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HomeMy WebLinkAbout2005-06-07 RMLD Operating and Capital Budget Subcommittee MinutesMinutes of Capital/Operating Budgets Subcommittee Meeting J RMLD Board of Commissioners IL_ It i I V'ASS. Date June 7, 2005 JUI _ 2 P 3: Time: 8:45 p.m. Place: General Manager's Conference Room Attendees: Messrs. Herlihy and Pacino, Ms. Kearns Messrs. Cameron and Fournier Mr. Donahoe Meeting started at 8:45 p.m. Mr. Cameron explained that the Changes to the Fiscal Year Operating Budget Draft 1 dated April 1, 2005 from the Citizens' Advisory Board (CAB) has already been handed out to the RMLD Board. Mr. Cameron mentioned that Vice Chair Soli was present for the Operating Budget discussion at the CAB meeting where power supply and LICAP were discussed. Ms. Kearns inquired about the Legal Costs for this year's budget. Mr. Fournier handed out the RMLD Outside Services dated April 25, 2005. Mr. Pacino pointed out for the Labor Negotiations there is nothing that has been budgeted. Mr. Cameron replied that all the union contracts expire December 31, 2006. Mr. Cameron pointed out that Item 3, MCAD/Arbitration this is where grievances are found. Mr. Cameron also commented that Management Compensation Review study would be performed. The Department has not had Wyatt look at all salaries for management positions for years. Ms. Kearns pointed out that the NLRA deems that this information needs to be turned over. Mr. Cameron commented the Wyatt study was used in the past for management salaries and is public record. Ms. Kearns inquired what does the study entail? Mr. Cameron replied it looks at the larger local municipals, APPA data, and local investor owned utility data. Mr. Herlihy inquired about Line 8 whereas AC is the Budget Mr. Fournier added this reflects the Phase 3 Manual, CIBFMS and the Expense Manual. Ms. Kearns inquired on the Washington, DC legal issues where would these be found? Mr. Cameron replied in Items 5 and 6. Mr. Herlihy was concerned that there is not sufficient funding in Item 5 considering what is going on at the FERC. Capital and Operating Budget Subcommittee Minutes -2- June 7, 2005 Mr. Cameron added he is comfortable with this number, which he could manage down to. He is comfortable with this number. Mr. Herlihy inquired about Item 7. Mr. Cameron replied this is for such vendors as Dufresne Henry that does environmental right of way work and is not capitalized. Mr. Fournier pointed out this is 215 Outside Services. Ms. Kearns inquired about Line 8 Actual $176,606 for 2004 versus the 2006 budgeted of $21,000? Mr. Fournier replied it is for the non-capitalized CIBFMS computer system training. Mr. Fournier pointed out the Station Operator position is budgeted, however, not filled as well as the E&O Manager position. Discussion then turned to Line 16 Engineering Services. Mr. Cameron noted this is money for system studies to be done because the Engineers do not have the same expertise in some matters. Mr. Cameron explained that two years ago cables failed at the North Reading substation at the Chestnut Street side. Mr. Cameron called in a company to inspect and find out what was wrong. Mr. Cameron explained this is an instance where the Engineers do not have this sort of specialized experience in non-destructive testing. It is good to budget for such items because as in that instant when you need them it is money well spent. Ms. Kearns inquired if this is the first time this has been in the budget? Mr. Cameron replied it has been in before. Mr. Herlihy then inquired on the Pension Actuarial; the last one was performed was in 2004? Mr. Cameron replied yes. This is done every two years. Mr. Pacino noted this has to go out for bid. Mr. Fournier added he will get three price quotes. Mr. Cameron pointed out it is a simple process because the scope is set. Mr. Herlihy inquired if the Department's pension is fully funded? Mr. Cameron replied yes. Ms. Kearns, on another matter, commented on her inquiry to Mr. Cameron on the D&O policy. Her employer was requesting this. Discussion then turned to the rental of spare vehicles. Capital and Operating Budget Subcommittee Minutes -3- June 7, 2005 Mr. Donahoe entered the meeting at this point. Mr. Donahoe explained that currently there are three vehicles that need major overhauls, which may necessitate the renting of vehicles. Ms. Kearns asked Mr. Donahoe if he used last year's figures and added a multiplier? Mr. Donahoe replied that he worked with Brian Hansen, who works for him in Facilities who handles the larger vehicles, to arrive at a number. Mr. Donahoe also added a percentage. Ms. Kearns asked of Mr. Donahoe when she reviews the Account Payables for the vehicles there are numerous vendors such as Stoneham Ford, Sunoco and a vendor in New Hampshire. Mr. Donahoe replied the current fleet is old. It is a matter of consistency on repairs. Mr. Donahoe added that on the state bidders list are Fords. The larger vehicles are under warranty but the hydraulics on the vehicles fail with time. Mr. Donahoe noted that the vendors are more responsive if there is competition. Mr. Donahoe has instructed his staff that they always get three prices unless it is an emergency. Mr. Donahoe added the benefit of the New Hampshire vendor is they come on site after hours and provide good pricing. Mr. Cameron commented it saves time and liability because RMLD staff does not have to transport the vehicles to New Hampshire. On another matter Chairman Herlihy was concerned about the