the Lincoln/Prescott project. WON Carlo Bacci noted the Hitching Post is closing and while It may be due to the owner retiring he still feels certain members of the Select Board are going down the wrong path voting for a split tax rate and they can continue to expect businesses to close due to it. Town Manager's Report Mr. Lelacheur echoed the board's thoughts about Julie Thurlow. He noted some future meeting dates have been change and moved to accommodate a Jewish Holiday. We are scoping out a project to put in a crosswalk by the library. He wanted the boards' thoughts before he has staff continue. The board all agreed this is Important to manage the foot traffic to the library and school In the area. There was a staff meeting yesterday regarding the Post Office project and as Mr. Halsey noted they have passed their last hurdle. They now can come In and apply for all their permits. He noted the town is sad to see the Hitching Post go. The best way to support our local businesses is to shop there. Manaoing Maillet Land Town Counsel researched back to 1937 Town Meeting to find that they did not do something they thought they did; so some parcels are still In your care even though Conservation has been taking care of them. This motion simply allows Conservation to continue to take of the land. Ms. Alvarado moved that the Select Board vote to: (1) ratify the Conservation Commission's management of two parcels of land, shown on the Assessors' records as Plat 26 lots 32 and 50 (formerly Plat 99, lots 2 and 21), held under the Board's care, custody and control, and (2) authorize the Conservation Commission to continue managing said parcels as open space on behalf of the Board. The motion was seconded by Mr. Berman and approved with a 5-0 vote. Page 1 2 Class II Ucense Application Attorney Manny Rabbitt was present to represent his client Angelo Clano, who was also present. ' Mr. Ciano owns the property and land at the proposed address of 143 Main Street. The property Is zoned appropriately to run a business there. He will only have a maximum of 8 vehicles there at a time. He has a large garage that would 2 vehicles. Another two vehicles would be parked behind the property; two along the side; and two along Tarpin Terrace. There would be no vehicles along Main Street. It was noted the Police Department has no Issue with this application and the staff have no Issue or further recommendations for conditions. Ms. Alvarado moved that the Select Board approve the Class II license as presented. The motion was seconded by Mr. Halsey and approved with a 5-0 vote. Cultural Council Update Members of the Cultural Council joined the board to give them a brief update on what they are working on. They presented the board with a handout of all the grant awards they gave out for 2018-2019. They explained they get $7,300 from the Massachusetts Cultural Council to give out in awards. Depending on how many applications they get, they divvy up that money to grant to a Reading Cultural Art group. They received requests for 23,333 this fall and were able to give to 22 different organizations. They would love more support financially from the Town so they can continue to give more. The board thanked the Cultural Council for all they do and agreed the arts in Reading are very important as they hope to work on finding a new senior/cultural arts center. Wakefield 40B Proiect - Tarrant Lane It was noted that the Town has no legal standing over this project; however they are willing ' to gather people's concerns and put them in a letter to Wakefield. Jillian Dent from Gazebo Circle started off the conversation with concerns about traffic and the already low water pressure in her area. She believes Hopkins Street needs a sidewalk. Donna has concerns with the Hopkins and South street Intersection. It seems that will be the entrance way for the construction vehicles and that is not a wide turn. Sarah McLaughlin also had traffic concerns. Mary Ann Downing expressed traffic concems as well. She noted that she believes Stoneham had a similar experience with Winchester putting in a project on the line. She researched the project and asked if the town could site that example in their letter. Anthony D' Artista shared the common concern of traffic. Ms. Alvarado noted she would like to have legal counsel look Into MaryAnn's example and see if we can apply It to our situation. Mr. Friedmann would also like to express the need for more police presence in that area during construction. Cathy Hoodle added her voice to the others about traffic concems. Anthony Bonacorso stood up noting he is the developer for this project. He came tonight to listen to all the comments. He would like to set one thing straight; the notion that Wakefield Is fast tracking this project is completely wrong. We took a lot of time on this project and they are requiring a lot from us. He understands everyone's concerns here tonight and will take them into consideration going forward. Page 1 3 RMLD Payment Discussion The RMLD Light board called to order at 9:30 PM. Mr. Ensminger explained, they are asking that the Select Board vote tonight on a proposed agreement to freeze the payments for two years while the subcommittee takes a hard look at the formula and contract regarding payments to the town for the future. It was noted Town Counsel has looked at this agreement and recommended with the Town Manager to move forward with it. Mr. Halsey asked how they got to the number in the agreement for the next two years. It was noted that is just a historical number we have been using since the beginning. The contract was put in place and never adjusted as the years passed. The number can go up or down depending on circumstances at the RMLD. Ms. Alvarado explained that this is a two-step process. The first step being freezing the payments and the second step, which comes right after, is focusing on redoing the formula. Mr. Ensminger noted he has a few minor word changes before voting. Ms. Alvarado moved that the Select Board approve the provisions of the Agreement Regarding Distribution of Earnings of RMLD to the Town of Reading and execute that Agreement as amended to the Board. The motion was seconded by Mr. Berman. The board discussed Mr. Ensminger's minor technicalities. They all agreed on the changes. The board voted 5-0 to pass the motion. Subcommittee - Town Manager Evaluation and Goal Process The board picked up where they left off at the last meeting discussing the wording of the motion and the date when they want to try and complete this work by. Mr. Halsey feels the June 3e date is far too late. We need to have the form done and ready to use It at that time. He also feels Dan's Input In this Is very important. He has been on the board thru a lot of evaluations and has crafted some of them in the past. He is no longer with us after the election In the beginning of April. After some discussion; mainly about Dan and his time left, the board ultimately agreed on striving for April 10, Ms. Alvarado withdrew her motion of lune 30a. Mr. Friedmann then put a motion on the floor to approve Mr. Berman's proposal: To create a subcommittee of the Select Board, (2 members) which will have the responsibility of formalizing the process of evaluating the yearly performance of the Town Manager, as stipulated in the contract signed between the Board and the Town Manager, and including this as a revision to Select Board Policy, Subsection titled "Town Manager Goals". The sub -committee will recommend to the full Board a yearly process and timeline (with dates certain) for creating jointly agreed upon goals between the Board and the Town Manager. The subcommittee will also consider implementing multiyear goals. The subcommittee will recommend a suitable form for Board members to evaluate the town manager's performance based on core competencies and those goals. Said form should allow members to highlight areas of needed improvement. If a majority of members agree remedial action Is required, a separate plan will be developed by the Board and the Town Manager and incorporated Into goals for the following year. . In carrying out this task, the sub -committee will work with town staff Including the Page 1 4 Head of Administrative Services, the Head of Human Resources and the Town Manager. The sub -committee will present its recommendation to the full Board no later than April 1, 2019. The board voted 5-0 to approve the motion. Select Board Policy - Article 2 Update Mr. Ensminger explained the Subcommittee is going to talk about and discuss the VASC and terms of volunteers. They want to update the list of B/C/C's and their sunset dates. He would also like to look into Operations in Article 1 and using Robert's Rules if the board has no objections of him doing so. Minutes Ms. Alvarado moved that the Select Board approve the meeting minutes of October le, 2018 as amended. The motion was seconded by Mr. Berman and approved with a 5-0 vote. Ms. Alvarado moved that the Select Board approve the meeting minutes of October 30u', 2018 as amended. The motion was seconded by Mr. Berman and approved with a 5-0 vote. Ms. Alvarado moved that the Select Board approve the meeting minutes of November 13", 2018 as amended. The motion was seconded by Mr. Ensminger and approved with a 5-0 vote. Ms. Alvarado moved that the Select Board approve the meeting minutes of December 4'", 2018 as amended. The motion was seconded by Mr. Ensminger and ' approved with a 5-0 vote. Ms. Alvarado moved that the Select Board aoorove the meeting minutes of December 5, 2018 as amended. The motion was seconded by Mr. Ensminger and approved with a 5-0 vote. Ms. Alvarado moved that the Board adjourn at 11:02 PM, second by Mr. Ensminger and approved with a 5-0 vote. ReadnaMunickpal L' ht Department (RMLD) Board of Commissioners. RE.0 t IV E 0 Sub-CommRLee on the Payment to the Town of Readino TOWN CLERK Wednesday, April 11, 2018c Winfred Spurr AV Conference Room `A r1 I rj G' M i 2022 MAY 19 PM 5 06 Start Time of Regular Session: 5:30 p.m. End Time of Regular Session: 5:57 p.m. Committee Members: Philip B. Pacino, Chair George Hooper, Chair RMLD Board of Commissioners Citizens' Advisory Board John Stempeck, Commissioner Neil Cohen, Member RMLD Board of Commissioners Citizens' Advisory Board Dan Emminger, Secretary Town of Reading Board of Selectmen Staff: Coleen O'Brien, General Manager Tracy Schultz, Executive Assistant Hamid Jaffari, Director of Engineering B Operations Rea dim Board of Selectmen: Board of Commissioners: Vanessa Alvarado David Hennessy, Vice Chair Tom O'Rourke, Commissioner Call Meeting to Order Chair Pacino called the meeting to order, RMLD Commission Presentation Chair Pacino stated that the Commissioners discussed the payment to the Town last Thursday. The Commission supported a floor of 2.5 or the CPI and a ceiling of five percent. This would be done for two years and, in the meantime, a study would be done. It has come to the Commissioners' attention that, going forward, the increases in the present formula are not sustainable. There will not be enough capital funds to maintain the system. The study will determine what the payment to the Town should be. The only caveat is that if there's a catastrophe in the next two years then the payment to the Town would need to be adjusted to compensate for that. The Commission views this as a starting point. Mr. Stempeck stated that the Commission didn't come to any conclusions or vote on anything. Mr. Stempeck stated that he would like to propose something different: to do the study first and see where the convergence comes in and how it impacts RMLD. 2018 will maintain the trajectory and nothing will be done to the payment during the next two years. Mr. Stempeck suggested waiting for a fact set from an independent entity study and then making a logical decision. Mr. Hooper asked what the cost of the study is projected to be. Ms. O'Brien explained that the concept of the study would be financials going forward. RMLD recently went to a six-year budget, has been forecasting the power supply, and switched to FERC accounting. This has resulted in more predictability in regard to where RMLD is heading. The price of energy in New England is the highest in the country. Sales are projected to decline at least one percent per year. This makes the convergence a more tangible issue, on top of OPEB and pensions. The study should not only look at the payment to the Town but should examine where RMLD is in general. With that type of information, the Commission can make an informed decision about where the money should be directed long-term. Mr. Hooper agreed. Mr. Ensminger stated that he would be more comfortable if the Board had voted. Not being able to match the CPI would have profound effects on Town finances. RMLD Commission Presentafion Mr. Stempeck replied that the Board shares that concern because they are residents of Reading but the RMLD's business is declining. Ms. O'Brien stated that the above -the -line payment to all the towns is two percent net plant. RMLD is making a lot of necessary system improvements which means that the above -the -line payments are going up. Meanwhile, sales are down. Mr. Ensminger clarified that the purpose of the Sub -Committee is explicitly the payment to Town of Reading. will discuss with Selectmen. Mr. O'Rourke expressed his concern with accountability with the Town at the upcoming Town Meeting. A request was made to see if RMLD could make more payments. RMLD has since discovered a significant difference between what Reading receives compared to other towns. There is no rationale behind the CPI: it is not tied to anything. $2.4 million is substantial. The study important to figure out what makes sense for a payment. Mr. O'Rourke stated that he recognizes that the Town wants predictability but clearly RMLD's ability to pay and the request to increase the payment are coming to a head. When the above and below the line payments are added it totals 39 percent of RMLD's total operating income. Mr. O'Rourke stated that the Commissioners are trying to do what they can for the Town, but they have a commitment to run RMLD. Mr. Ensminger asked if the study will include potential growth scenarios North Reading. Mr. Stempeck stated that the study will look at potential growth. Ms. Alvarado asked what the potential timeline would be for a study Ms. O'Brien explained that due to procurement laws, RMLD may have to do a Request for Proposals. It would be a six to eight-month window from the time study started. Ms. Alvarado stated that she agrees with the idea of a study. The town budget cannot sustain The operational budget on inconsistent revenue sources. If there's the potential for the amount to change, funding could not be used for the operational budget, which is the primary point of concern. Ms. Alvarado recommended that no decision is made before the results of study. Mr. Pacino stated that the next step will be to proceed forthwith with study. Mr. Stempeck made a motion, seconded by Mr. Hooper, that the Sub -Committee on the Payment to the Town of Reading move to instruct the RMLD Board of Commissioners to institute the recommended study of the finances of the Department. Motion Carried: 5:0:0 Mr. Ensminger stated that the Town may want to be involved in the study. Ms. O'Brien replied that the scope can be sent to the Town for review once written. Approval of Minutes Mr. Ensminger made a motion, seconded by Mr. Cohen, that the Sub -Committee on the Payment to the Town of Reading approve the minutes of February 13. 2018 as amended. Motion Cabled: 5:0:0 Mr. Ensminger made a motion, seconded by Mr. Cohen, that the Sub -Committee on the Payment to the Town of Reading approve the minutes of March 12, 2018 as amended. Adjournment Mr. Hooper made a motion, seconded by Mr. Cohen, to adjourn. Motion Carried: 5:0:0 Town of Reading Meeting Minutes commission - council: fiECEIVED TOWN CLERK READING, MA. FA - 2022 w2022 MAY 19 PH 5: 07 RMLD Board of Commissioners sTEATWOC Time: 6:00 PM Date: 2017-06-30 Cc 65/ J Building: Reading Municipal Light Building Location: General Managers Conference Room Address: 230 Ash Street Session: Open Session Purpose: General Business Version: Attendees: Members - Present: Philip B. Pacino, Chairman David Hennessey, Vice Chairman -Secretary Pro Tem David Talbot, Commissioner John Stempeck, Commissioner Thomas O'Rourke, Commissioner Members - Not Present: Others Present: Staff: Colson. O'Brien, General Manager Hamid Jaffari, Director of Engineering and Operations Jane Parenteau, Director of Integrated Resources Wendy Markiewicz, Assistant Director of Business Fina Tracy Schultz, Executive Assistant Minutes Rescectfully Submitted By: David Hennessey Topics of Discussion: Call Meeling to Order Chairman Pacino called the meeting to order at 6:08 p.m. Fund Balances with Setting Guidelines on How the Eight Percent is Used Chairman Pacino began with reviewing the Department's restricted cash and various investment balances. The depreciation fund is 3 percent of capital assets that B reserved to fund capital improvements. The Deportment also maintains a construction fund, deferred fuel reserve, deferred energy conservation reserve, and rate stabilization fund -which is a catch all. The reserve fund for uncollectible accounts covers customers that don't pay on time. Sick leave benefits fund sick leave buyback. Customer deposits are held in escrow. The hazardous waste fund had a balance of $150,000; the Department spent $600,000 this year. Chairman Pacino explained the renaming of some of these fundsis under consideration and stated that the Board should consider establishing a contingency fund. If a major substation goes down, that could potentially cost $10 million. Chairman Pacino explained that the sheet he was reading from shows balances as of June 30, 2016, so they have changed. Chairman Pacino then referenced the draft form of the April 30, 2017 financial statements and stipulated that these numbers are in draft form (but should be close) and may change. They show unrestricted cash is about $16 million. It looks like the Deportment spends $7' million 0 month. There is one month worth of operating cash in the Department. The restricted cash is about $23 million. Financially, this is Fund Balance, with Setting Guidelines on How the Eight Percent Is Used close to where the Deportment was last year at the same time. Chairman Pacino then refected to the presentation he prepared far the meeting. Chairman Pacino explained that he took the operating and capital budgets that were just voted on and tried to get the 8 percent rate of return the Department can eam. Fuel costs were