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HomeMy WebLinkAbout2006-12-13 RMLD Board of Commissioners MinutesReading Municipal Light Board of Commssi Regular Session TC I VE Q 230 Ash Street JO W N CLERK Reading, MA 01867 READING, MASS. December 13, 2006 -7001 FEB 28 P 151 Start Time of Regular Session: 7:37 p.m. End Time of Regular Session: 9:37 p.m. Attendees: Commissioners: Messrs. Pacino, Soli and Hahn, Mses. Kearns and O'Neill CAB: Mr. Herlihy RMLD Staff: Messrs. Cameron, Bilicki, Dion, Fournier and Seldon Mses. Antonio, Cavagnaro, Gottwald and Parenteau Guest: Executive Vice President, Michael Vigeant, Center for Research & Public Policy Vice Chair Kearns called the meeting to order at 7:37 p.m. Presentation Commercial Customer Survey Results Vice Chair Kearns introduced Michael Vigeant, Executive Vice President, Center for Research and Public Policy (CRPP). Ms. Kearns said that Mr. Vigeant's firm had performed a residential survey of RMLD customers last year and recently completed a survey of RMLD's commercial customers. She asked Mr. Vigeant to present the results of his survey. Using a PowerPoint presentation, Mr. Vigeant explained that the commercial survey was done by engaging in telephone conversations with some of RMLD business customers. Mr. Vigeant stated that his company had conducted one hundred fifty surveys during which twelve characteristics were measured, such as: satisfaction with customer and field service contact, preferences for communication with the RMLD, information and awareness on key issues, collecting customer perception on issues pertaining to rates and demographics. Also, quality of electric service, customer service and field personnel, green choice and preference on communication were measured. Mr. Vigeant said that when his company rated RMLD on these twelve company characteristics, the overall positive rating is 82 however, when "don't knows" were removed the rating was 95.8%. Mr. Vigeant stated that the higher positive ratings (netting out the "don't know responses") was a valid indicator. He said that using that indicator RMLD was rated 97.9% for dependable service, 97.2% for reliability and 96.9% for keeping customers informed. Mr. Vigeant said that the "don't know response" was high was for the category "keeping electric rates as low as possible". Mr. Hahn asked whether having the "don't knows" screened out meant that businesses do not know the RMLD's rates? Mr. Vigeant replied that the persons who responded to the survey may not be the persons who paid the electric bills. Mr. Vigeant pointed out that the survey response showed that the dollar amount was important, but it was viewed as one line item in the cost of doing business. Mr. Vigeant said that on the Green Choice program, 58.6% were somewhat aware and 55.3% were not aware of this program. Mr. Vigeant added that 85.3% of the customers surveyed use conservation measures. Ms. Kearns asked if there are any areas in the survey results that showed a difference between commercials and the residential customers? Mr. Vigeant said that he would get back to Ms. Kearns on this. Mr. Vigeant said that commercial customers would be more critical than residential customers on such issues as reliability and the RMLD did well in this area. Regular Session Minutes December 13, 2006 2 Minutes November 15, 2006 - - Mr. Soli made a motion seconded by Ms. O Neill to table the Regular Session meeting minutes of November 15, 2006 for approval until the next RMLD Board meeting to reflect the changes requested by Mr. Soli and Ms. Kearns. Motion carried 3:1:0. Mr. Hahn voted against this motion. Report of the Chairman of the Board Citizens' Advisory Board Recommendation Regarding Transfer of Funds from the Deferred Fuel Reserve to the Operating Fund Ms. Kearns asked Mr. Herlihy, CAB representative, to report to the Board on what transpired at the last CAB meeting. Mr. Herlihy said that at the last CAB meeting, the CAB made a motion to recommend to the Board of Commissioners to leave the suggested $1.7 million in the Deferred Fuel Reserve and to revisit the issue in April 2007 and that this motion carried unanimously. Mr. Herlihy explained that he voted on the Deferred Fuel Reserve motion on the condition that the Board of Commissioners and CAB should potentially hold a joint meeting as a "budget summit". Mr. Herlihy said that the Department is flush with reserves. Mr. Herlihy said that the CAB voted against the RMLD refund, 3:1:0. Mr. Herlihy voted in favor of the customer refund. Mr. Herlihy said that the CAB is very concerned about what the future will bring in terms of potential rate increases. Mr. Herlihy explained that he voted for the rate refund because the longer this is held off, customers who have moved out of the service territory do not receive what they paid into it. Mr. Herlihy said that the sense of the CAB is for them to meet with the Board of