HomeMy WebLinkAbout2007-08-09 RMLD Operating and Capital Budget Pension Legal Services Subcommittee MinutesReading Municipal Light Department Board
August 9, 2007
Start Time of Regular Session: 7:18 p.m.
End Time of Regular Session: 8:48 p.m.
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Attendees:
Sub Committee Members: Messrs. Hahn, and Pacino, Ms. O'Neill,
Commissioners: Mr. Soli
RMLD Staff: Messrs. Cameron, Dion and Fournier
Chairman Hahn called the meeting to order at 7:18 p.m.
Mr. Cameron gave an opening statement on all the scenarios that were going to be addressed.
Mr. Cameron turned the presentation over to Mr. Fournier to review the five scenarios that have
been identified as mechanisms for funding the Department's Capital Fund requirements, as
outlined in the Six Year Plan.
Mr. Fournier began with Scenario #1 which he described as the Base Case. In this scenario, all the
capital expenditures outlined in the Six Year Plan would be made with no bonding or changes in
current allocations. It was noted that under this scenario, the Capital Fund balance would be
negative by 2012.
Ms. O'Neill asked what was accounting for the forecasted capital expenditures that were above
the average of approximately $4.5 million per year, which include the upgrades to the Gaw
Station. Mr. Dion explained that the forecast also includes expenditures in later years for the
upgrade or replacement of the Wildwood Substation in Wilmington.
Mr. Fournier moved to Scenario #3, which included internally funding approximately $1.2
million of the Gaw Capital expenditure and bonding for $5.7 million at an anticipated rate of 4%.
Mr. Fournier explained that Bond Anticipation Notes (BANs) would be used in FY 2009, 2010 and
2011 until the project was complete and then it would be bonded and repaid over the next 10
years beginning in 2012.
Mr. Fournier then explained Scenarios #4 and #5, which included increasing the Department's
Depreciation Expense to 4% and 5% respectively. He explained that in each case, Net Income
would be reduced and the Capital Fund would be increased. Mr. Hahn asked what would be
required by the DPU to change the Depreciation Expense rate. Mr. Fournier explained that there
was a form required by the DPU in which the Department would explain the reason for the
change and it would be reviewed and approved. He noted that the Department's Depreciation
rate was at 5 % in 2000 and 2001 when the North Reading Substation was being built.
Mr. Fournier moved to Scenario #2, which he noted was the staff's recommended option. In this
scenario, Unrestricted Cash (the Operating Fund) would be transferred to the Capital Fund to
maintain a $4 million balance while funding the capital requirements outlined in the Six-Year
Plan.