not included because they are a pass through to the customer and zero out. The projected rates are $65 million. Power costs are about $38 million and operating expenses are about $16 million. The depredation fund is $4 million, which is the 3 percent that's allowed. The other things like interest income and various other charges total 487,500. The above the line payment is comprised of the payments made to the towns in the service territory. This is calculated by taking 2 percent net plant and then dividing by the kwh sales in each. This comes to $1.5 million and raises the rate of return, which is $6.1 million. The payment to the Town of Reading is projected to go to $2,419,770. With loss disposal added and the $2.5 million voted through for the capital budget, the RMLD is left with a bottom line of one million dollars. One of tonight's objectives is to devise a strategy of what should be done with that one million. The capital budget that was voted on the other night totals $7.6 million. $4.3 million is from the depreciation fund. Capital funding from the bottom fine is $2.5 million, and $650,000 bond on the substation leaves a net $174,000, which will be made up from the capital fund and the depreciation fund. Chairman Pacino then showed the Financial Equity slide that he presented of the last town meeting, with an ending net position of $10A million. Power supply commitments cost $10.2 million, pension liability is $8.8 million, OPEB is $5.8 million, and Massachusetts Municipal Wholesale Electric Company costs are $1.6 million. The RMLD is negative at this point. The strategy for the million dollars could be to use it here or use it as a contingency fund. Chairman Pacino concluded by telling the Board to remember that if money is token away that could go into Capital it could compromise the reliabBity, of the system. Additionally, if money is moved and raise rates it could have a potential effect on economic development. Chairman Pacino then opened the matter up for discussion. Ms. O'Brien asked the Board to look at a sheet Ms. Markiewicz prepared, showing what has been done with net income available for funds transfer over the ksst five .years. Ms. O'Brien stated that she wasn't at the RMLD until after 2013, but from 2012 to 2017 the.. plant value has increased from $61 million to $76 million. The 8 percent went from $4.8 million to $6.1 million. The net income available for fund transfers is the amount that you can transfer to construction if you need to. It is based on the 8 percent. The construction fund transfer has fluctuated; the $2 million transferred in 2012 was probably due to the Installation of meters for high -Use customers. When you look of the last transfer of $2.5 million, which left $1.4 million for continuing operations, you could say only transfer $1.5 million next year. However, the plan is to pay down the new substation within a few years -don't want to carry that. It can be assumed that RMLD will stick with paying $2.5 million to the capital fund for the next several years. If we were going to make a little extra we were going. to pay off some of our OPEB and pension. Ms. O'Brien then asked Ms. Markiewicz to explain why these are liabilities. Ms. Markiewicz stated that, due to GASB regulations, all unfunded liabilities must be put on the books. The pension unfunded liability is $8.3 million. This year itis mandated that Other Post - Employment Benefits (OPEB) be on the books. Currently RMLD only meets its obligation, no extra is paid. Ms. Markiewicz stated that when thinking about 'extra money' it's not extra - we have other obligations that we're not meeting, that we could be meeting. his. O'Brien explained that it has been a juggling act. There was a lot of construction that hadn't been done over the years. The substations are essentiality at the end of their useful life, we've done a good job band -aiding them far now. The depreciation fund is down to $650,000 Instead Of at $4 million However, Ms. O'Brien stated she has been trying to delicately balance the financial by only using bonding when necessary and using money economically. But going Page 1 2 Fund Balances with Se1Hng Guidelines on How the Eight Percent is Used forward, as we start to put in what we're taking out, and spend no more than that and try and build up a contingency fund. If you lost a main substation you're probably looking at a minimum of $10 million to rent mobile units. Danvers has a $20 million contingency fund. This system is half that size. Right now, rate stabilization is what Ms. Parenteau would go into if the fuel reserve was overused and is what Ms. O'Brien would go into if the depreciation fund was overused. Typcally, the rate stabilization fund would carry the single failure contingency. It's difficult with the wording of how funds were established here. It makes it sound like you need to give that money hack. It needs to be called something different to remove the implication that anything in excess in that fund needs to be returned. To establish wast case scenario, as far as the operating fund is concerned, that is $16 million. It costs us $8 million in checks every month but we have $8 million in payable. This means that there is a little less than one month contingency. What fund do we pay if one large customer leaves? How do we pay bills? What's your contingency calculation for uncollectibles? Hazardous waste -I don't even know what that means - a major spill would be the oil water separator containment system at your substation failing -That's not $150,000. It's more like $3 million. Ms. O'Brien stated that she has been waiting for Ms. Markiewicz to get in charge so that the funds can be renamed and be filled with the appropriate amount. Strategically, there are benchmarksof what typically goes into these funds. That is what we've been trying to build but there has been so much capital and maintenance work. Mr. O'Rourke speculated that there must be some practice in the utility industry for these accounts; don't other utilities have the same kinds of issues? Ms. O'Brien replied that everyone has contingency funds. The amount depends on what their system looks like and how old system their system is. Ms. O'Brien stated that she doesn't know if there are exact guidelines but you go by worst case scenarios. Typically, that would be the failure of a major substation, and having to bring in mobile units. What does a typical homeowner have for a contingency? Two months of mortgage payments, and enough to cover a failed fumoce/roof? Mr. O'Rourke asked if the auditors could offer any guidance. Mr. Stempeck replied maybe if the auditors were specific to the utility industry. Our auditors missed that revenue was gang down. They looked at a snapshot in time. The numbers added up but we were going into an abyss. Mr. Stempeck continued, stating that there's a lot of data here. All of which is needed to make the place work. However, he thought the objective of this evening's meeting was to take what we have as a baseline and figure out where to go in the future. If terms of a contingency fund, businesses have a line of credit from a bank. They don't withdraw the money, but they have access to it immediately. It costs a relatively small amount, per month, to maintain that, but it disaster happens it's available. The money needs to be paid back, but it's done over time. Having a contingency fund is great, but then there's a lot of cash sitting around, not earning interest, while you wait to see if anything bad happens. Mr. O'Rourke added that the amount of money currently sitting in RMLD's accounts is not enough to cover expenses if disaster happens. Mr. Stempeck stated that the town is trying to ensure that the Department is sustainable and then asked to rewind what is trying to be accomplished this evening. Mr. Stempeck stated that his understanding was that a selective process would be done and short and long term alternatives to increase revenue and profitability to all the towns would be looked at. Chairman Pacino replied that's part two. The first section of the meeting is for the Commission to devise a strategy as to what to do with the million dollars. Mr. Stempeck replied that part of that strategy might be to fund a line of credit with a major bank. An emergency fund could be established with a couple hundred thousand dollars Page 13 Pund Balances with Setting Guidelines on How the Eight Percent Is Used establishing a $20 million line of credit. Mr. Stempeck clarified that the charge may not be that much; you just need to have a bank that's going to be there for you and reserve the funds for you. Ms. Markiewicz cautioned that since we're attached to the Town that process probably could not work. Ms. Parenteou added that she thinks it's illegal. In the Power Supply business, RMLD can't issue a letter of credit; the Deportment can only post cash. Mr. Stempeck replied that this wouldn't be a letter of credit; this would be in lieu of cash, if it's needed. It's a mechanism RMLD sets up with the bank; if we need to draw x -amount of dollars, we have access to $20 million and we will pay a premium to be able to do that. Maybe there are some legal requirements. Mr. Stempeck added that he can guarantee investor owned utilities have lines of credit for working capital purposes. Mr. Stempeck reiterated that we're not issuing a line of credit. We're having a bank give us a line of credit for emergency contingency purposes, and RMLD would have no problem getting a line of credit. May need to put a reserve in place.. Ms. Porenteau stated that it is worth exploring. Mr. Stempeck pointed out that RMLD is independent from the town in many respects. Ms. O'Brien askedhow would you pay it back, from the reserve? Mr. Stempeck answered that most people payback lines of credit within a year, but you canet I 9 ohge' terms. Mr. O'Rourke, In terns of the reserve, explained that we wouldn't be building a fund; we would be paying for pccessto money in case we have a problem. Mr. Stempeck added that it's more like an insurance policy, rather than dumping money into an account. Chairman Pacino reiterated that's what he's looking for, strategically, is what to do with that million dollars. Prioritization of Strategic Discussions Mr. Stempeck replied that he was glad Chairman Pacino said that, and then distributed a handout he had prepared with suggestions on strategy. Objectives need to be established -is it to increase revenue? RMID has been focused on lowering costs. There needs to be a clear objective that all agree to and then we need to think about how to get there and list possible alternatives. A SWOT analysis (Strength Weakness Opportunity Threat) needs to be performed, with the group thinking about each alternative and walking through what's good and bad about it. Can we do H? Resources need to be assessed. Is it an opportunity? Then the Opportunities need to be rank ordered. Time needs to be spent with the resources in the room. The RMLD employees know the business and the Board members bring their own unique Perspectives, Are there things that haven't been thought about? Numbers are static. It is fantastic to show that the value of the plant has increased. That needs to be projected forward. Can you project any of these alternatives forward, and what might they be, what might their range be, and what would it take to get there? Is anything worthwhile? Do we have the resources? Mr. Stempeck admitted that the question of resources bothers him because there are not enough resources to get all this done. Con we put something in place to make this happen? Maybe go back to the idea of establishing a line of credit. The key point is getting that list, rank ordering it, and moving forward. assign some work teams, set dates, determine what tactics we need to accomplish the tasks, and then walkthrough a communications structure. H could be used We can't Ignore contingency. There's a million dollars to be hod and used. to make us a producer of solar and that could serve as a mechanism for building our revenue Page 14 Priorlitzalion of Strategic Discusslons back up. We would be lowering cost and increasing capital. Ms. Parenteau stated that the net plant would go up, so RMLD could earn more money. Mr. Talbot asked for clarification on the meaning of the term 'net plant.' Ms. Parenteau answered net cost minus depreciation. Ms. O'Brien asked Ms. Parenteau to talk about solar. Ms. Parenteau explained that the optimum arrangement for RMLD is community solar facilities. When customers are buying into that program our base revenue doesn't decrease. When someone puts solar up on their roof they're buying less from us so we're getting less of our operating revenue from that customer. With community solar, the customer is still buying. all their power from us but we're allocating a financial piece of that to solar. It's ideal because the customer receives the capacity benefit and RMLD doesn't lose any operating revenue. Ms. Parenteou stated that the primary way RMLD collects operating revenue from commercial customers is through the demand charge. A commercial solar customer still operates on a cloudy day, so they're going to hit that demand, and we're goingto recover most of that revenue. We lose about $22:000 a year, which isn't that much. Ms. Parenteau continued, stating there could be an opportunity for RMLD to partner with the towns to come up with a business model where we took at the cost of solar. Ms. Parenteau stated that she was talking to the developer who installed the solar at 326 Ballordvale and he said that WGBH is the first not-for-profit in the state to develop a partnership with a developer. The developer owns the property for 5 years, and then there's a financial transaction in year 6 to transfer ownership. back to WGBH. This way, the developer receives the tax incentives and the property owner gets a lower cost of capital, and then it goes onto their books. There are all kinds of business models that can be investigated. RMLD wants to make sure that we're doing our due diligence because we don't have a lot of open space within the service territory. So now we're talking about roof spaces. Take into consideration the liability, but that's what these developers do.. The cost of upgrading the roof and then owning B. There's definitely potential in it, and it aligns with our core business. Mr. Stempeck asked what benefits the towns would receive from participating Ms. O'Brien answered that the towns would receive property tax. Ms. Parenteau explained that none of the towns have the capital to invest in solar. If RMLD portnered with the towns they would receive a lease payment and they would receive property tax. The developer provides the capital. Ms. O'Brien added that when we own it, we don't get the tax incentives, which is what the developer uses to make it economically, viable for himself. This is why the WGBH arrangement is an interesting twist. The developer uses the tax incentive to get it going and then there's the transfer. We wouldn't be able to compete or get the value in our portfolio like a vendor can. Mr. Talbot stated that there is potential opportunity in rooftops owned by public entities but when the four towns were invited to participate there was no response. Ms. Parenteau explained that each town had a reason; it wasn't that there was no interest. Mr. Talbot stated that this is an opportunity to remind the Towns of how they can benefit through solar. Paye 1 5 Prioritization of Strategic Discussions Mr. Talbot said that staff has done all they can do; this must be handled Board to Board. The RMLD Board needs to make it clear to the Boards Of Selectmen or the Financial Committees what the solar opportunities are, so they can go back to their towns and convey this Information to the managers. Ms. O'Brien answered that RMLD has done 2 years of clear presentations. The presentation slides show the revenue that could be generated by property tax on solar installations. Ms. O'Brien stated that she has also had one-on-one meetings with the Town Managers. Mr. Stempeck asked how much more could it return to them if they installed x number of square feet of solar. Ms. O'Brien stated that it depends on property tax, and asked Ms. Parenteau what the property tax rates were. Ms. Parenteau explained that B is tricky with Wilmington, The Town won't sign a pilot for solar; they want to tax it at the regular property rate and the assessor has been going back and forth and hasn't given a number. RMLD has said for every megawatt put in, the towns can receive $10,000 to $20,000. Between the lease payment and the property tax it works out to be a half a million dollars over a period of ten years, per megawatt. We'll put those numbers together. Mr. Stempeck calculated that would come to $50,000 a year. Ms. O'Brien clariffed that the lease and property tax was on town buildings. It's just property tax for non -town owned buildings. Mr. Stempeck stated that the answer could be solar and asked how many total megawatts does RMLD provide? Ms. Parenteou answered 170. Mr. Stempeck said hypothetically, if 10 percent of RMLD's usage was solar, you could round that 170 up to 200 megawatts; and 10 percent of that is 20 megawatts. That's ten million dollars over a period of ten years. If split equally, that's 2 and a half million to each town over ten years. Mr. Talbot stated that this'x a no brainer and it needs to be communicated to the Select Boards. Mr. Talbot added that he knows for a fact that some of the Select Board members don't think if's workable. They believe that there isn't a solar model that will produce revenue for the Town. Mr. O'Rourke asked, what's the universe of things we want to look at? RMLD can't do everything. One month the Board's focus is on solar, then fiber, then batteries. Ms. O'Brien stated that RMLD has already done a lot of work with solar, and has been consistent in that area over the last 3 years. Mr. O'Rourke pointed out that RMLD already has certain capabilities. Clearly revenue is a blip problem. Mr. O'Rourke stated that he has no disagreement with the strategies, per se. It's just that the magnitude of opportunity needs to fit core capabilities. It 'takes time to b*V ih capability, Mr. Stempeck then proposed a listing of alternative revenue source. The group brainstormed the following: Potential Opportunity Areas • Solar . Heat pumps • Telecom • Battery Storage • Electric Cars . Economic Development • Electric Pole Acquisition . Energy Conservation • Unbundled Service lcharge for services . Acquisition Prioritization of Strategic Discusslons Mr. Stempeck asked if RMLD could lust increase the rates. Ms. Parenteau answered only if expenses increase. Chdrmon Pacino added that if you want to lower that 8 percent number -don't spend money on capital. We have to spend money to make money. Ms. Markiewicz added that net income includes adding back return on investment. Mr. Stempeck stated that the only variables we have to play with are cost and revenue. Ms. Parenteau cautioned that the impact on rates from any of these strategies would have to be considered. Mr. O'Rourke anything can we acquire another business? Could we merge with another utility? Mr. Stempeck become vertically integrated Ms. Parenteau years ago, RMLD formed an LLC and did streetlight maintenance programs for Brookline, Massachusetts. RMLD lost money. Mr. O'Rourke asked, what prevents RMLD from acquiring other utility companies? Chairman Pacino cautioned that you would have a lot of trouble politically, and Ms. Parenteau added that RMLD would have to go into debt. Ms. O'Brien asked, how would you take over a town from Eversource or National Grid? Mr. O'Rourke stated that there is a finite number of businesses and people. As a mature business, how do you grow market share? You acquire business. Ms. O'Brien replied that's exactly why investor -owned -utilities have such high rates: they're acquiring businesses. That's what they're doing with their money. The only one that I've ever seen come close is Brookline. They had years of neglect in maintenance and outages all the time. They were going to the state to see if they could buy out NSTAR and take 8 over. Brookline didnot proceed. I just don't know how you would ever take over something unless they defaulted. Mr. Stempeck conjectured that maybe it wouldn't be that big, and that the economies of scale and economies of scope should be considered. Mr. Stempeck stated that if he was a small municipal utility, for the benefit of the stakeholders (the citizens) it would be much better to be part of RMLD. Ms. Parenteau replied That she has never heard of it happening and it should be placed low on the priority list due to feasibility. Mr. Stempeck then suggested performing a classic SWOT analysis of RMLD. Prioritization of Strategic Discussions SWOT Analysis • Strong Management Team • Customer Relationship/Intimacy • Brand • History (100+ years) • Low Cost Provider • Strong Infrastructure • Fiscally Responsible Page 17 • Internal automation • Alternative Revenue Sources (see accompanying sheet) • Potential for electricity generation • Additional business models, such as supplying appliances and vendor partnerships • Responsive • Geographic Monopoly 3 unions Three • Revenue Erosion through: • Politics from 4 town service area • Conservative Technology (LED's, etc.