Commissioners in January to discuss the Energy Services strategy then meet jointly to discuss the Department's financial strategy because it will be a challenging year. Mr. Herlihy stated that the CAB is not a proponent of moving funds back and forth. Mr. Herlihy said that the CAB is concerned with taking a financial action then having to reverse that in the future. Mr. Herlihy said that the Board sets policy, but it is productive to meet jointly because collectively there are major decisions to be made next year. Ms. Kearns, referencing the unapproved RMLD Board minutes of November 15, 2006, page 4, asked Mr. Herlihy if . he shared with the CAB the Board discussion regarding the transfer of funds from the Deferred Fuel Cash Reserve into the Operating Fund and changing the increment from one half cent to one cent. Ms. Kearns asked if the CAB in its discussion addressed either of those issues because those issues were the basis for the motion to bring it back to the CAB not just the Deferred Fuel issue. Mr. Herlihy said that both items were addressed. Mr. Cameron said that CAB member Vale was at the last RMLD Board meeting not CAB member Herlihy. Mr Cameron said that Mr. Vale did make mention of what was discussed at the RMLD Board meeting. Ms. Kearns said that Energy Services had brought to the Board's attention two issues: (1) going from one half cent to one cent and (2) the amount of $3.0 to $3.5 million in the Deferred Fuel Reserve. Before the vote was taken, Mr. Soli asked that both those issues be explained and described to the CAB. Ms. Kearns said that the CAB's motion does not address these concepts. Ms. Kearns would like to know if the CAB discussed them. Mr. Cameron explained that the motion put forth by the CAB was whether the RMLD should transfer $1.7 million from the Deferred Fuel Reserve back to the Operating Fund. He said that there was never any motion to discuss the caps or bands around how much the Fuel Charge could be changed on a monthly basis. Mr. Cameron said that the CAB took up the motion given to them. Mr. Cameron stated that the motion the Board made at its November 15, 2006, meeting was taken up by the CAB. Ms. ONeill said that the RMLD Board did not make a motion or did not directly ask the CAB to consider these issues. Ms. ONeill said that based on Mr. Herlihy's update, where no vote was taken, the CAB was indicating that they would like to meet jointly with the RMLD Board to discuss some of these financial issues. Ms. O'Neill said that some of these issues would include setting a target level for the Deferred Fuel Reserve Fund. Regular Session Minutes December 13, 2006 Report of the Chairman of the Board Citizens' Advisory Board Recommendation Regarding Transfer of Funds from the Deferred Fuel Reserve to the Operating Fund Ms. O'Neill said that she spoke with Mr. Fournier today because she wanted to know about the elements of the budget before being presented. She said that the planning process for the new budget will be coming up in February or March. Ms. O'Neill said that one fund mechanism requires Board vote whereas two others do not. Ms. Kearns' said that her position is that the Department came to the Board with two recommended changes. One change was to go from one half cent to one cent and the other was to look at the Deferred Cash Fuel Reserve of $3.0 to $3.5 million which has not been analyzed and that she would like this information on the agenda for the next meeting. Mr. Hahn said that last year the Department borrowed from the Operating Fund and that with all due respect to the CAB the Department should put that money back while it can afford to do. Mr. Hahn is unsure why this should not be done. Mr. Hahn stated that at the Power Supply Subcommittee earlier this evening he was provided with data about the underlying business metrics. He said, "When you see the data it will clarify what should be done." Mr. Hahn said that he is for looking out a couple of year in terms of market supply and market volatility and to use these numbers to somehow quantify what the numbers should be. The two parameters are how much does the Board allow the Department to change the Fuel Charge on a monthly basis and how much should be in the Deferred Fuel account. Based on the information he received this evening, Mr. Hahn said that RMLD may not need to make those changes. Mr. Hahn said that this was a totally separate issue from restoring money to the Operating Fund that was taken out., Mr. Soli commented that this is repaying the loan. Ms. Kearns asked if the CAB agrees with the Board on that issue? Mr. Hahn replied "No they want to hold the money." Mr. Hahn said that whether you take the money to restore the situation to where it was is completely independent of how much the RMLD is going to raise the Fuel Charge. Ms. Kearns said that the question before the Board was whether there was any need for a motion to transfer