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HomeMy WebLinkAbout2009-05-11 RMLD Operating and Capital Budget Pension Legal Services Committee MinutesReading Municipal Light Department Board of Commissioners RMLD Board of Commissioners Operating and Capital Budget/Pension/Legal Services Committee Minutes Monday, May 11, 2009 L E- R Start Time of Regular Session: 7:38 p.m. End Time of Regular Session: 9:38 p.m. Attendees: Committee Members: Ellen Kearns, Chairman of the Committee Philip Pacino, Member Commissioners: Mary Ellen O'Neill, Chairman Staff: Vinnie Cameron, General Manager Joe Donahoe, Facilities Manager Robert Fournier, Accounting/Business Manager Jane Parenteau, Energy Services Manager Richard Hahn, Member .1009 JUL I I P IZ- 4 ,6 Beth Ellen Antonio, Human Resources Manager Jeanne Foti, Executive Assistant Paula O'Leary, Operational Assistant Kevin Sullivan, Engineering and Operations Manager Ms. Kearns called the meeting to order at 7:38 p.m. Review the 2010 Operating Budget Ms. Kearns explained that the goal for the 2010 fiscal year Operating Budget is to keep the Operating Expense at the 2009 fiscal year level exclusive of power supply costs. The increase in the 2009 fiscal year budget to the 2010 fiscal year budget is $192,509. Ms. Kearns wanted to know what is the motivating factor for this. Mr. Cameron said that in developing last year's budget it was based on the appropriate amounts to run the operations of the Department, there was no fat. Mr. Cameron asked his Direct Reports to tighten up their budgets last year. Mr. Cameron pointed out that the labor costs are going up 2% for calendar year 2010. In fiscal year 2010 there are increases in depreciation, town payment and power supply. Mr. Cameron stated that in fiscal year 2010 that there are decreases in the professional services and there will be no Halloween party, which is unfortunate that needed to be done. Mr. Cameron pointed out that the main reason for the increase in the fiscal year 2010 budget is funding Other Post Employment Benefits for $377,059. Ms. Kearns commented that last year the budget met the needs of the Department therefore will level fund for fiscal year 2010. Ms. Kearns handed out the RMLD 2010 Operating Budget Draft 1 sheet that has been utilized by the Citizens' Advisory Board. Mr. Fournier explained that this sheet summarizes and highlights major points on the $87 million budget. Mr. Fournier said that about 88% of the budget when analyzed, the Department has no say in it. This involves power costs, fuel, depreciation, town payments, voluntary town payments, return on investments to the Town of Reading and contractual obligations. Mr. Fournier pointed out that $76 million is spoken for. Mr. Fournier stated that $11 million is available to discuss. However, there are other factors such as labor, overtime, training, education, legal services, insurances, rent and bad debt expenses which are operating expenses. Mr. Fournier commented that there is $3.1 million that you can work with which represents less than 4% of the total operating budget. Out of the $3.1 million there are necessary expenses such as tree trimming $250,000 and conservation program for more than over $500,000, general benefits and insurance $200,000 as well as hardware and software contracts. Mr. Fournier commented that it is a highly fixed industry; there is not much wiggle room. Ms. Kearns asked on the labor overall is staff being increased in any departments? Operating and Capital Budget /Pension/ Legal Services Committee Business Division Mr. Fournier replied that the rebates have been moved to the Energy Services budget. Mr. Fournier addressed Cost Center 61, he pointed out that there were seven employees in the Management Information Systems Department in last year's budget, however when one employee left was not replaced. Ms. Kearns asked why the supplies went up from went up from $14,000 to $24,000? Mr. Fournier replied that this reflects what the Department spent historically. Mr. Fournier reported that in Cost Centers 57/77 Miscellaneous Income Deductions the Depreciation Expense, Voluntary Payments, Customer Deposit Interest Expense, Return on the Investment to the Town of Reading, Lost and Disposal of Assets, Interest Expense on Bonds. Mr. Fournier explained how these figures are derived. Mr. Fournier reported that on September 1, 2010 the RMLD will be making its last payment, and will debt free as far as bonds go. Ms. Kearns asked Mr. Pacino as an accountant did he feel that the 3% depreciation is appropriate? Mr. Pacino replied, "yes," it has been at the level before. Mr. Fournier commented the standard is 3%, however, there is an option to petition to increase or decrease the percentage to the DPU. It is a source of capital funds it is not advantageous to keep changing this. Energy Services Division Ms. Parenteau presented the Energy Services Division fiscal year 2010 budget. Ms. Parenteau stated that the Energy Services Division decreased by $92,500. The bulk of that was the decrease in expenses $32,000, education $10,000, office supplies $500 and outside services $50,000. The conservation budget for fy 2010 has increased $6,000 that includes the labor from the Customer Service Representative and Energy Efficiency Engineer. The overall budget is down $100,000. Ms. Kearns asked on the outside services will the legal services of Attorneys Barna and Coyle be utilized? Ms. Parenteau replied that ESD will be going out for power supply in this fiscal year and will utilize the services of the Ken Barna. Ms. Parenteau does not see anything significant for the use of John Coyle perhaps minimally on the transmission side. Mr. Cameron said that the trend is for municipals to share the expense amongst each other on issues that affect them directly. Ms. Kearns asked if the services of Mark Dean will be used in the next fiscal year? Ms. Parenteau replied that his services will be used in the fiscal year. Ms. O'Neill asked