( • Lack of internal automation/GIS Solar Advanced motors systems; technology and processes old Adjustable Speed AC Drives • Limited workforce flexibility • Loss of 20 -year agreement with towns • Volatile energy markets • New Regulations (Clean Energy Sids) • Takeover by Investor Owned Utilities Mr. Stempeck stated that it's hard for him To think in terms of utilttes. He's used To Thinking in terms of businesses, where you expand your channels of distribution or go iced toTthinkI You can't do that here. Vice Chairman Hennessy added that you can't really cut costs either. Mr. O'Rourke asked, what more could we do if we had more capital? Purely as an example, Ms. Porenteou mentloned how that years ago, RMLD sold appliances. As another example, RMLD could get people to rent a water heater from the RMLD and pay a fee every month. If the water heater goes, RMLD guarantees we'll be there within 12 hours to replace that because that service it part of they fee. Mr. Jaffar" cautioned that when you go into people's homes you raise issues of riabfltty. Ms. Parenteau stated there have been issues with RMLD's current hot wafer program and we are trying to phase it out. Mr. Stempeck asked, what are other utilities doing? Mr. Jaffari replied that some utilities are partnering with vendors to sell solar panels Ms. Parent8aU stated that if RMLD had invested in generation 3 years ago, the Department could be making a bundle now that capacity prices are up. RMLD had considered partnering with Middleton to put In a 100-me90watt gas fired generator at a substation in Middleton. RMLD would have taken60percent of.. the power, and Middleton would have taken 40 percent of the power. At the time, capacity prices were low so RMLD decided not to do It. A lot of the systems that have invested in generation -it was a big investment but it's paying off for them now. Mr. Talbot asked, what are we doing with this topic? Mr. Stempeck explained that it is a process. The purpose is to get everyone on the some wavelength. There's a list of topics for further investigation. We've already taken some steps to examine fiber, including the consultant. Mr. Talbot revealed that the reason he was asking was because about a month apo; he asked what RMLD's revenue is from fiber leasing. What are we making. and how has that changed over the years? Mr. Talbot stated that he had not received an answer. Page 1 8 Prioritization of Strategic Discussions Ms. Markiewicz replied that it is about $222.000. _ Ms. O'Brien stated that there are potential requests that could bring fiber revenue up as high as half a million. Mr. Talbot stated that it would be helpful to have those answers as the Board strategies about possible sources of revenue, and that without us even trying, fiber revenue could be doubled. Ms. O'Brien responded that we don't know if ft's going to be doubled. The way that fiber works is RMLD hasa loop and Ughtower has a. customer from point a to point b. Ughtower jumps on the loop for 5 sectionsthen jump off. That contract Is good for three years. At the and of that three years, they may not renew the contract. Mr. Talbot stated that he. understands that and that he is looking for is numbers of what RMLD makes in revenue from fiber right now. Mr. Talbot asked at what point do we look at the numbers, get an expert on the subject, and do a systematic analysis. Mr. Stempeck explained this is a systematic process they're going through right now. Mr. Stempeck referred to the Ust of potential opportunities and stated that he feels there's a need. to explore every one of them. In a moment the group will rank order them as to what we should explore. Mr. O'Rourke verified that staff would get revenue numbers for Mr. Talbot. Ms. O'Brien replied that the revenue from fiber is $222,000. There are a multitude of contracts that start and stop at various times. Mr. Talbot stated that he wants a chart that shows, starting with year one when we started to get ibis revenue, through the date of any projected new proposals, the revenue RMLD has earned. Ms. O' Brien replied that chart exists; it is staggered due to the different contracts. Ms. Markiewicz stated will ask Ms. Ryback, who handles the contracts, to send the chart. Vice Chairman Hennessy asked for clarification on how much can be leased, and inquired if RMLD is close to the maximum use of its fiber loop? Mr. Jaffari answered that there are 6 tubes. Each tube has 12 strands .2 tubes are dedicated to RMLD. RMLD uses its designated tubes for metering, SCADA, switches, substation communications, and AMI. The 4 other tubes contain 48 strands. Vice Chairman Hennessy asked how much of those are being leased. Ms. O'Brien replied only sections are used -there is jumping on and jumping off. There might have a section where 30 fibers are being used and another section where only fibers are being used. Mr. O'Rourke then stated he was being a friendly facilitator and asked everyone to get back on track. Mr. Stempeck began by asking, what is the objective of what we're trying to do? To increase the revenue of the organization and to protect the. organization. Mr. O'Rourke slated that he looks at these things as having 3 components. strategic importance, 4J ease of implementation, and the size of the opportunity. Mr. Stempeck added that there might be a great opportunity but it requires the most resources and time, then you may not want to do it. Pape 1 9 Priori ization of Strategic Discussions Ms. O'Brien asked how do you know the revenue? Such as investing in the general we knew then what we know now. Mr. Stempeck replied that he is willing to bet there is data available that says how much does it costs to build one, what's the return on it, what kind of resources did it take, and how long did it take to do. It's a point in the sand that you can plot, plus or minus 20 percent. Mr. Stempeck continued, stating what comes out of all this isn't just for the Board and the staff. This can be taken to the Town and we can say we're considering all these opportunities for investment to bring back more revenue to the Town, and drop mopeo the bottom One. We can t show that we are responding to the Town in a positive and thoug111f t woe. We're In fee process of doing this, it's going }o take . months }o work Through, but it will be worth it for the Town. Mr. Stempeck explained that he would like the Commissioners to vote and get a sense of how the group feels on rank ordering and determine who would like to work on each one of them. The Commissioners will assemble data and come back to next meeting with one or two pages.. of high level information. This could be taken to the towns to show where we're headed and that we're considering alternative revenue streams. Ms. O' Brien asked how the revenue stream is determined. Mr. Stempeck asked Ms. O'Brien to pick an example. Ms. O'Brien answered telecom. Mr. Stempeck replied that RMLD already has a stake in the ground because we have an existing customer. What has it been historically? Has it been increasing? Does it look like N's going to be getting higher? What do people typically pay for this? Are we getting our money's worth? Should we be getting 50 percent more or are they already giving us a premium on its Those are numbers that are in the industry. The consultant we're using would be able to tell us that. How many more people could we potentially reach with what we have today? Ms. Parenteau asked how is that more money for town? Ms. O'Brien explained that it would be a separate company. Currently, the fiber loop is considered rental surplus of electric assets. Mr. Stempeck asked: suppose tomorrow, we could do three times fiber we're doing now. Ms. O'Brien stated that RMLD already did an analysis on Tiber, and thought Mr. Stempeck was referring to broadband. Mr. Stempeck said that the last thing he wants to do is broadband. Leasing fiber to other people is a great opportunity and can be accomplished quickly. Broadband is a totally other matter. Mr. Talbot stated that fiber needs to be defined, because there's four different things. One is you keep doing what you're doing, which is where you offer your fiber loop up to people who want to lease it, This Could be expanded. Number two is you go to the pubic sector. What do the schools, and town departments need? We don't know what they're doing now. What does public safety need? They may be leasing From Verizon. Number three is you hit high priority businesses. That is broadband, because it's data services. But if by broadband you mean residential -that's last on the list. You almost certainly don't touch that. Mr. Stempeck added that if you don'} have an independent supplier, you're toast. They could raise the rates. Ms. Markiewicz referred back to Mr. Talbot's question about fiber revenue and stated that RMLD earned $231,000 over a 12 -month period. The price varies between $55 and $60 a mile, and is adjusted according to the CPI index Page I to Mr. Stempeck suggested rating the opportunities. 1 is the first thing you would be looking at and 10 would be the last. Mr. Talbot asked what "electric vehicles" means. Ms. Parenteau replied that refers to charging stations. Ms. O'Brien explained that RMLD would install charging stations, and answered in the affirmative when Mr. Talbot asked if people would swipe their credit cards for electricity. Mr. Talbot announced that if will never work. It's way too expensive unless it's subsidized. People do it at their homes. Vice Chairman Hennessy asked for clarification on how buying poles would benefit the RMLD. Ms. Parenteau answered that space can be rented on the poles. Mr. Talbot pointed out that 5G wireless wasn't discussed; that's the wave of the future. Mr. Stempeck replied that can fall under telecom. Ms. O'Brien expressed her concerns over how much was included under telecom. Rankings: Opportunity Ranking laHi est 10 -Lowest Solar 11 1 1, 2, 3 Telecom 1, 1, 2.2, 4 Electric Vehicles 5,6 7, 7, 8 Pole Acquisition 5, 6, 7, 8, 10 Unbundle RMLD Services 3, 4, 5, 5, 7 Heat Pum 6-6 88, 8 Battery Storape 2.4, 4, 7, 9 Economic Develo pmerit 21313.519 Energy Conservation 3,4 8,.1.' 10 Acquisition 3,6.9.9.10 Mr. Stempeck asked who wants to work on what presentation to town. Team Assignments with RMLD Uaison Reports due Mld-July • Chairman Pacino: Solar and Unbundled Services: Jane • Mr. O'Rourke: Services and Pole Acquisition: Coleen • Mr. Talbot: Fiber Opportunities: Hamid • Vice Chairman Hennessy: Fiber Opportunities: Heat Pumps: Hamid and Wendy • Mr. Stempeck: Solar and Acquisition Opportunities: Jane Mr. O'Rourke asked what happens to the million that the Board had discussed at the beginning of the meeting. Ms. O'Brien explained that the funds are in operating, but if it's needed for capital, then it goes to capital. Mr. O'Rourke asked, year to year, what happens to it8 Ms. Markiewicz answered that in FY 2016, 1.5 million was transferred to capital and 1.8 million stayed in the operating fund. Mr. O'Rourke expressed his concern that if looks like a net profit. Ms. Markiewicz clarified that it's not that we're not using it. Page 1 11 Priorittzation of Strategic Discussions Chairman Pacino we decide what to with it: could put that into the OPEB, could put that into the pension liability, In response to Mr. O'Rourke, Ms. Markiewicz stated that RMLD is continuing to use that money for operations; having to get rid of that money would be like having to start your checkbook at zero at every year. Mr. O'Rourke stated that the problem is if you run a business and you're showing a net profit of a million, that gets distributed to the shareholders. That's not the case here. Chairman Pacino stated that it could be applied to the unfunded pension liability and OPEB; the Board also discussed starting a contingency fund. Ms. Markiewicz added that the Board talked about uncollectible accounts being unreasonably low, and the funds delegated for hazardous waste being unreasonably low. Vice Chairman Hennessy asked Mr. Stempeck, in terms of process, why continue to research potential opportunities that received low ratings, like acquiring new business? Mr. Stempeck responded that everything is going to be looked at, at a very high level. We've got a good Department already in terms of what we're doing, are there examples of other municipals or other utilities where we can use the economies of scale and the economies of scope. Vice Chairman Hennessy reiterated hisconcern that most people didn't think some altematives were good ideas but we're still going to do research. Mr. O'Rourke responded that the rankings weren't based on analysis -if all alternatives aren't looked at further, it would become a self-fulfilling prophecy. The alternatives will be reevaluated after research. The Board will go back to the SWOT analysis and consider how each fit in RMLD's core competency. Maybe the answer will be: not so well. Some will be put on the back burner. Some will be easier to implement. Mr. O'Rourke stated that he is interested in acquisitions. What if there is an entity that RMLD could acquire. we have a healthy balance sheet and we could probably make a play. Mr. Stempeck stated that we're spending money outsourcing poles; they could be acquisitions. What would it cost to acquire poles? Mr. Jaffcd cautioned that operational costs would go up. Ms. O'Brien emphasized that you don't make much revenue from attachment fees; it's regulated at $8 per pole a year. That's why Verizon wants to get out of the pole business and just be an attacher. There's no real revenue created by ownership per se; there's only maintenance costs. Mr. Stempeck asked if staff could check if RMLD could obtain a revolving line of credit. Ms. Parenteau stated that she would find out. Mr. 5tempeck volunteered to take first pass at a template and offered to take the evening's handwritten charts and put into an easier to read format. At 826 p.m., Vice Chairman Hennessy made a motion, seconded by Mr. Stempeck, to adjoum Vage 1 12 I.1 A true copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Dave Hennessy, Secretary Pro Tem RMLD Board of Commissioners Page 1 13 REC IVEU ea Town of Reading i OWNECLERK Meeting Minutes READING, MA. 2022 MAY 19 PM Board - Committee - Commission - Council: RMLD Board of Commissioners Date: 2017-07-06 :,vr cvcgc,.