indoor air and its expense for a ten-year- old building. Mr. Cameron replied that the system is over ten years old and needs to be maintained. Mr. Cameron directed Mr. Donahoe to repair the system or junk it. Mr. Cameron has recently spoken to AccuAire. Mr. Donahoe explained this should have not happened to this system. It is a result of shoddy workmanship from inception. Mr. Donahoe mentioned when the piping went in it was welded versus cut. Mr. Donahoe further discussed how the chemical oxidizer used rusted out the pipes coupled with the hard water issue in Reading. The cost is $63,000 but it is better than $400,000 at a minimum for replacement. Mr. Cameron added the Yazaki coolers themselves are in good shape. Mr. Donahoe commented in 2001, another vendor told the Department the chillers were junk. AccuAire has subsequently come in and with their repairs is saving the Department $400,000 to $700,000. Mr. Donahoe added when the pipes are replaced they will use PVC because they will not rust. Mr. Herlihy inquired if there is any legal recourse the Department has? Mr. Cameron replied no. Mr. Donahoe pointed out the pumps originally put in were undersized, but replaced under warranty. Mr. Donahoe has asked AccuAire to train one Facilities employee to clean out the pipe baskets. The cooling tower needs to be replaced and he is uncertain of the cost. Mr. Donahoe noted the piping will cost $26,000 to $30,000. Ms. Kearns asked of Mr. Donahoe if he sees anything else on the facilities side? Capital and Operating Budget Subcommittee Minutes -4- June 7, 2005 Mr. Donahoe replied on building and vehicles there is a need for both larger and smaller vehicles. Mr. Donahoe stated the parking lot needs to be repaired because it is caving in. Mr. Cameron pointed out the water table is high here. Ms. Kearns inquired if the Department only purchases American vehicles? Mr. Donahoe replied on the state bid there are Chevrolets, Toyotas and Fords. For American vehicles it is sedans. Mr. Cameron added the bucket and line trucks are big items. Trucks last ten to fifteen years. The hydraulics needs to be done every five years. What hurts the larger vehicles is the engine time. Mr. Donahoe pointed out hydraulics are more difficult to tend to, but the diesel work is easier. Mr. Cameron added for safety considerations every vehicle gets an annual inspection. Ms. Kearns asked if daily vehicle inspection sheet reports are passed in? Mr. Donahoe replied no, but if a vehicle is deemed unsafe then it is taken off the road. Mr. Herlihy then asked about the equipment in the Audio Visual Room and if fixing it may be considered? Mr. Cameron replied it does not work. Mr. Donahoe added it is not worth fixing. Mr. Donahoe noted it has VHS and cassette. It could go to surplus. Mr. Herlihy stated, on another matter, he would like to see an RFR looking at the telecommunications within the Department. Currently, the Department has numerous telecommunications carriers. Mr. Herlihy believes by bundling all the telecommunication needs of the Department it will provide for cost savings and streamline the billing. Mr. Herlihy provided the various scenarios for the current telecommunications and their related billings. Mr. Herlihy suggested a communications consultant could be considered. On another matter, Ms. Kearns asked why the Department pays no real estate taxes to North Reading, Wilmington, Lynnfield and Reading? Mr. Fournier replied it is due to the In Lieu of Taxes, which all four towns receive two percent of net plant, based on kilowatt compensation per the Twenty Year Agreement. Mr. Pacino added this is because of the settlement the Department had with Wilmington. Mr. Pacino provided information and insight of the Twenty Year Agreement process, proceedings and how the Department has followed this Agreement over the years. Mr. Herlihy then turned to the parking lot issue. Mr. Herlihy inquired if it is contained within the Six Year Plan? Capital and Operating Budget Subcommittee Minutes June 7, 2005 Mr. Cameron replied it should be. Mr. Herlihy inquired on the rent at the Barbas building. -5- Mr. Cameron replied the Department is looking into using Station 1 to alleviate the need for this type of space. The Barbas lease expires in 2008. Mr. Herlihy then inquired on the asbestos? Mr. Cameron replied this is specialty work and the asbestos has to be taken off cables and is performed by an outside vendor. Ms. Kearns asked Mr. Cameron on the budget process if he cut half of the original submitted budget projections items? Mr. Cameron replied he cut about half of the items. Mr. Cameron then proceeded to page 1 for the PPA LICAP issue explaining the $918,000. The $23,000 will be spent prior to LICAP being in effect. The LICAP decision will be made in June at the FERC. In January 2006, this will go into effect and by April the Department sees the need to purchase 70,000 kilowatts via LICAP at $3 per kilowatt. This will be recovered via the PPA. Ms. Kearns expressed her concern that the customers are made aware of this. Mr. Cameron replied that on per kilowatt-hour basis the PPA is set annually. He had sent a letter to all the four town managers explaining to them LICAP may impact the RMLD's customer. Mr. Herlihy commented that this year's budget is higher than last year's. Commissioner Pacino made a seconded by Chairman Herlihy to recommend the FY 2006 Operating Budget to the RMLD Board of Commissioners in the amount of $2,787,076. Motion carried 2:0:0. Meeting adjourned at 10:00 a.m.