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HomeMy WebLinkAbout2006-05-09 RMLD Operating and Capital Budget Subcommittee Minutes'RECEIVED Reading Municipal Light Department (RMLD) Board of CommissionjiQ CLERK Operating and Capital Budget Subcommittee Minutes R DI G, MASS. General Manager's Conference Room jul MAR 20 P 5= 0 Date: Tuesday, May 9, 2006 Time: 1:00 P.M. Place: General Manager's Conference Room Attendees: Richard Hahn, RMLD Board of Commissioners, Subcommittee Member Mary Ellen O'Neill, RMLD Board of Commissioners, Subcommittee Member Robert Soli, Secretary, RMLD Board of Commissioners Vincent Cameron, General Manager Robert Fournier, Accounting/Business Manager Joe Donahoe, Facilities Manager Mark Uvanni, MIS Manager To discuss Fiscal Year 2007 Operating and Capital Budgets. Regular business of the Operating and Capital Budget Subcommittee. Commissioner Hahn called the meeting to order at 1-05 p.m. Mr. Hahn opened the meeting by stating that the format of the meeting could be to continue the review of the Operating Budget or ask particular questions. General Mr. Cameron said that the RMLD's Division Managers would be available to answer any questions concerning the Operating Budget. Mr. Cameron suggested that if there are specific questions then that format can be followed for the meeting. Mr. Hahn said that he would like to perform the review of the Operating Budget by divisions. Ms. O'Neill stated that she had submitted general questions relative to the Operating Budget and she would incorporate them as the review went along. Mr. Cameron went over the increase in the residential base revenues caused by such projects as Archstone and Johnson Woods. Mr. Cameron said that another residential development was Inwood in which the RMLD will have a coop resale arrangement. Mr. Cameron said the revenues have historically come in close on both the residential and commercial sector. Mr. Cameron added that Home Depot and Jordan's Furniture, although a big project, did not have a large impact on the revenues, therefore this was conservatively calculated. Mr. Hahn addressed the demand and energy and the fuel for the Purchase Power in the Budget. Mr. Hahn referred to page seven of the Summary that there was a spike in 2005 in the Residentials, and 2007 represents a $700,000 increase which translates into close to 10.5%. Mr. Cameron replied that in 2005 severe weather year because of the extremely cold winter and hot summer. Mr. Cameron pointed out if you compare 2007 at $14.8 million and 2004 at $14.7 million that shows a truer picture of the Revenues. Ms. O'Neill then asked one of her submitted questions, "What areas, exclusive of fuel-related expenses, are witnessing greater than a 10% increase in expenses? What outside forces are driving these increases and/ or what priorities are we setting on increases determined internally? Operating and Capital Budget Subcommittee Minutes 3 May 9, 2006 Summary Page 9 Mr. Hahn would like to see a column added for 2006 to reflect the estimate and actual. Under the 593 and 594 Accounts he would like to see the estimate and actual. Summary Page 9 Mr. Fournier added that Citizens' Advisory Board member Arthur Carakatsane requested a summary of three years actual, which is contained in the back of the Operating Budget. Mr. Hahn would like to see the annual budget spread monthly. Ms. O'Neill then addressed one of her questions, Why is there 3.9% in depreciation expenses indicated although the intro. memo states 3%? Mr. Fournier replied that the 3% deprecation is set and if the Department wants to decrease or increase it this needs to go before the DTE. Mr. Hahn explained that the 3.9% is the increase from 2006 to 2007 or the increase in the expense not the rate. Business Division Mr. Fournier pointed out that FERC provides a chart of accounts and he has added to it by putting on the last three digits in each category. That is how the accounting numbering system was developed. E&O Division Ms. O'Neill asked about her question, For #66, "Line" on page 6 of the budget/ actual comparison, could you give me a total summary of labor-related expenses by putting all into two categories only - "labor reg" and "labor of"? Also, could these be separated also into in-house and contracted labor, reg and OT? Ms. O'Neill inquired on the labor and overtime is it combined? Mr. Fournier said that there are five other expense accounts to allocate this. Ms. O'Neill asked if labor and overtime costs are combined? Mr. Fournier replied that regular and overtime labor are broken out. Page 4 Mr. Fournier explained the staffing levels E& O Division. Page 7 Mr. Fournier explained the staffing level and the vacant position. The Chief Engineer is vacant. Mr. Cameron reported that this position involves a union issue in the change ofa job description. Page 10 Mr. Fournier pointed out to page 10, the 581, 585, 593, 594 and 596 in the labor the capital has been backed out. Mr. Fournier pointed out the Line Forman's salary of $87,476, $40,452 is capital where the remainder $47,024 is expensed. Operating and Capital Budget Subcommittee Minutes 5 May 9, 2006 E&O Division Page 12 Ms. O'Neill pointed out that tree trimming has increased. Mr. Cameron said that a few years ago there was only one crew and the Engineers petitioned him to have two crews for three months and an extra crew for the four months. The Department performs its tree trimming in the off- season. Mr. Cameron explained that with the price of fuel coupled with the fact one former Commissioner wanted holiday pay rolled into the hourly rate has increased the cost of the contractors. Mr. Hahn asked about the requirements for a police detail. Mr. Cameron explained what facilitated the need for police details. Mr. Hahn said that there is more cost in the labor side. Mr. Fournier commented that one position has been filled that of the Engineering & Operations (E&O) Manager. Mr. Cameron said that the E&O Manager position was filled in December 2005. There are two other vacancies, the Chief Engineer and the Station Supervisor, which are being discussed with the union. Labor has increased from $5.6 million to $5.8 million, which reflects a 3% increase. Mr. Hahn said that labor is $5 million and $1.3 million is benefits, which reflects less than 7% of revenue. Mr. Hahn pointed out it is "controllable" however, there is far less flexibility with unions than with exempt employees. Mr. Cameron added that the total labor expense is apportioned according how the labor is used. Labor goes to the capital side for capital projects. Mr. Fournier did point out that the head count for the RMLD has gone down. A Customer Specialist left in August and was not replaced. The Meter Department had an employee leave to become an Apprentice Lineman and was not replaced. The Department looks at opportunities not fill positions, if they are not required. Ms. O'Neill asked about education and tuition reimbursement expense. Mr. Cameron explained that the tuition reimbursement is for employees seeking their degrees. There is training for the Engineers on GIS and SCADA and in the Linemen training program, currently there are three apprentices who will be involved in a training plan. Business Division Mr. Fournier then explained for the Operating Budget there is a Summary Sheet for each division, which is then, followed by Cost Centers then a Detail for that Department. Page 3 Mr. Fournier pointed out that the Town Hall charges the RMLD for its services. Mr. Fournier noted that his salary is allocated to three departments. Page 4 Mr. Fournier went over the lock box, pension trust, Stone Consulting and Melanson Heath costs. Mr. Hahn thought that the audit costs pricing were good. Mr. Fournier explained the voluntary payments, which is 2% of net plant paid out to each town by kilowatt percentage. i Energy Services Division Mr. Fournier went over the Energy Services Division budget. Mr. Fournier highlighted such items as staffing, ISO training, the commercial rebate program and legal fees. Operating and Capital Budget Subcommittee Minutes May 9, 2006 7 Mr. Hahn asked if green power would be procured in the open market? Mr. Cameron replied, "yes". Discussion ensued on green power and where to find this type of power in the market. A subsequent Operating and Capital Budget Subcommittee meeting will be posted for next Wednesday, May 17. Mr. Hahn made a motion seconded by Ms. O'Neill to adjourn the meeting. Meeting adjourned at 3:10 p.m.