� Time: 6:00 PM acs0. Building: Reading Municipal Light Building Location: General Managers Conference Room Address: 230 Ash Street Session: Open Session Purpose: General Business Version: Attendees: Members - Present: Philip B. Patina, Chairman David Hennessey, Vice Chairman -Secretary Pro Tem David Talbot, Commissioner John Stempeck, Commissioner Members - Not Present: Thomas J. O'Rourke, Commissioner others Present: Staff: Colleen O'Brien, General Manager Hamid Jaffari, Director of Engineering and Operations Jane Parenteau, Director of Integrated Resources Wendy Markiewicz, Assistant Director of Business Fina Tracy Schultz, Executive Assistant Minutes Respectfully Submitted By: David Hennessey Topics of Discussion: Call Meeting to Order. Chairman Pacino called the meeting to order and reported that solar and fiber topics would be discussed this evening, with solar being addressed first. Presentations: Opportunity Areas Solar. Mr. Stempeck and Chairman Pacific, Chairman Pacino stated that he and Mr. Stempeck want the RMLD to come up with a plan to increase solar commercial development, similar to the solar install in Wilmington. They also want to bring up solar with the Town representatives when the sub -committee meets. Ms. O'Brien explained that, after the Board's last meeting, Ms. Parenteau sent an email following up with the Town of Reading on the potential revenue solar can offer. Ms. O'Brien then met with Mr. LeLacheur, Reading's Town Manager, to discuss solar. The next step is to call Joe Huggins, Reading's Facility Director. Ms. O'Brien and Ms. Parenteau will sit down with Mr. Huggins and Mr. LeLacheur and discuss potential buildings. RMLD can work with the Town to write a Request far Proposals (RFPs). Mr. Talbot clarified that there were time constraints. Ms. O'Brien stated that she had explained the April deadline to Mr. LeLacheur. nge I 1 Presentations: Opportunity Areas Solar: Mr. Stempeck and Chairman Pacino Ms. Parenteau explained that there is generally a quick turnaround. The only reason an RFP is issued is because you're leasing public space. We're not going out for the power supply end, but would structure it so that they could maximize their lease payment and we could get a PPA that would work for us. Mr. Talbot commented that it must be up and running by April. What needs to happen by when for that to be feasible? Ms. Parenteau answered that the quickest way to accomplish this would be to get the RFP out as soon as possible. That gives the financials and that provides the Towns the opportunities to determine if it makes sense. Ms. O'Brien reiterated that RMLD needs to meet with Mr. Huggins to discuss the Town rooftops. Ms. O'Brien then relayed that the Town Manager had asked about RMLD bonding and stated that if looks like RMLD Is not going to make November, but maybe next spring If RMLD is able to buy land. Ms. O'Brien told Mr. LeLacheur that RMLD has been working hard on efficiencies and saving money. RMLD will only be bonding for the substation. Mr. LeLocheur then stated, relative to RMLD's payment to the Town, the CPI calculation this is used fluctuates up and down. It would be better if the Town could count on a certain amount. Mr. LeLacheur wanted everything dscussed with Ms. O'Brien conveyed to the Board. Mr. Talbot asked if the date is set to meet with Mr. Huggins. Ms. Parenteau will reach out to Mr. Huggins tomorrow. Chairman Pacino then asked if RMLD can reach out to commercial building owners. Ms. O'Brien quantified if there a size of rooftopthat makes sense economically for developers. Ms. Parenteau answered that the developers that have approached RMLD have primarily wanted a megawatt of solar. Mr. Stempeck suggested getting a list together of the major businesses in the area. Ms. Parenteau answered that developers havealready done that legwork; we need to know strategically how much solar we want to put onto the system. Ms. O'Brien explained that we're limited electrically by feeder capacity. Mr. Jaffari stated ISO mandates not more than 5 megawatts per feeder. Ms. Parenteau said that by going with an RFP developers tell us where they want to put solar, with the price. Mr. Talbot stated that developers are pounding on the doors of big commercial customers -It's not like we need to. The market is already trying to do it on its own without us hying to seek it. Ms. Parenteau stated that because of this, we were thinking we would take a time out from commercial and focus on the Towns, with the Board's approval. Ms. O'Brien explained that RMLD doesn't physically have enough employeegrto go to all molar businesses and the towns. To which Mr. Stempeck asked, what kind of investment would it take to have a solar department? Ms. Parenteau cautioned that solar installations should slow down after the first quarter of 2018. The State iseliminating the Solar Renewable Energy Credit (SREC) program and is going to a Smart program. Municipals will only be eligible far SRECs if they're charging their customers an SREC fee. It would be self -funding so the towns would have to buy in and charge their customers in order to receive revenue to buy energy certificates. This hasn't been finalized, but will play a large role in determining if solar is still cost effective for developers. Page 1 2 Presentations: Opportunity Areas Solar. Mr. Stempeck and Chairman Pacino Mr. Stempeck asked, with the increases in transmission costs, wouldn't we want to generate as much as possible? Ms. Parenteau explained that the trick with solar is that the winter peaks occur when it's dark outside. There are savings from solar, but it can't be depended on every month. Mr. Stempeck announced that he reached out to his contact at National Grid to ask about installing solea on the ground under the powerlines; he hasn't received a response yet, but is hoping to discuss a joint program with revenue shoring. Mr. Jaffari will give W. Stempeck the information fa his contact at Eversource. Chairman Pocino asked for the next steps. Next Steps Ms. Petenteau answered setting up a meeting with Mr. Huggins. Ms. Parenteau is meeting with the Toomn of Lynnfield on Monday to discuss installing solar on schools. We can do a commercial RFP, but thinks they'll come forward by themselves. The pros and cons of on RFP were discussed. Ms. Parenteau ultimately explained that there is a lot going on; RMLD's preference is to focus on the Towns. Engineering gets involved with solar; they manage the interconnections. We're short-handed in Engineering right now. It's not just writing the RFP. Even if a company were to come in and mite the RFP for RMLD, Engineering still needs to handle the increased workload. Mr. Stempeck asked about capacity constraints and how much more the system can handle. Mr. Jaffari referenced a study that was done that determined RMLD can handle 25 to 30 megawatts of solar. Ms. Parenteau pointed out that we already have 5 to 7 megawatts installed. Mr. Stempeck replied that we have 15 to 20 megawatts to go. Ms. O'Brien asked how much are we trying to accomplish by next April? All four towns are interested in meeting. Mr. Stempeck stated that RMLD should focus on munk*Kds and pick a few large eAmirnerdds, as long as RMLD has the resources. if Board wants to push solar how would you obtain resources to do it we pay for it Ms. O'Brien explained that even if you hire from outside still need to have project management on the inside; it's going to be a lot of work just working with Towns. Mr. Stempeck asked why not do an RFP for commercial? Mr. Stempeck suggested picking the biggest property in all four towns. Ms. Parenteau explained that the best scenario for RMLD is community solar. We don't lose any operating revenue from that. But is there enough demand in our customer base to warrant more community solar? Mr. Stempeck asked if community solar could be on large commercial buildings. Ms. Parenteau answered that would be the best scenario for RMLD. Mr. Stempeck replied then let's approach solar that way. Ms. Parenteau added that Analog wants to meet renewable base; they want to have a backing of renewable energy for every kWH of power they used. Mr. Talbot added that they wont to become carbon neutral. —� Ms. Parenteau explained that Analog is 10 percent of our load- they're looking to us for solutions. Mr. Talbot stated that RMLD needs to make it happen. Ms. Parenteau stated her Department Page 1 3 Next Steps was going to brgkWonn to come up with a solution; they haven't even had an internal discussion yet, but will manage the project. The Board agreed that Ms. Parenteou should work with municipals on solar and work with Analog on renewables. No commercial RFP will be issued. External Acquisition Opportunities: Mr. Stempeck Mr. Stempeck stated that he had reviewed RMLD's rates in comparison to what other municipals are charging. RMLD Is right in the middle of the pack and is not the lowest cost producer. However, RMLD's commercial industrial rate is very low compared to other towns. It makes no sense to go out and talk to neighboring towns about becoming a port of RMLD's service territory because we can't lower their rates all that much. But how many big industrial customers can we poach from others? Ms. O'Brien and Ms. Parenteau cautioned that RMLD has previously worked to persuade large customers to relocate and the towns were not happy about it. While RMLD is glad to do whatever it takes to bring businesses in, we need to work with the towns on any town -related economic development projects. Mr. Stempeck countered that RMLD is within its right to examine big businesses in surrounding towns and should send them a letter showing rate differences and then let the business approach the town. Fiber Opportunities: Mr. Talbot and Vice Chairman Hennessy Mr. Talbot began by advocating that RMLD engage with the towns and invite them to sit with a consultant. save you money and make revenue same with business committee proposing launch a study Mr. Jaffad There was discussion about problems with the existing study -asking for data that RMLD doesn't have. Mr. Talbot stated that RMLD needs to move up a few levels of abstraction and communicate to towns and the business community that there are fifteen other municipals in the state that are already doing something with their existing telecom fiber, and we could be doing something. This is a thing that municipal light plants are doing. Mr. Talbot referenced RMLD's fiber revenue and stated that there's demand out there. Data needs are blowing through the roof and we have an asset that people need. Mr. Stempeck asked if Comcast or Verizon were interested in leasing RMLD lines. Mr. Talbot answered that neither lenses from public entities. Ms. O'Brien explained that the fiber leasing was in place when she began at RMLD. They are mostly ftee-year contracts, with no guarantee that customers will renew with Lightower. Mr. Talbot stated that Commissioners should approve the fiber contracts. Ms. O'Brien reminded Mr. Talbot that the Commissioners don't approve dark fiber rates or contracts. It's not an electric rate. Mr. Talbot pointed out that there are a dozen or more municipal light plants leveraging fiber stands to reason should be opportunities out there -The demand for I.T. and data services Is exploding while the demand for electricity is flatlining. Mr. Stempeck asked if there is a breakdown of how much the other communities make in revenue- do we get as much or more for doing nothing? He is looking for a benchmark. Mr. Talbot stated that an expert could conte in and answer that. Mr. Stempeck asked if the Page 14 I Fiber Opportunities: Mr. Talbot and Vice Chairman Hennessy information was published. Mr. Talbot answered in their annual reports, but he doesn't have the time to go through those. Ms. O'Brien stated that it's a separate annual report because the fiber portion has a separate LLC. Mr. Stempeck asked Mr. Talbot to send him the names of The municipal fiber entities. Mr. Talbot stated that they are all conservative like we are and yet they still do these things because they have done the analysis and seen that it is worth doing. Vice Chairman Hennessy added that fiber is not going away: it's the future. Additionally, while it's not our core competency there are simtkaities to RMLD's existing business. It's de9yering services with a monthly fee on cables that go along the some wires that we deliver electricity. Mr. Talbot stated that the basic infrastructure lasts for decades. Fiber doesn't go obsolete. It physically lasts for 40 years. The first step is to bring in an expert and get a higher level, system- wide, view of what we have and what we could do with our system. The Board decided to ask for any results, Including educated guesses, from the curent study and then end it. Ms. O'Brien stated that whoever did the analysis on the other towns already has data and lessons learned. Norwood is a good example. Chairman Pacino summathed: the first priority is solar: soft to Towns and Analog. After that, there will be a passible presentation on Infer and the Board will find out who old the Norwood feasibility study. Ms. Markiewicz asked if there was a timeline -at fiscal year-end and audit is commencing. Chairman Pacino asked can we switch to a calendar year? Chairman Pacino instructed Ms; Schultz to put that on the agenda for the next meeting. Mr. Stempeck made a motion to adjourn, seconded by Vice Chairman Hennessy, at 7:28 p.m. Motion Carried: 4:0:0. A true copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Dave Hennessy, Secretary Pro Tem RMLD Board of Commissioners Page 1 5 'RECEIVED TOWN CLERK Reading Municipal Light Department (RMLD) Board Of Commisslonets READING, MA. Strategic Meeting Tuesday, September 26, 2017 PX - 2022 MAY 19 PM 5� 07 General Manager's Conference Room Start Time of Regular Session: 6:10 P.M. End Time of Regular Session: 8:50 p.m. Commissioners: Philip B. Paclno, Chairman David Talbot, Commissioner David Hennessy, Vice Chairman, Secretary Pro Tem Thomas J. O'Rourke, Commissioner, John Stempeck, Commissioner Staff: Coleen O'Brien, General Manager Wendy Markiewicz, Director of Business Finance Hamid Jaffari, Director of E 8 O Tracy Schultz, Executive Assistant Jane Parenteau, Director of Integrated Resources Guesh William Bottiggi, General Manager, Braintree Electric Light Department Call meeting to Order: Chair Paclno called the meeting to order. Fiber Question and Answer Session Mr, Botfiggi, General Manager of Braintree Electric Light Department (GELD) introduced himself. Mr. Bottiggi began by showing photos of Braintree's Watson Station. Mr. Bottiggi stated that RMLD has a jen percent entitlement in the facility and its gas turbines, which were built in 2rJo9. It has been eight years, and eight principle payments out of twenty hove been made by RMLD. Mr. Bottiggi reported that he would be discussing broadband, intemet, community solar, the electric vehicle program, how Braintree communicates with its customers, and anything else the RMLD staff and Commissioners are interested in. Mr. Bottiggi stated that BELD was founded 125 years ago, in 1892. Thomas Watson was the first general manager. Braintree has the same oversight as RMLD, but they have three commissioners instead of five. Mr. Bottiggi explained the process of building the Watson Station and offered a tour to the RMLD Commissioners and Staff, and explained that the turbines go from zero to full power in under ten minutes. This has. allowed BELD to participate in the forward reserve, which RMLD has benefitted from. Mr. Bottiggi said that approximately $1.8 million was mode this last summer. Vice Chair Hennessy asked how much of Braintree's power is generated at the Station. Mr. Bottiggi answered that this is really a separate business. BELD has a hedging plan like RMLD and doesn't depend on the Station for their power. GELD depends on it to control capacity costs and to hedge the highest customers. Fiber Question and Answer Session Mr. Bottiggi then moved on to broadband, intemet, and cable television, stating that BELD built an HFC network in the late 1990's. It's a hybrid fiberoptic coaxial IHFC) network, which is what Comcast uses. In this type of network, you have fiber that leaves the BELD office and goes out into a neighborhood. There's a node, where the signal is converted to COOK, which is electricity, and then it goes down the street to all the homes. It was built for automatic meter reading, which was a complete failure since _ ;the technology just wasn't there. At the time, Time Warner was the cable television provider to the town; it was the kite nineties and no one had high speed intemet yet. The Town Meeting voted for Fiber Question and Answer Session Braintree Electric to get into the high-speed internet business. The network worked for high-speed Internet. BELD focused on the residential side. Mr. 60111991 said that the Town Meeting wanted BELD to get into the cable business. BELD borrowed $5 million and built out the rest of network, and entered the cable television business in 2001. In 2W6, voice over IP telephone was added. BELD also Introduced HDTV and video on demand. Vice Chair Hennessy asked if customers received one bill for their cable and electric. Mr. Bottiggi answered no; services were always billed separately with no cross -subsidization. Ms. Porenteau asked how many residential customers currently live in the service territory? Mr. Bottiggi answered about 14,000 now; there were about 12600 then. Mr. Bottiggi stated that he was optimistic about the business growing. Then, in 2007, Verfwn showed up and built Fos throughout the town and Invested billions In marketing. Then Comcast took notice. BELD peaked of 6,000 customers in 2007 and has been steady at 3,400 internet customers for the lost five years. A lot of those are elderly customers that lke the customer service. BELD loses cable television customers every month because everyone is cutting the cord and using Whones, streaming, and video over the internet. BELD has 3,400 internet customers and 2,700 cable customers. BELD is Investing in high speed internet and recently purchased a new router so that BELD can control it and throttle it depending on how much a customer pays. Mr. Stempeck asked how they acquire television programming. Mr. Bottiggi replied that because they are so small, that's one of their biggest disadvantages. They have individual contracts with some channels and the National Cable TV Cooperative covers 80 percent of programs and negotiates for everyone. The biggest one is sports. NESN and ESPN. BELD is paying $9 a month per subscriber for ESPN and no one's watching ti. - Ms. O'Brien asked about the 3,400 internet customers. Mr. Bottiggi replied those are their loyal high- speed internet customers. A quarter of their total customer base has BELD internet. They own BELD because it's a municipal utility. If all BELD customers would get their intemet from BELD they could lower their rates. All BELD wants to do is break even and invest, with a little put aside for emergencies. Ms. O'Brien asked, we you making money? Mr. Bottiggi answered that the target is to have about a million dollars in cash. That's where we're of. Ms. Parenteau asked how BELD's prices compare to Comcast or Verizon. Mr..BatBggi replied that they are very similar. However, Comcast and Verizon have the competitiveadvantage when it comes to Programming. BELD receives $6 million in revenue a year from telephone, internet, and cable. Sixty five Percent of that goes back into programming. It's a tough business. Mr. Jaffari inqui ed'.about the separate division for cable and internet, and asked how many employees it has? Mr. BoftiW explained that there are four people at the Help Desk, six people in the field, a few people who do marketing and the web portion. There's probably a total of fifteen employees. Mr. Jaffawi ciorified that they do their own repairs. Mr. Bottiggi answered that they have two small buckets. They work on the network. There are some employees that work staggered shifts. This is because uNike the electric business, in this business you're going into the home, running coax, running wire and installing a tv. They have vans with ladders and theemployees go up and deal with the connections and the service drop. Mr. Stempeck asked if they charge for that service. Mr. Bottiggi answered that they used to, but now Ws built