what would happen to the monies not used in the conservation programs? Ms. Parenteau replied that Mr. Fournier is accounting for that separately, that the expenses are taken out of this account. Ms. O'Neill said that in fiscal year 2009 all the monies collected for the energy conservation programs were not spent. Ms. Parenteau commented that amount is $147,000. ~ Mr. Fournier said that those monies collected will be used for more energy conservation programs in 2010. Operating and Capital Budget /Pension/ Legal Services Committee Engineering & Operations Division Mr. Sullivan reported that the Vehicle Maintenance expense increased by $25,716. Maintenance of Underground lines increase of $37,405 based on the amlualized average and three-year average. Tree trimming reduction of $230,518 that is based on utilization of a single tree trimming crew for fiscal year 2010. The total reduction for the Line Department from fiscal year 2009 to 2010 is $238,319. Ms. O'Neill asked if these reductions were from the reforecasted 2009 budget or the original budget? Mr. Cameron replied that the decrease reflects the original budget. Ms. Kearns pointed out that in the tree trimming she has noticed a single tree crew. Mr. Sullivan said that the single tree crew started on February 1. Ms. O'Neill commented that it had paid off to have more than one tree crew. Mr. Sullivan has not seen a backlog on the tree trimming by reviewing actual information provided by the employee that oversees the tree trimming crews. Mr. Hahn clarified that on the tree trimming $249,000 has been budgeted whereas the three-year average is $258,231. Ms. O'Neill commented that the Line Department has three new positions what are they? Mr. Sullivan replied that there is a First Class Linemen and Apprentice Linemen that are new hires, whereas one Apprentice Linemen is coming from the Station. Future positions and openings were discussed. Ms. O'Neill wanted to know the capital/ operating split. Mr. Fournier replied that 74% is capital and 26% is operating on the line side. Ms. O'Neill wanted to know why such a high increase in the labor for the capital budget? Mr. Cameron said that the labor split last year was 85% capital and 15% operating. Ms. Kearns asked if the additional staffing in the line department have any effect on the amount of overtime worked? Mr. Sullivan replied that there is a diminish effect in that thinking. The Apprentice and First Class Linemen need training to bring them up to fully trained. Mr. Sullivan reported that in Cost Center 67/80 Meter Department there is an increase of $5,632. Ms. Kearns asked if the AMR was solely residential meters? Mr. Cameron replied that some commercial meters are remotely read. Mr. Sullivan reported that in the Station Cost Center 68 there is a reduction of $80,776. Mr. Sullivan reported there will be an increase of $27,264 in the Labor Regular for the Station Supervisor. Ms. Kearns asked the three-year average came in at $37,000 now it is coming at $76,000 what happened? Mr. Fournier replied that this is due the labor for the Station Supervisor was being capitalized for the Gaw station last year. Mr. Sullivan reported that in Cost Center 68 of $159,566 that includes the previous $80,876. Operating and Capital Budget /Pension/ Legal Services Committee Facilities Manager Division Ms. O'Leary replied that the Department is in its fourth year with the insurance. She is looking to go out for an RFP for an insurance consultant and hopes to have this person on board by July 1. Mr. Fournier reported on the Employee Pension and Benefits. There was in an increase due to the funding of the OPEB in the amount of $377,000. Mr. Fournier said that in order for the Pension Trust to be fully funded it might require an additional $100,000 of funding. Ms. Kearns said that this represents an increase of $645,000. Ms. Antonio pointed out that the health insurance has been decreased by $70,000. Ms. Kearns asked about injuries or damages. Mr. Fournier explained that the Department has insurances for property damages and workers compensation. Ms. O'Leary commented that for claims under $5,000 the Department pays out the smaller settlements. Mr. Donahoe pointed out that he has level funded or decreased many of the costs in Cost Center 63 Transportation wherever possible. Discussion followed on vehicle repairs and the difficulty in finding a pool of vendors to choose from because the local mechanics at gas stations do not have the equipment to analyze vehicles that are found at dealerships. Ms. O'Neill questioned the tie in on of the numbers in the classification Capital Credit 01-63-5933-109 because the numbers do no tie in. - Mr. Fournier said that this is something that he needs to update because these are prior account numbers. - Mr. Donahoe then addressed Cost Center 64 Building Maintenance Services has been decreased or level funded with minimal increases. Ms. Kearns stated that she is happy that AccuAire billings have diminished. Mr. Donahoe said that the Department has a new company Alpha Mechanical. Mr. Donahoe commented that the 105 budget includes such items as locks, sign painting, excavation and HVAC. Mr. Donahoe that on average $50,000 is spent on the HVAC system. Mr. Pacino asked when does the Department use excavation? Mr. Donahoe replied the Department has used the town or outside vendors to perform smaller projects. Ms. O'Neill asked how does the RMLD account for cooling? Mr. Donahoe replied that Mr. Seldon had the Meter Department put a meter in the RMLD's transfer room which is takes into account all RMLD's electricity for the Ash Street facility. Mr. Donahoe said that Mr. Seldon tracks this. Mr. Fournier added that the RMLD's electric usage is reported in the DPU report pages 58 and 59, Losses and Internal Use. Ms. O'Neill asked if this includes the substations as well? Mr. Cameron replied, "yes." Ms. O'Neill asked does the Department have a conservation program for the electric and water?