Into the rote. Mr. Jaffari asked what the operational cost is. Mr. Bottiggi answered $5 million; they break even Fiber Question and Answer Session -Mr. Joffori asked if you can exchange funds from Fiber to electric. Mr. Bottiggi explained that the way -hey are set up is that electric owns the HFC network. The broadband business pays rent to the electric side to use that network,substantially below market. Mr. Bottiggi stated that they're reaching a tipping point. Internet speeds are going up and streaming is reliable. Whereas, three or four years ago, you would start to watch a Netflix movie and if would freeze. In ten years traditional cable will be nonexistent and we'll be streaming everything. That's going to change the business because it will allow for a to cart choosing of channels. Vice Chair Hennessy asked if it would be better if BELD had just intemet and not tv. Mr. Bottiggi explained that people only want to get one bill for cable and internet. If they were to stop offering cable they would lose intemet customers. Mr. Bottlggi stated that 5G is the future. Cell phones are currently 4G. 5G is significantly faster. It is an opportunity for municipal utilities because big cell towers don't work with 5G. 5G is fast but short range. You might end up with top of pole mounted cell towers. Those will need a license, they'll need to rent space from you, and they're going to need fiber. BELO looks at this as a potential opportunity. They've been approached by Vernon to install this, but they want to pay the some attachment fee as any pole. Mr. Bottiggi explained that they need RMLD's approval to put anything that is not a unity on the pole. Wireless is not a utility. You can't stop them from attaching to a pole for telephone lines. But this doesn't fall under those FCC rules. They need to work a deal with you. -Ms. O'Brien asked who is qualified to going up to the electric section of the pole and install the cell equipment? Mr. Botfiggi replied that if it's in your power space, it must be your people. Only your linemen are qualified. Mr. Stempeck stated that he likes that scenario. Ms. O'Brien asked Mr. Bottiggi what would you do if you were going to do broadband today? Mr. Bottiggi answered that today he wouldn't get into the traditional residential broadband business or cable tv. The technology is changing. Wireless is going to be the thing. It's possible that the wires on the poles will go back to just being electric wires. All Communication, besides fiber, is going wireless. Mr. Talbot commented that you need the fiber backhaul,at least until 5G materializes in scale. Mr. Bottiggi replied at least unfJ 2020. You're still going to have big volume users, like data centers, who will want fiber. They're not gdng to want a wireless set up. You'll still have commercial grade intemet connec$vity. Mr. Bottiggi explained that BELO has a small business that they have tinkered with. They have gunning throughout town That is used for substation communication, and realized they could sell intemet to businesses. They invested in equipment and have half a dozen customers, and a company that backs the service up if something happens. Mr. Talbot asked what percent of poles have fiber on them? Mr. Bottiggi replied that it's less than half. Basically, it's just a couple of rings ttuaughout town, to which Mr. Talbot asked, ore you losing money on this business? Mr. Bottiggi replied no, they break even in the broadband business. Fiber is not broadband money, that's on the electric side. BELD doesn't have any debt. If they had debt they would be in serious trouble, but they paid their debt off in 2010. Mr. Talbot asked If they were doing anything for the municipality.hs teed ggi plied that they throughoutovide town I.T. for the Town of Braintree, except for the schools. They provide Ki g P pnd R saves the town money. Mr. Talbot stated that we have four towns. We could investigate what ,--Iwe could do for the towns. Fiber Quesfion and Answer Session Ms. O'Brien asked what would we need to do to set up Internet to the schools? All we have is a loop. Mr. Bottiggi replied that Ms. O'Brien should speak with his staff. Mr. Talbot asked if he and Vice Chair Hennessy could present a report that municipals are doing with fiber. Ms. O'Brien stated that Mr. 90 i needs to finish � talfis w}rg3 other iti9g Ia�psesaniCilan. Mr. Bottiggi explained that BELD's community solar has 2,100 panels on the roof of the high school. Customers sign up for the output of fen panels. The rate is locked in at fifteen cents a kWuntil 2026. They're also doing a 22-megawatt community solar, and the developer is only going to offer it to commercial customers and sell it in big chunks. There are 8.0D0 panels. BELD has partnered with a company called Sagewell to Incentwrze the implementation of elechic vehicles. The 9001 was to have 2D0 in Braintree offer two years. They are one year in and they have forty new electric vehicles. Mr. Bottigggi stated he thought itwould be a little faster. Prices are dropping. Mr. Talbot asked how do you know how many electric cars you have in town? Mr. Bottiggi replied that you do it by rebates. You Google 'Mass rebate' and enter the zip code. It only works for new or leased vehicles-it won't show used. Mr. Bottiggi continued, stating projections are all over the place, but the Governor wants 300,000 electric vehicles in Massachusetts by 2025. A level 2 charger is six or seven k1owatts a load. With our transmission and capacity prices, if everyone comes in and plugs in at the peak we're going to be Paying a substantial amount. Mr. Talbot said that you want to be able to control when they charge. Mr. Bottiggi replied that BELD is paying customers $B ❑ month not to charge on peak. It saves BELD $17 a month. If you put a level 2 charger In, GELD will give you a $250 rebate. Mr. Talbot asked what's your backhaul to get the data from the meter back to you? Mr. Battipgi explained that the meters are read every 15 minutes and the data is analyzed to see if there's a Q*e. It's a hopping system mesh network. Ms. O'Brien said that we're building a mesh network now. The meters that were previously installed are unable to connect into grid modernization. Mr. Talbot clarified that the hops are to the meters. Mr. Bottiggi explained that they can do eight hops and there are a dozen collectors In town off the fiber loop. When this was implemented, employee skill sets changed. The office staff hod to learn how to manage that data. They didn't have to add any people. It was done over two years with their own people. It was a successful project and a lot was learned. Mr. Talbot said. that Chattanooga would say that you need a fiber network to do this, Mr. Bottiggi answered that you need some fuer from the collector back to the Office. Mr. Talbot asked what's the range? How far does fiber have to go? Mr. Bottiggi replied that they have fourteen square miles and there is one collector per square mile. Mr. Bottiggi stated that BBA communicates with customers about specials and events on Twitter and Facebook. When there's an outage, customers can use their phones to access the BELD webpage and view an outage map populated by the meter data system. Review of Opportunity Areas Mr. O'Rourke said that there are four or five things that BELD is doing that RMLD is thinking about doing or doing more of, such as solar, fiber, broadband, and 5G. If you had to pick one? Mr. Bottiggi answered electric vehicles, because of the impact on your load due to charging on peak. Review of Opportunity Areas Mr. O'Rourke commented on the need for additional revenue streams. Mr. Botw asked how much revenue can you raise to have an impact? Our load has dropped but our energy costs have dropped as well, Ms. Parenteau explained it's because he invested in a power plant. We're getting hit with capacity charges. Presentation Recommending that RMLD and Community Stakeholders Create a Fiber 4 Telecom Strategy. David Talbot and David Hennessey Mr. Talbot stated thotwe have a fiber bop but no strategy in regards with what to do with it, other than incidental leasing. We don't have any Interaction with municipafities on how we can help them. We don't have a strategy on how far to build it out. Mr. Talbot then asked Mr. Jaffori what The mileage of the loop is. Mr. Jaffori replied 25 miles. Mr. Talbot explained that the presentation is a draft for the Board to look at and see what they agree on. Mr. Talbot highlighted various area municipalities and how they have implemented residential and commercial fiber programs. Mr. Talbot stated that what he and Vice Chair Hennessy suggest is that RMLD starts to systematically look at what they could do. RMLD needs a fiber strategy and close coordination with municipalities, schools. and businesses. There need to be regular meetings with the four Towns. The meetings need to be an the Board level to raise issues of what a utility can do. There need to be discussions with the towns' IT departments to seed we can savethem money while making revenue. Mr. Stempeck stated that he had called Vermont about their $15 a month Tesla battery lease program. It would be a piggyback onto the electric system that would still generate revenue. Mr. Stempeck then asked Mr. Bottiggi if BELD has been able to attract businesses to their area due to their low rates. Mr. Bottiggi stated they old recently have a large customer move into the service territory. Mr. Bottiggi stated that he minks RMLD is right on with fiber but needs to explore what it would cost to get into fiber. You need to buy a bunch of equipment, get the right people, and then you're going to buy wholesale bandwidth. Mr. Bottiggi suggested that the RMLD Board and Staff should come down and talk to BMLD employees and we the equipment. Ms. O'Brien stated that in terms of leasing fiber, the Board can write a policy directing the General Manager on how to proceed. we don't have anyone here to build out fiber. Ms. O'Brien stated that a long -tern plan for fiber is needed and that they would need to hire the right person to help develop one. Mr. Talbot reported on his meeting with Bob LeLacheur. Adjournment Mr. Talbot made a motion, seconded by Mr. O'Rourke, that the Board adjourn. Motion Carded: SAD A true copyv of the RMLD Board of Commissioners minutes majority of the Commission. David Hennessy, SecrO Pro Tem RMLD Board of Commissioners g Board - Committee Town of Reading Meeting Minutes commission - Council: RMLD Board of Commissioners STRA*Ec I c Time: 6:00 PM Date: 2017-05-02 5eC510 1 Building: Reading Municipal Light Building Address: 230 Ash Street Purpose: General Business Attendees: Members - Present: RECEIVED TOWN CLERK READING, MSA, 2922 MAY 19 PH 5: 08 Location: General Managers Conference Room Session: Open Session Version: Philip B. Pacino, Chairman David Hennessey, Vice Chairman -Secretary Pro Tem David Talbot, Commissioner John Stempeck, Commissioner Thomas O'Rourke, Commissioner Members - Not Present: Others Present: Staff: Coleen O'Brien, General Manager Hamid Jaffari, Director of Engineering and Operations Jane Parenteau, Director of Integrated Resources Wendy Markiewicz, Assistant Director of Business Fina Tracy Schultz, Executive Assistant Guest: Mayhew Seavey, PLM Engineering Minutes Respectfully Submitted By: David Hennessey Topics of Discussion: Call Meeting to order: Chairman Pacino called the meeting to order at 6:01 p.m. Electric Rate Design Scenados Ms. O'Brien stated that, to be successful, the strategic committee has three areas that h must address. The first area is rates and rate structures. Solar and other potential impacts on revenue need to be considered. The second component that needs attention is RMID's system, its technology roadmap implementation, and instituting cyclic maintenance. The third piece is the employee base and the talent management of the employees. Mc Stempeck added that the rates also involve the revenue distribution amongst the different customer classes, and the embedded subsidies. Mr. O'Rourke stated that he sees revenue as being the biggest issue. Ms. O'Brien agreed that revenue impacts everything: how much money can be spent on the system, the size of RMLD's Page 1 1 Electric Rate Design Scenarios workforce, etc. Mr. O'Rourke stressed the need to look at alternate ways to increase or maintain revenue. Mr. Stempeck asked, in respect to solar, at what point do we make the decision to produce our own electricity and run our own solar farms? Instead of trying to force people to put panels on roofs, is there enough land somewhere? Mr. Stempeck stated that he sees numerous solar fields covering the landscape when travelling around the state and then asked who owns the land beneath high voltage power lines. Mr. Stempeck stated that's a perfect place to put acres of solar panels -no one uses the land because there's no access. Ms. O'Men stated that land owners were initially given benefits for installing solar, but subsidies have lessened for ground mount solar arrays. Ms. Parenteau explained that the market is Pushing away from ground mounts due to concerns that it would cause a loss of farmland. The State doesn't want to take away open space. Mr. Stempeck's suggestion would be a different venue, however, because there are power fines there. It may be possible to approach the State because it is unusable space. Mr. Stempeck stated that Instead of fighting to install solar panels on roots, it might pay to be clever and just bypass reluctant building owners. RMLD could then generate and sell the power. Mr. Talbot asked what locations for solar are being encouraged if ground mounts are being discouraged. Ms. Parenteou answered that roof -mounts we being encouraged for community solar and low- income housing, and ground mounts are being considered for landfills, brownfields, and other unusable land. Mr. Talbot asked if we are reengoging with the Town Manager and stressed the need to determine RMLD's solar strategy. Mr. Talbot suggested board to board ihteroclWn with other towns and the school committees and stated that there is a need to determine, at the board level, what people in the area would like to see done. Ms. O'Brien asked Mr. Seavey to begin his presentation. Mr. Seavey stated that RMLD's objectives are to reduce or eliminate subsidies between and within classes of customers; to ensure rates for large high load factor customers can attract and retain those customers; and to make rates more reflectiveof the cost of providing service, thereby eliminating subsidies. Additionally, RMLD wants to provide price signals that encourage customers to reduce demand when It's expensive and increase their usage when It's less expensive. Any changes will need to be phased in over periods of time, so that customers can adjust their usage. Distribution revenues must be protected from erosion, whether from loss of customers or from customers who generate their own electricity. There are two subsidy types. The first, cross�closs, is where one class of customer subsidizes another. In the case of RMLD, non-residential customers subsidize residential customers and all customers subsidize solar customers. The second type is intra -Gass subsidies, which is especially prevalent with large demand industrial customers. The demand charges that the customers on, paying don't reflect the full cost of demand. A lot of those demand -related costs are being recovered through kWh charges. It creates a subsidy situation and sends an incorrect price signal to customers because they're not paying the price of the demand that they're imposing on the system. At the last meeting, three alternative scenarios were presented to correct cross - class subsidies: • A flat one percent base increase across the board. Rates of return remain unequal: Minus three percent for residential, 27 percent commercial. Page 12 Electric Rate Design Scenarios • Design all rates to have the same 8 percent rate of return; a 13 percent increase just in base rates for residential customers and an I I percent decrease for commercial customers. • An in-between alternative. Chairman Pacino questioned the 8 percent rate of return billing adjustments. Ms. O'Brien explained that right now, if we change nothing in terms of subsidies, there will be a 4 to 6 percent increase across the board. This is what Ms. O'Brien communicated to each of the Town Managers and Boards of Selectmen (except for North Read'ing's Selectmen [they keep rescheduringj). Mr. Seavey is explaining what the rotes would hypothetically be if everyone contributed equally to the 8 percent rate of return (because right now some customers contribute more than others and some customers contribute less than others). Mr. Seavey then moved on to the third scenario, which is meant to get the residential class to break even and cover its expenses. RMLD would still not earn any return from that rate class but they would be paying their fdr share of the cost to run the system. The noniMdential customers would be adjusted to be more in line with what you typically see, which is the Industrial rate of return being lower than the commercial rate of return; currently, the opposite is the case at RMLD. Commercial customers would have a 3 percent decrease and Industrial customers would have a 0.5 percent increase. Huge changes wouldn't be implemented, except for the residential time -of -use customers. However, Mr. Seavey explained he is recommending a 5 -year phasing in period so that the change is gradual. Instead of a residential uniform increase between 5.5 and 6.5 percent you would gradually boost the residential rate of return. Simultaneously, the industrial rate is only going up a tenth of a percent as compared to what it would have been. Commercial will only go up 3 h percent instead of 5.7. It is less of an increase for commercial. virtually no increase for industrial, and slightly more of an increase for residential. Over the five- year period, this will achieve the scenario where residential customers will be paying their own way and the industrial rate is much more competitive. Mr. Talbot asked how RMLD's commercial and industrial rates compare to the rest of state. Ms. O'Brien answered that RMLD's rates fall in the middle of what other public utility customers pay. Mr. Seavey added that RMLD's rates are well below what industrial and commercial customers are paying to private utilities. Mr. Talbot inquired if there was a more exact ranking than "in the middle" of the Commonwealth's 41 municipals. Mr. Talbot expressed his confusion over wanting to hit residents harder than commercial and industrial customers. Ms. O'Brien explained that the goal is, over time, to move towards a realignment of less subsidization and closer to neutral. Mr. Talbot replied that he gets that, but without seeing how RMLD compares to other utilities it is hard to evaluate that strategy. Mr. Stempeck stated that one rationale, especiallywith the industrial and commerctal classes, is that those are job creators for people in the community; you want to encourage organizations to move to this area and invest here. Residential doesn't do any of that. If we want to be a bedroom community, that's great. But if we don't bias some things towards our industrial base it will be one more nail in the coffin of businesses moving away. Mr. Talbot reiterated that he understands the overall concept, but he wants to see where we rank in the state. Page 1 3 Electric Rafe. Design Scenarios Ms. O'Brien explained that this is taking a proactive stance towards strdtegiring and looking forward. If solar comes in, if people start installing batteries, how are we going to hit the demand on the peak with everyone. You must take the rates and put them in perspective so that you can start making sure that you're addressing potential industry changes. Mr. Talbot explained that he Is looking for context. With that, there has been a lot of talk in the past few meetings about companies evaluating their electric rates. Ms. O'Brien explained that information comes from discussions between RMLD's key accounts employees and the customers that they work with, We wouldn't want to explain to a customer why they are subsidizing other customers. That's why we want to bring it closer to neutral. Mr. Talbot stated that on the other hand, RMLD is public power; this is a public meeting; the rotes are public. As part of a public process, If we're saying we're currently disadvantaging industrial and commercial, he wants to see the context. Mr. Stempeck agreed, stating that the discussion needs to get more granular. Are the percentages weighted at all in terms of total power consumed? Typically, in most industries, if an industrial or commercial customer uses a large amountofsomething, they receive volume discounts. Mr. Stempeck stated that he was unsure if that's incorporated in the rate presentation. Mr. Seavey answered that it isn't, because that's Illegal in a regulated utility; you mud'hwe a published rate that applies to everyone who falls within a usdge category. However, rdtesare typically designed in such a way that if you have a particularly high load factor, you will pay a much lower price per kWh than a smaller customer. Mr. Stempeck stated that answered his question -we do have scale economies. Ms. Parenteau answered shot we do. Some customers pay less cents per kWh. It works out so that a smaller commercial customer pays about 12 cents per kWh, while a large commercial customer pays about 10 cents per kWh, Mr. Seavey answered tfust it works out that way if the rate is designed properly, and right now the rates need to be odjusted so that it does. RMLD's industrial rates are not in sync with the commercial rates or with the industrial rates of other municipal utilities. Mr. Seavey stated that he just dM a quick scan through of the most recent MMWEC bill comparison and RMLD's rates for Its largest customers are its least competitive rates. RMLD is around the median of all municipals. RMLD's rates for smaller customers are better than that; they're in the bottom quartile. There is an Imbalance in the rates for very large customers: the rates are not as competitive as they could be. Mr. Talbot stated that to fix that goes to Mr. Stempeck's point. If we're off the charts, then that's the piece to address. Mr. Seavey answered that's just one dimension that is being discussed; there's also the demand charge. There are two parts to adjusting the rate to better reflect cost. Mr. Stempeck stated that we want to encourage a customer who is using massive amounts of power to stay in the community and reinvest In community. Ms. O'Brien answered that's the economic portion of the objective. That's why we're trying to correct subsidies over the next rive years. Mr. Stempeck replied that in general, that works far most of the population. However, Mr. Stempeck expressed his concerns over having one or two loge customer outliers who will be negatively affected by the rate changes; can we think of special circumstances? Page 1 4 Electric Rate Design Scenarios Mr. O'Rourke asked if a new rate class can be created. Mr. Seavey answered that has been done in the past. Before deregulation, electric companies used to be able to negotiate special contracts with large customers. in terms of whether RMLD needs to address the residential problem, there's a provision in Chapter 164 that says that you're not wpposed to sell for less than the cost of production. You could ague that's applicable to RMLD residential customers, who currently have a negative rate of return. Mr. Seavey then transitioned to Intra -Class Subsidies. This occurs when the demand charge is not covering all the demand -related costs. In this case. RMLD is charging $8 or $9 for something that costs $16 plus $8 or $9. That $16 in demand -related cost is not being charged as demand; That's being spread over kWh and significantly pushing up the cost to that customer. The proposal is to create a separate Purchase Power Capacity and Transmission Charge (PPCTC) for demand -billed customers within the industrial class. There are about 60 customers in that class, who make up a third of RMLD's total kwh sales. Most of these customers have relatively high load factors. Mr. Seavey looked at doing the same thing with the commercial class, which also has a demand charge, and discovered that the Impact would have been horrendous. There were bill increases over 50 percent. The last time RMLD looked at its rales one, of the things that was considered and rejected was a separate small commercial class that doesn't have a demand charge. This rate is typical among other utilities for commercial customers using between 5=0 or 10000 kWh a month. That would solve that problembut would make implementation more difficult. Breaking the commercial class in two is something RMLD might want to look at next year for FY 19. Mr. Stempeck pointed out that RMLD has all the data from these customers; setting up separate classes should be an exercise on an Excel spreadsheet. Mr. Seavey stated that there were issues last time that caused RMLD not to do so. Mr. Seavey continued, stating that if RMLD shifts to the $14 demand charge, there is one outlier that will see a 40 percent bill increase. It's a time -of -use customer that is so small it shouldn't be on the time -of -use rate. The large bill increase could be avoided by simply moving the customer off the time -of -use rate. Mr. Seavey stated that two-thirds of the customers will see an increase; the other third will see a decrease. Only 10 customers will have an increase greater than 10 percent. None of the decreases will be particularly huge either. Mr. O'Rourke pointed out that if you give a huge decrease when adjusting subsidies, customers will be looking for an additional decrease the following year. Mr. Seavey answered that now you're sending them a price signal that every additional kwh they use is much less expensive than it was last year. If they're looking at shifting production from one facility to another they'll be more likely to stay. Mr. O'Rourke inquired as to what's not legally acceptable with a customer like that. You get them into the correct rate class, but do you have the discretion to, rather than lower rate, to give them incentives so that they won't leave the service territory? W. Seayey answered that he has designed economic development rates with i time conditions, batt you must be able to phase it out: you can't do it over a long period of time. Even though S mti& large customers are getting significant decreases in their rates, they're still earing close to a 20 percent rate of return; it's not like you're giving it away. "J Mr. Stempeck stated that's where the percentages can be a bit misleading in terms of absolute dollars. Gage 15 Electric Rafe Design Scenarios Mr. Seavey proposed phasing this in over a 3 -year period. Instead of going to a $12 per kW of demand, go to $4, then $8. The cost next year is $14, but with the forward capacity going down, by the time you get to FY20 it will be $12. If this method of Implementation B chosen, then only one customer out of the 60 would see an increase over 10 percent inhY18. Mr. Stempeck asked that for companies that are disadvantaged by the rate changes, can we impact them by helping to reduce their usage? Mr. O'Rourke remorked that the Board is up against opposing forces; trying to save the world by reducing usage while also attempting to increase revenue. Is there a way to sell services, so instead of focusing on selling energy, we become the knowledge providers? Mr. O'Rourke gave the example of going to a manufacturing plant and showing the customer how to reduce usage, and then sharing in the savings. Mr. Seavey answered that private and municipal utilities do that; though they tend to outsource that service because most don't have the staff and the expertise. There are plenty of energy service companies that can do that on a shared -savings basis. Mr. O'Rourke explained that he still believes that RMLD's biggest future challenge is going to be how to increase revenue. The money needs to come from somewhere and with most businesses that's a natural progression: we're still in the products division and are outsourcing the service piece and the knowledge piece, which customers are willing to pay for. Ms. O'Brien asked for clarification from Mr. O'Rourke -was he referring to contracting out the services of engineers? Ms. O'Brien added that she doesn't believe that the law allows us to do contract services. Ms. O'Brien explained that if Ms. Porenteou's group is working with a key account, RMLD can either do an audit or hire an engineering firm to go in and do the ouch, but we're not making money on that. Mr. O'Rourke stated that the customer wants us to come in and lower their bills. There's an opportunity to send in RMLD's engineers. Ms. O'Brien explained that we do that, and we pay our engineers through the rates, but we don't go out and charge the customer; it's a tree service. Municipal tax-exempt employees cannot be contracted out to do taxable work. Mr. Stempeck pointed out that many nonprofits provide additional services. Mr. Seavey recommended seeking a legal opinion. Ms. O'Brien answered that she believes Attorney Pollart said no. Ms. O'Brien explained that we can't go out and provide a service and charge for it, unless that service directly relates to a common system tie e.g. we charge a customer to daconnect their power. Mr. O'Rourke stated that it would fit With how the rest of the world is shifting; customers just wont you to solve their problems. We have a lot of technical knowhow•that's a real value. If we go 10 years out, the future is about reinventing who we we; the model we have today probably Isn't going to be sustainable. Mr. Seavey countered that while there is lots of change that could take place over the next ten yews, there's no guarantee which direction electric technology will go. If electric energy replaces fossil fuels, then there are huge opportunities for growth. It's just as easy to foresee rapid advancement as it is to anticipate an Industry death spiral. The best guarantee is to be resilient and to not get locked In. Ms. O'Brien stated that she will double check with legal counsel for any potential conflict of interest, but she is fairly certain that the answer is no. Page 16 Electric Rafe Design Scenarios Mr. Talbot suggested looking at what Attorney Pollart has already said in regards to his legal opinion on the matter. Mr. Stempeck stated that it depends on how the question was previously asked. Mr. Talbot lauded Mr. O'Rourke for making a great point on how to think outside of the box in terms of revenue and how the business can change. Mr. Talbot then transitioned the discussion to fiber, stating that we don't know what we could be doing to make money with it; there is a tiny study underwoy and the network is producing revenue. We didn't even know we were going to be making this money when we built the network; it was bust for substations and then suddenly there was outside interest in leasing the fiber. Mr. Talbot referenced the research that he has done all over the state which has led him to conclude that this is a growth area. People are doing many creative things. They're building more fiber, and whenever they build more fiber there are always people ready to lease it. We need a bigger study with bigger Board engagement. Mr. Stempeck clarified that Mr. Talbot was pushing for a separate group that doesn't lean on RMLD staff that would be tasked with determining if the fiber business is economically viable for RMLD. Mr. Talbot explained that it would be Board to Board engagement that would meet every quarter and learn more about what is happening around the state. Another part could be that we generate a more comprehensive review of how we use our network now. Mr. Talbot remarked that Mr. Seovey had given a wonderful presentation that delves into the minutiae of electric rates; Mr. Talbot would like to see the some as applied to how we lease our fiber and what is charged for that. Mr. Seavey moved on to the next topic: Renewable generation subsidies. Mr. Seavey explained that RMLD is losing $3 a kW of installed solar capacity every month in distribution revenue. The options are to: a Charge the solar customer $3 a kW of installed solar capacity as a monthly fixed charge, to recover the lost distribution revenue. a Install demand meters because those customers will incur demand. a Separate metering and billing of distribution service and renewable generation supply. The issue is that RMLD is losing $20.000 a year in distribution revenue. It's all residential solar. There's quite a bit of commercial solar but there's no revenue loss because those customers are all demand metered. Therefore, those solar customers are not avoiding any distribution charges. The proposal is to cap that revenue loss at a number, say, $100,000 a year (approximately 300 more solar customers). When you reach that level, it would be a subsidy of 11 cents on every residential custamer's bill. Right now, the subsidy is about three cents a month. When you reach that cap, any new residential solar customer would either be charged a fixed distribution charge, have a demand meter, or have two meters. Presumably, this will happen a few years in the future, so there is time to consider the options. Mr. Stempeck asked Mr. Seavey what the residential cost of solar would have to be to dissuade a homeowner from going forward with an installation. Mr, Seavey replied that he has done analysis of that, but it's going to be different for RMLD because there Is no pure net metering. Additionally, the payback for RMLD customers is longer than National Grid customers because RMLD's rate is lower and RMID is not crediting as much. However, Mr. Seavey did some calculations. Without the distribution surcharge the customer was looking at a 5 -year payback. With the surcharge, that went to 7 years. But, subsidies coming from tax credits completely outweigh anything that RMLD is contributing. Page 1 7 Electric Rate Design Scenarios Vice Chairman Hennessy asked how much less are we credting as compared to the privately - owned utilities? Mr. Seavey replied that through their rate they get a 20 -cent credit (since their current rate is 20 cents q kWh). Ms. Porenteou stated that our credit is 5 cents. Mr. Seavey explained that the area is not overrun with applicants because solar developers know not to go after municipal customers. Mr. Talbot sought assurance that this would not be voted on anytime soon. Mr. Seavey explained that the current recommendation is not to do anything. Mr. Seavey then corrected himself, stating there Is one thing that is being recommended for Immediate implementation. RMLD should have a backup and standby rate. Customers have a right to self -generate. The backup and standby rate charges them far RMLD keeping its distribution system available for them to use their equipment isn't working, Mr. Talbot said he didn't understand the back up and standby rate. Ms. O'Brien explained that the customer may be off the grid, but we still have a distribution system: wires/transformers that are availableand must be maintained. Mr. Seavey explained that the threat here is the Tesla solar wall, where you now have a combination of storage and solar that will provide 100 percent. But the electric company still needs to be there in case of an emergency, or if it's cloudy for five days. Ms. Parenteou added that if someone wants to be off the grid, RMLD should fake the wires down or they will pay for the backup service. Mr. Talbot asked how RMLD can identify someone is off the grid. Ms. O'Brien answered that the system identifies outliers. Mr. Talbot stated that these are interesting problems that we're all focfn& Mr. Seavey commented that he often hears that at conferences, where utilities are terrified of the potential death spial that they are facing. Mr. Talbot stated that Concord, MA has a special rate for Electric Thermal Storage, where a thermal rock heater is used to heat residential homes. Have we considered offering an incentive for electric heating? Mr. Seavey explained that method of heating is most often seen in locales where there isn't ready access to natural gas. Due to cost if doesn't make sense as a retrofit, it makes more sense in new construction to avoid a lot of infrastructure costs. If you have access to a lot of cheap off- peak energy, then it makes sense. Mr. Talbot stated that The enabler of storage on all these systems is fiber. fiber providliing high reliability connections to these systems is another reason we should be thinking about that side of the business. Mr. Stempeck stated that we are though, as evidenced by the Installation of smart meters, to which Mr. Talbot answered that we don't have a smart grid. Mr. Sfempeck replied, not yet, but that can be one of RMLD's strategies, Mr. O'Rourke asked if there is a need to communicate to customers about the backup rate. Mr. Seavey answered that customer communication should be done when it's put in place. Ms. O'Brien stated that the rates will be drawn up and will go through the regular approval process and be implemented for July 1. Mr. O'Rourke stated that someone may go through the trouble of getting their alternative energy sources and not realize they still need to pay for access in emergencies. Mr. Seavey P+ l6 Electric Rate Design Scenarios - added that he has experience With cogeneration customers, and developers neglecting to inform customers about the back up and stand by rate. Mr. Talbot asked, when the $100,000 solar cap is reached, what will that feel like for the next solar customer or for the people who just installed their systems -what are they facing in terms of expenses. Mr. Seavey explained that all private utilities have caps. on their solar rates and that the state has capped the amount that they're willing to allow one group of ratepayers to subsidize another. RMLD should start publicizing six months before the target is Frit. It's not that it won't be I economical to install solar -the payback will just take longer. Mr. Seavey then addressed the residential fime-of-use rate. The rate of return of the residential time -of -use rate is minus 11.5 percent. When the rate was designed, the time -of -use component was included in the distribution rate. But, there's no time -of -use component to distribution costs. Distribution costs are demand related costs. However, there are big costs associated with energy, capacity, and transmission that are time -related. Off—peak energy is much less expensive than on -peak energy and all capacity and transmission costs are on peak. It makes sense to redesign the rate to eliminate the time -of use -distribution charge and replace it with a time -of -use capacity and transmission charge. This would be phased in over a 5 -year period. The distribution charge will go up 3/10 of a cent every year to get it up to the point where it's on par with the base residential rate. Mr. O'Rourke asked what the essence of the problem is. Mr. Seavey replied that the problem is that RMLD is losing money hand over fist on this rate due to the way the rate was designed. Mr. Talbot asked if there was a built-in benefit since it's encouraging people to use less energy during peak times. Mr. Seavey replied, as with any optional time -of -use rate, the people who will benefit from it choose to be on the rate. Ms. O'Brien stated that the time -of -use calculation for the rate should be based on time -of -use components. Whoever performed the original calculation didn't do it correctly. Mr. Seavey explained that there will still be a sizable differential between off and on peak price. It's just that they'll both be a little higher, and that will be phased in over 5 years. The price signal will still be there to shift usage off peaks. Mr. Talbot asked if the time of the cheap rate could be shortened. Mr. Seavey answered that the price differential should be more than adequate to encourage people to shift behavior if they can and want to. You don't want to be paying people for doing nothing. Mr. Seavey then presented a summary of recommended actions. a Adjust increases in base rates each year to move closer to uniform rates of retum. • Restructure the Purchase Power Capacity Transmission charge for industrial customers to include a demand charge that increases from $4 to $8 to $12 over the next three years. • To track total annual subsidies to residential solar customers and prepare an action plan when those begin to approach $100,000 a year. Create a backup and stand by rate to protect against revenue loss from customers who generate all or most of their electricity behind The meter. Restructure Time -of -Use to include an on peak and off peak purchase power capacity and transmission charge and eliminate the on and off peak distribution charge. Mr. Seavey stated that he will come back with specific rate designs to implement this strategy. Mr. Talbot asked where the 100,000 number came from. Mr. Seavey answered that it was arbitronly chosen. Page 1 9 Electric Rate Design Scenarios Vice Chairman Hennessy asked when RMLD would hit that number. Ms. Parenteau stated that RMLD has about 20 new solar customers a year. Mr. Seavey stated, at that rate, RMLD would hit the cap in about 15 years; to which Ms. Parenteau added it all depends on technology and whether the rate of installations remain constant. Ms. O'Brien explained that there are also electrical caps on how much solar can be put on each feeder. Mr. Talbot stated that everyone is worried about 11 cents on an average residential bill subsidizing solar and stated that it doesn't bother him. Everyone is paying an extra dime on their electric bill for the greater good. Solar is a good thing not a bad thing. To get Draconian with the next hundred solar people is not the direction he would like to go in. Ms.. O'Brien asked Mr. Jaffari for the system total on how much ;.tar the RMLD system can handle. Mr. Jaffari replied approximately 40 megawatts total, or few than 30 percent of the system Wad. Mr. Seavey reiterated that the Board is not being asked to decide; for the time being, RMLD will any track solar installs. Ms. O'Brien. stated that RMLD is trying to determine appropriate levels of subsidies. Mr. Talbot replied that he thinks an 11 -cent threshold is ridiculous. Ms. O'Brien asked how much are we already subsidizing solar? Ms. Parenteau answered $24,000. Mr. Talbot suggested increasing the Conservation Charge on the bill after holding public meetings and running advertisements. Mr. Stempeck stated, let's get the rates right first. Ms. O'Brien reiterated that this is a 5 -year strategy with some immediate implementation. Mr. O'Rourke stated that, at the last several Board meetings, there has been a struggle over fiber and solar. The electric business seems to be going through dramatic change. Would a classic SWOT analysis be appropriate? Mr. Stempeck stated that he had a counter -proposal to that, and suggested the formation of a subcommittee of Board Members and possibly Selectmen. The subcommittee would research solar and fiber and produce tangible facts that could be reported back to the Board. Mr. O'Rourke responded that the assembty of such a. group seems to be premature. It sounds like a goal that would come out of a strategy session. We need to first determine our defendable niche and that can only be defined in a strategic meeting. Mr. Stempeck replied that when determining strategy, the first thing his company does is conduct customer interviews. Truth isn't found in meetings; you need to go out and talk to people. Mr. Stempeck clarified, he's not referring to interviewing RMLD customers. But, facts need to be gathered and a SWOT analysis on the benefits of a strategy and determining whether it applies to Reading needs to be done. Then that Is brought back to the team to debate. Professionals build a story line about what wRl work and then form hypotheses and debate. Mr. O'Rourke replied that's providing a 360 view of the organization. We spend a lot of time in meetings debating. However, the workforce is limited and we can't focus on solar and fiber while still maintaining the electric business. Maybe the strategic planning process will resultin a decision to stay the course. While solar and hoer are important things they'll never represent the critical mass of our business. Strategy should provide direction. Mr. O'Rourke suggested a Page 1 10 peehic Rate Design Scenorlas separate meeting to plan. The CAB could provide input and the Board could come up with a SWOT analysis. Ms. O'Brien stated that, as a General Manager who works with other General Managers, you may not get the whole story when you talk to them. Mr. Talbot replied that he is not saying that he does. Ms. O'Brien continued, stating that they'll give you positive things, a couple of negative things,.. but they are very hesitant about money they have spent on projects that have not been successful. Ms. O'Brien said that she's not in disagreement, but we must be careful how we extract the reality of the lessons learned. Mr. Talbot gets a lot of information from other General Manager's, but he doesn't necessary get the full story. Mr. Talbot replied that there are 41 municipals with 15 in the fiber business. There's a lot we don't know. Ms. O'Brien stated that what she was getting at is that she could invite some General Managers to RMLD for a discussion about fiber so that Mr. Talbot could more fully understand what's going on behind the scenes. Mr. Talbot stated that there are other things we can do than be reflexively negative about exploring other potential businesses. Maybe we need to bringin a consultant. There's no in- house expertise on telecom; that's not a crific'sm - just a fact. Mr. Talbot suggested bringing in somebody who only works With the public. sector to study RMLD's situation and determine what he or she would do. Mr. O'Rourke replied that's a step ahead in the process. it's more tactical than strategic Mr. Stempeckadded that when you run a strategy session you rank and order Priorities. Number ` one is to keep the ship afloat. Then you determine whether you want to become a generator, such as solar. That is so close to RMLD's core competency of providing electricity it seems like a natural transition. Telecom is worth looking at; we're getting money through leasing -lei's do more. Ms. O'Brien explained that you can't use the electric rate money as seed money to build a fiber business. You would have to develop a whole new business plan to be able to do that. Mr. Talbot answered that it would be nice to hear some ideas or optimum or suggestions about what to do; fiber has potential opportunities. Mr. Stempeck commented that Holyoke set up a whole separate group for telecom. Mr. Talbot replied that you're supposed to keep them separate but there Is no prohibition in state law about arty type of telecom service. We would never serve residential; we would start by serving businesses. We need more insight into this. Ms. O'Brien suggested getting a legal opinion for mixing monies relating to fiber. Mr. Talbot countered that a lawyer isn't necessary. Mr. Stempeck expressed his support for getting a lawyer's opinion. Ms. Markiewicz added you would want to ask an auditor whether it needs to be a separate entity. Mr, O'Rourke stated that he doesn't disagree with opportunity but if that is something that we want to charge ahead on, we've bypassed the strategic planning process. The strategic agenda should determine the future of the business. We don't want the outcome of the strategy to be to do more studies. Mr. Talbot replied that none of us has the expertise to know what our strategy should be vis a VIS telecom, loosing, dark fiber, businesses, Gorperotions, schools, whether the towns needs cheaper Electric Rate Design Scenarios bandwidth that we can provide, whether the fiber can support the Smart Grid, which of course we know it can. How does it all fit together? W. O'Rourke stated that Mr. Stempeck made an Important point, that it becomes a matter of which one of these are we going to choose and how does it fit Into our Curren} business. Companies go out of business dairy because they do something that doesn't align with their core competencies. Mr. Talbot pushed for a fiber study. Chairman Pacino countered, but is that our strategy. We need to sit down and discuss all our strategies. Mr. Stempeck added that it ends up in circular logic until you get the data to support any one of these strategies, or possible strategies; you don't know whether to embrace it or reject it. We all have our own personal feelings, including his own on telecom. W. Stempeck thinks it's great, but thinks that the competitive threats are huge. A counter-strategy to telecom competition is needed. You also need facts. You must dig into it. You need to get data and facts and then discuss. Ms. O'Brien said that it's tough to build another business given the short and long term plans far the electric system. Mr. Stempeck stated that an increase in electric couldhdppen if hansporta}ion redly takes off, ta Marry of the other changes have already been implemented; LED lights, the sredlystito of AC motors, it's more efficient. Car charging at home would be great for revenue. Ms. O'Brien added that she's hoping the Volkswagen grant will help. Mr. O'Rourke asked. Ms. O'Brien what the next steps would be. Ms. O'Brien replied ttwt the rate structures would be presented for voting and be implemented for July 1. Then the goord could meet again for another strategic meeting. Mr. Stempeck stated he sees a lot of value in having other General Managers in to }alk. Adjournment At 805 p.m. Mr. Stempeck made a motion, seconded by Chairman Pacino, to adjourn. Mellon carried 6.'0:0. Executive Session: Executive Session was posted in the event discussion relative to competitively sensitive issues relative to power arose. There was no such discussion, }herefore no Executive Session was held. A hue copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Dave Hennessy, Secretary Pro Tem RMLD Board of Commissioners Page 1 12 gWN �f qF�r Town of Reading l Meeting Minutes Board - committee - commission - Council: RMLD Board of Commissioners Date: 2020-07-23 Building: Reading Municipal Light Building Address: 230 Ash Street Purpose: General Business Attendees: Members - Present: Time: 07:30 PM 'R'ECEIVED TOWN CLERK READING, MA. 946 2022 MAY 19 PM 5.08 Location: Winfred Spurr Audio Visual Room Session: Open Session Version: Final Due to the pandemic and the March 12, 2020 Governor's Executive Order Suspending Certain Provisions of the Open Meeting Law, all particpants attended remotely. John Stempeck, Chair; David Hennessy, Vice Chair; David Talbot, Commissioner; Robert Coulter, Commissioner; Philip B. Pacino, Commissioner Members - Not Present: Others Present: RMLD Staff: Coleen O'Brien, General Manager; Charles Underhill, Director of Integrated Resources; Wendy Markiewicz, Director of Business, Finance, and Utility Technology; Tracy Schultz, Executive Assistant Jason Small, Citizens' Advisory Board Karen Herrick, Select Board Zackary Fentross, CPA, Melanson Gail Page, 55 Montvale Avenue, Woburn, Chair of Green Sanctuary and Coordinator of the Greater Reading Alliance for Clean Energy (GRACE) Lynn Champion, 8 Franklin Avenue, Wilmington, GRACE James Satterthwaite, 8 Hunt Street, Reading Geoffrey Coram, 31 Ridge Road, Reading Jeremy Wahiman-Krogh, 175 Lowell Street, Reading Tom Mottl, 93 Oak Street, Reading Ann Mottl, 93 Oak Street, Reading Tay Evans Rhoads, 59 Howard Street, Reading, GRACE David Zeke, 163 Pearl Street, Reading Martha Moore, 102 Sanborn Lane, Reading, Conservation Commission Bruce MacKenzie, 102 Sanborn Lane, Reading Caroline Whiting, 17 Chestnut Road, Reading David Kay, 54 Pratt Street, Reading Minutes Respectfully Submitted By: Philip B. Pacino, Secretary Pro Tem Topics of Discussion: Page I 1 Call Meeting to Order Chair Stempeck called the meeting to orderand read RMLD's Code of Conduct. Chair Stempeck announced that the meeting is being videotaped via Zoom for distribution to the community television stations in North Reading, Lynnfield, and Wilmington. Chair Stempeck stated that Mr. Pacino would serve as Board Secretary and explained that public comment would open following the report of the audit committee. Presentation of the Calendar Year 2019 Audit Mr. Fentross introduced himself and explained that the financial statements are not presented on a comparative basis because the prior audit was for a six-month period. This was due to RMLD moving from a fiscal year ending June 30 to a calendar year ending December 31. Comparative financials will be presented starting vvith the December 31, 2020 audit. Mr. Fentross stated that the RMLD had positive operating results for calendar year 2019, a well - funded OPEB trust fund, and no management letter. RMLD received a clean opinion, which is the best opinion that can be received from an independent audit and is the same opinion that the has been received in prior years. While Ms. Schultz pulled up Mr. Fentross' presentation, Chair Stempeck had all meeting participants introduce themselves. Mr. Fentross continued with his presentation and discussed the Statement of Net Position. The capital assets net of accumulated depreciation has a balance of about $79,084,000, which is approximately a $1.8 million increase from the previous year. The increase is primarily due to improvements in infrastructure. The Department spent $6.5 million in total capital asset additions, but that was softened by $4.5 million in depreciation expense, which leaves, which results in the $1.9 million increase. Major capital asset additions that took place in calendar year 2019 included $1.1 million for new poles and fixtures, $2 million on overhead conductors, and $1.3 million on underground conduit and devices. Mr. Fentross then discussed non-current liabilities. The net pension liability has a balance of about $14,610,000 and represents the Department's portion (28 percent( of the total unfunded liability for the Reading Contributory Retirement System. The system as a total is at 72 percent funded. The average in the Commonwealth is 65 to 70 percent. This is a $3.8 million increase from the prior year, which is due to the retirement system's Investments coming in at $13.4 million less than what was anticipated. The net OPEB liability has a balance of about $7,094,000, which is a decrease of about $280,000 compared to the prior year. RMLD has set aside funds to fund about 36 percent of that liability. This is a strong position for RMLD: most towns in the Commonwealth have only funded one to ten percent. Other light departments in Massachusetts have funded between 20 to 40 percent of that liability. Mr. Fentross then discussed purchase power expenses, which has a balance of about $61,027,000. This B a decrease of about $9 million from the prior year. Electric sales under operating revenues has a balance of roughly $89,475,000. RMLD had savings on the cost of power that it purchased and passed those savings on to the customers. Mr. Fentross explained that the change in net position has a balance of approximately $4,319,000. This is essentially RMLD's net income. RMLD had strong operating results. Report of the Audit Committee Mr. Pacino stated that the Audit Committee met the prior week and Mr. Fentross made a more detailed presentation. Some questions were raised, and Mr. Fentross wrote a memorandum answering those inquiries. The Committee recommended that the report be accepted by the Commissioners. Mr. Pacino made a motion, seconded by Vice Chair Hennessy, that the Board of Commissioners accept the Audit Report from Melonson, Calendar Year ended December 31, 2019 as presented and as amended by the Audit Committee, on the recommendation of the General Manager. Roll call vote: Mr. Pacino: Aye; Chair Stempeck; Aye: Vice Chair Hennessy: Aye; Mr. Talbot: Aye; Mr. Coulter. Aye. Motion Cabled: 5:0:0 Page 1 2 Mr. Fentross thanked RMLD staff and left the meeting Public Comment Mr. Coram stated that he had slides to convey his points, which he sent to Ms. Schultz that morning. Mr. Coram stated Ms. Schultz told him she needed meeting materials 48 hours in advance. Ms. Schultz affirmed. Mr. Coram stated that he was shocked to see the suggestion on RMLD's Twitter to raise the temperature on air conditioning from 70 degrees to 73 degrees. Mr. Corom stated the RMLD webpage suggests a temperature of 68 degrees. Mr. Coram stated EnergyStar recommends a temperature of 78 degrees. Mr. Coram stated that he emailed Ms. Mulvaney at the end of June and she did make a change to the Twitter graphic. Mr. Coram asked that the video on the RMLD website also be updated. The Commissioners agreed that this was a reasonable request. Mr. Satterthwaite stated that GRACE would like to make a request regarding RMLD's Clean Energy Policy but would hold off on comment until item 9 (discussion of clean energy policy setting) on the agenda. Mr. Kay asked how the United Unitarian Church in Reading could add solar to its roof. Mr. Underhill explained that information regarding solar rebate opportunities is available on the RMLD website. The issue with the Church being a non-profit is that many of the Incentives are provided through tax offsets. However, the Integrated Resources Department would be glad to discuss the filing process and available incentives. Mr. Underhill added that the video that Mr. Coram referenced earlier is in the process of being rerecorded. RMLD's Response to COVID-19 Ms. O'Brien explained that she has been keeping the Board and RMLD employees up to date on RMLD's Emergency Operating Procedure. RMLD has been ahead of any potential safety issues. The management team meets every day. There are four areas of the Governor's Order. staffing, hygiene, cleaning, and operating. RMLD is well within the limit of ten people per 1000 feet of accessible space. Plexiglass has been added to cubicles. Most of the administrative staff is working remotely. Integrated Resources Division Monthly power supply report Mr. Underhill began by stating loads are being tracked against the budget. For the first three months of the year, octuals ran below budgeted loads. These were pre-COVID 19 impacts. April and May also ran low: these months include COVID as a factor. June's actual load was higher than the forecasted load. Mr. Underhill explained that RMLD was not as adversely impacted by COVID as had been Initially projected. Purchase power expense is well below expected projections. Energy costs are holding slightly below what was budgeted. Capacity costs are usually fixed and have been running slightly below where they were projected to be. That is one of the larger contributors to the power supply market savings. Transmission costs are also below what was projected. This is because loads during peak time are down significantly. Mr. Underhill reviewed kilowatt hour purchases by resources. RMLD has been selling small quantities of power back to the market each month. Mr. Underhill discussed the projected outlook of the power supply through 2040, including non -carbon resources. The Commonwealth's original Renewable Portfolio Standard, the Clean Energy Standard, and the proposed Golden Bill. In the coming years, RMLD is ahead of the curve in terms of its potential to meet any of these standards. RMLD is looldng at having seventy percent of its portfolio being non -carbon in four years. RMLD has made aggressive efforts to obtain a non -carbon portfolio going forward. RECs report Mr. Underhill explained a valuation study for the Renewable Energy Certificates (RECs) that RMLD has in its portfolio was done. The RECs fall into three categories: Class I Class II and 'Other.' The 'Other' are projects in Connecticut and Maine that don't meet the Massachusetts threshold. Class I RECs are currently valued at about four and a half cents a kilowatt hour and Class II RECs are currently valued at about two cents per kilowatt hour. Nge 13 Detailed breakdown of portfolio by RECS classification Mr. Underhill discussed the RECS that RMLD currently has control of in its portfolio. Integrated Resources Division Potential rate Impacts ol options for complying with RPS and Golden Bill Mr. Underhill presented a slide showing the estimated impacts of various portfolio options and legislative compliance on RMLD retail rates, including the impact of acquiring and retiring all RECS in the portfolio. Update on RMLD programs Mr. Underhill presented slides showing the amount spent on the RMLD/Department of Energy Resources (DOER) solar rebate program. There are still $85,000 of funds available. The program has been extended from June 2020 to the end of the year. So far there have been 28 participants receiving an average payout of $5,875. Mr. Underhill stated there are an estimated 15 project slots remaining. Mr. Underhill then provided an update on RMLD's rebate programs, including the cordless yord equipment program, an electric panel upgrade program, and a heat pump program. Report on the Select Board Meedng Mr. Talbot stated the Select Board discussed coordinating a response when RMLD issues Shred the Peak alerts. Green Communities was also mentioned at the meeting. Discussion of clean energy policy setting Mr. Satterthwaite referenced item 3d on the draft sustainable energy policy, which states that the RMLD would adapt to the Clean Energy Standard (CES) and the Renewable Portfolio Standard (RPS), if required by the state legislature to do so. Mr. Satterthwaite stated that Mr. Underhill's past presentations have shown that the RMLD has prepared for the contingency That municipals may ultimately need to adhere To the RPS and CES. Ms. Satterthwaite stated that GRACE believes that catching up with the rest of the state, in terms of clean energy, is the right thing to do, and should be done regardless of whether it is required by The legislature. Mr. Satterthwaite stated that GRACE requests that the RMLD adopt a policy of parity with the investor-owned utilities, hitting The some annual targets for renewable and clean energy, and reporting progress under exactly the some rules. GRACE IS advocating this policy for the following reasons: 1. Ifs not only simple, but comprehensive. The policy phrased this way immediately defines what types of energy are counted and what types are not counted. It automatically prohibits the double counting of renewable energy certificates, which has been a controversial topic. It spells out incremental improvement from year-to-year. It entails that the RMLD will hit new targets, if such targets are mandated for the rest of the state. 2. As reasonable people, GRACE doesn't feel that they can ask for more. Cost is always a factor, and the RMLD has multiple constituencies to please. 3. GRACE was founded when two churches in town got together, and as people of conscience, don't see how They can ask for less. The rules imposed on the IOUs are the only transparent standard against which the fairness of burden -sharing can be measured, relative to the rest of the state. The four towns served by the RMLD are relatively affluent with median family incomes between $114,000 and $125,000. The corresponding number for neighboring Woburn is $03,000, for The state as a whole, it's $80,000, and for Lynn, which borders Lynnfeld, it's only $54,000. Mr. Satterthwaite stated that there should be moral clarity about this. It is not fair or just that less affluent neighbors should pull their weight in creating a cleaner energy supply, while we do less. Yes, municipal light plants have a different business model than Investor-owned utilities, but there's a simple bottom line at the customer level as far as how much is being individually paid and how much pollution is being created. This means customers are taking advantage of a legislative loophole in order to pay less by polluting more. 4. A farsighted policy adopted by The RMLD now may have influence beyond the borders of The four Towns. As the largest of the municipal light plants, and the only one serving four different towns, the RMLD is in a position To be a leader and To set an example. Page 14 Discussion of clean energy policy sefting Chair Stempeck stated that the issue is one of cost. The IOUs rates are higher Than RMLD's. Chair Stempeck explained That for people who are on fixed incomes, a rate increase isn't as easy to handle. RMLD's charter is to provide reliable power to its service Territory at the lowest possible cost. Ms. O'Brien added That the money that is made by selling RECs gets reinvested in low-risk projects. Municipals are getting Together to make green projects happen. Mr. Underhill then stated that when RMLD began its electrification program, a commitment was made To acquire sufficient resources from non -carbon production. If The Commission decides To retire RECs, they will need to decide whether to vote for supplemental funds to continue aggressive requisition of non -carbon resources. Or, that would need to be slowed in order to strike a balance with rate costs. Chair Stempeck also mentioned RMLD has a large industrial customer that accounts for 12 percent of RMLD's load. Mr. Underhill added that the commercial/industrial sector accounts for about 60 percent of RMLD's load. Chair Stempeck said that low electric rates attract and keep business to and in The area. Mr. Satterthwaite stated that in the short -Term, GRACE is asking for reporting rather than action. Mr. Satterthwaite stated They would like to see how RMLD is doing compared to the IOUs. Ms. O'Brien explained that Mr. Underhill presents this information monthly. Mr. Satterthwaite stated sold RECs should be represented. Mr. Underhill states that he shows the potential for green based on the RECs that RMLD has. RMLD's resource portfolio is in compliance with what The IOUs follow. Mr. Talbot asked if RMLD can try To move away from peakers (if used). Mr. Coulter explained that is determined by ISO -the power companies have no say. General Discussion Meeting dates were discussed. Executive Session At 8:57 p.m., Mr. Pacino mode a motion, seconded by Vice Chair Hennessy, that the Board move into Executive Session to consider the purchase of real property, and to discuss the deployment of security personnel or devices, or strategies with respect thereto, and return to Regular Session for the sole purpose of adjournment. Roll call vote: Vice Chair Hennessy: Aye; Mr. Coulter: Aye; Mr. Pacino: Aye; Chair Stempeck: Aye; Mr. Talbot: Aye. Motion Cabled: 5:0:0 Adjournment At 9:52 p.m., Mr. Pacino made a motion, seconded by Vice Chair Stempeck, that the Board adjourn. Roll call vote: Vice Chair Hennessy: Aye; Mr. Coulter: Aye; Mr. Pacino: Aye; Chair Stempeck: Aye: Mr. Talbot: Aye. Motion Carried: 5:0:0 A true copy of the RMLD Board of Commissioners minutes as approved by a majority of The Commission. i�!%�%d 8 iyQG%ff0 Paili�acino lfeb 1, m]1I3:36 ESTI Philip B. Pocino, Secretary Pro Tem RMLD Board of Commissioners Page 1 5 a Town of Reading Meeting Minutes Board - Committee - Commission - Council: RMLD Board of Commissioners Date: 2020-04-30 Time: 07:00 PM Building: Reading Municipal Light Building Location: Address: 230 Ash Street Session: Open Session Purpose: General Business Version: Final Attendees: Members - Present: RECEIVED TOWN CLERK REP,DING, MA. 2822 MAY 19 PM 5: 08 Due to the pandemic and the March 12, 2020 Governor's Executive Order Suspending Certain Provisions of the Open Meeting Law, all particpants attended remotely. John Stempeck, Chair; Daivid Hennessy, Vice Chair; David Talbot, Commissioner; Robert Coulter, Commissioner; Philip B. Pacino, Commissioner Members - Not Present: Others Present: RMLD Staff: Coleen O'Brien, General Manager; Wendy Markiewicz, Director of Business, Finance, and Utility Technology; Tracy Schultz, Executive Assistant George Hooper, Citizens' Advisory Board Vivek Soni, Citizens' Advisory Board Vanessa Alvarado, Select Board Karen Kerrlck, Select Board Minutes Respectfully Submitted Topics of Discussion: B. Pacino, Secretary Pro Tem Call Meeting to Order Chair Stempeck called the meeting to order and read RMLD's Code of Conduct. Chair Stempeck announced that the meeting is being videotaped via Zoom for distribution to the community television stations in North Reading, Lynnfield, and Wilmington. Chair Stempeck asked Mr. Pacino to serve as Board Secretary and had all attendees Identify themselves. Public Comment Mr. Soni stated he is happy that the Board is moving forward with finalizing the Town payment. Ms. Alvarado thanked Chair Stempeck for attending the Select Board meeting the previous evening. To review and discuss a proposed approach for Payment to the Town of Reading Chair Stempeck announced that the Intent of the meeting is to discuss the proposed Town Payment. Chair Stempeck explained that a formula using CPI has been being used and the Board felt that it was no longer appropriate. kWh consumption is declining and RMLD's fixed Vage I 1 To review and discuss a proposed approach for Payment to the Town of Reading costs are increasing. Additionally, the electric system hadn't been maintained and required investment in infrastructure, including a new substation. Thus, declining revenue, increasing costs, and a formula that continually increased the payment to the Town of Reading (irrespective of external conditions) didn't make sense. The RMLD Board has been wrestling with how best to meet the needs of its various constituencies, including all of its customers in all four towns, the Citizens' Advisory Board, the Town of Reading, and the staff and employees of the RMLD. Chair Stempeck explained that the Board has examined and presented multiple approaches as to how to meet the diverse requests. The best approach requires compromise for The better good of the enterprise. Chair Stempeck explained that at present, the interim payments as voted on by the Board are scheduled to end on July 31, 2021. The proposal is to extend that to December 31, 2021. There was no discussion regarding that extension. Chair Stempeck then explained that the proposed formula uses Idlowaff hour consumption. Mr. Hooper asked why the formula was changed from 3.75 mils to 3.875 mils. Mr. Talbot explained that in March, formulas using 3.75 and 4.0 mils had been proposed: this is a compromise. Chair Stempeck stated that the suggested approach is to take a three-year weighted average of kilowatt hour consumption and multiply it my 3.875 mils per kilowatt hour. Chair Stempeck explained that the chart in the Board packet shows what could happen with payment amounts. Using 3.875 mils, the cumulative gain in five years (calendar years 2022 to 2026) to the Town would be $298,587. Two'what if' scenarios were then presented. The first assumes that kilowatt hour sales increase by one percent per year over five years: that would mean an increase to the Town payment of $631,811. The second scenario assumes a one percent decrease overfive years would lower the cumulative payment by $127,242. Mr. Talbot added that it's projected that the above - the -line payment will be increasing due to capital investments. Returning to the below -the -line payment, Chair Stempeck then discussed the impacts of COVID and mild winters. If there was an eight percent drop in sales in calendar year 2020 (with sales returning to normal in calendar year 2021), The cumulative payment would decrease by $11,868. If sales were to drop one percent following the initial hypothetical eight percent COVID decrease, the cumulative payment would decrease by $209,803. Mr. Pocino asked that the Excel spreadsheet be sent to the Board members. Mr. Pacino expressed his concern over catastrophic event occurring. Chair Stempeck stated his belief that the three-year rolling average would smooth that out and that the caveat to any of the formulas is that if there's an event that's large enough to compromise RMLD's ability to make the payment, then the payment to the Town would shrink. Chair Stempeck then explained that the calculation for the above -the -line payment is two percent of net plant times the percentage of Total kilowatt hours that each community uses. Chair Stempeck stated that RMLD's intent is to continue to put capital into the plant. Vice Choir Hennessy asked about The increase in plant due to the new substation. Ms. Marldewicz replied that it has been spread out over a few years because it's a lengthy project. Mr. Pacino stated that there should be a discussion about having a ceiling and a Floor to the payment. Chair Stempeck stated that having a ceiling would mean That sales would be increasing and expressed his feeling that a ceiling would not be needed. In terms of having a floor to the payment, if there was an emergency Then RMLD would not be locked into the payment. All available funds would be needed to handle the catastrophe. Chair Stempeck stressed that the below -the -line payment is voluntary. Mr. Pacino said the payment motion should define what constitutes a major event and that he was leaning towards having a floor for the payment. Vice Chair Hennessy expressed his concern that a hard floorwould be problematic if sales were to drop dramatically. Chair Stempeck added that, perstatute, RMLD is not allowed to use the otherTowns' rates to subsidize the below -the -line payment to Reading. Ms. Alvarado stated that if a floor was set and something happened and RMLD was concerned, the payment could be revisited. Mr. Coulter asked where the numbers are coming from for net plant. Ms. Markiewicz explained it is part of RMLD's six-year plan and is on the website. Ms. Alvarado stated that a minimum payment would provide the Town with stability. Chair Stempeck asked Mr. Hooper and Mr. Soni to discuss the evening's discourse at the next CAB meeting. Mr. Hooper stated that he thinks the payment should be revisited every three years and asked if the Select Board has reviewed the spreadsheet. Page 1 2 To review and discuss a proposed approach for Payment to the Town of Reading Ms. Alvarado replied that the Select Board reviewed it at their meeting the previous evening. Ms. Alvarado stated there was concern regarding the lack of a Boor. Adjournment At 8:53 p.m., Mr. Pacino made a motion, seconded by Vice Chair Hennessy, that the Board adjourn. Roll call vote: Mr. Talbot: Aye; Mr. Pacino: Aye; Chair Stempeck: Aye; Vice Chair Hennessy: Aye; Chair Talbot: Aye; Mr. Coulter: Aye. Motion Carded: 5W. A true copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Philip B. Pacino, Secretary Pro Tem RMLD Board of Commissioners cage 1 3