the $1.7 million. Mr. Hahn asked before the motion is made is it appropriate to move these monies, seeking direction from Mr. Cameron and Energy Services? Mr. Cameron said that there is no need to do it right now. Ms. Parenteau said that the information given at the Power Subcommittee did not take into account the $1.7 million transfer. Mr. Hahn said that whether the $1.7 million is moved or not, the Fuel Charge will have to be raised because when the Calpine escrow runs out the prices will increase. Mr. Hahn said that this evening they received a plan that will manage this increase. Mr. Hahn said that if Mr. Cameron and the CAB want to hold off with the transfer until January then that is fine. Ms. Kearns asked for a motion for the transfer of the $1.7 million back to the Operating Fund. No motion was made. Ms. Kearns said she would like this matter on the agenda for the January meeting. Mr. Soli said the Subcommittee met and discussed the progress items for the General Manager that the Board votes upon. Mr. Soli said that the General Manager's plate is full. Mr. Soli stated that an item that will come due is the --'f Cost of Service Study that goes to the CAB and then the rate recommendation comes to the Board. Regular Session Minutes 4 December 13, 2006 Report of RMLD Board Subcommittees General Manager Subcommittee (Secretary Soli) Mr. Soli reported that the General Manager asked if these items could be changed so that the dates were coincident with the rate change recommendation. Mr. Soli said that the Subcommittee discussed this at great length and agreed upon it. Mr. Soli said that the Board votes on these items, therefore it is being brought to the Board because they vote on. Mr. Hahn made a motion seconded by Mr. Soli to give the General Manager a reprieve on the two General Manager progress report items related to the Cost of Service Study. Motion carried 3:1:0. Ms. Kearns voted against this motion. Chairman Pacino was not present for the vote. Power Contract, Rate Setting, Customer Choice (Commissioner Hahn) Mr. Hahn said that the Subcommittee met this evening and Ms. Parenteau and Mr. Seldon provided them with additional progress on developing a power supply portfolio for the next five years. Mr. Hahn explained that Energy Services is intent on identifying potential suppliers, and negotiating a contract with suppliers. He said that in the spring, when the timing of the market is right and the CAB and Board are of the same mindset, Energy Services plans to go out and get indicative pricing and if the market is right to sign contracts. Mr. Hahn said that there will be a joint meeting in January with the CAB and if necessary a second meeting in February. Mr. Hahn mentioned that there was discussion about the possibility of procuring power supply directly from renewables, if possible. Mr. Hahn commented on the impact of buying Renewable Energy Certificates (RFC's). Mr. Hahn stated that it is a good plan. Mr. Hahn said that the second item they addressed was a monthly projection up to 2008, which projects what the Fuel Charge will be assuming the current market exists. Mr. Hahn said that the results show that if you do not do anything and the Calpine reserve ends, the Fuel Charge will go up approximately four cents a kilowatt hour. Mr. Hahn said that kind of rate shock is not what our customers want. Mr. Hahn said that one scenario is to have Fuel Charge ramped up slowly to avoid rate shock, but this needs to be discussed at the joint meeting. Mr. Hahn stated that the possibility exists of performing a technical study for demand side management or energy efficiency. Mr. Hahn said that it is a good use of the Department's money and will be discussed in January. Mr. Cameron stated that the meeting scheduled for January will be a joint meeting with the CAB and due to the competitive nature of the subject will be held in Executive Session and legal counsel will be present. Chairman Pacino arrived at this point in the meeting. Ms. O'Neill wanted to have a Regular Session meeting before the Executive Session meeting in January. Action Item 15 Kv C-style, Polymer Cutouts Mr. Dion said that these polymer cutouts are to replace the porcelain cutouts. He said that the Department is being proactive in replacing these due to failures and is part of a replacement program. Discussion followed. Mr. Soli made a motion seconded by Ms. Kearns that bid 2007-9 15 Kv C-style, Polymer Cutouts be awarded to: Graybar Electric for a total cost of $51,957.00 as the lowest qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. General Manager's Report Financial Report, October 31, 2006 Mr. Cameron said that he failed to mention after the results of the commercial survey were presented that it is the RMLD employees that make the survey results so positive. Regular Session Minutes December 13, 2006 General Manager's Report Financial Report, October 31, 2006 Mr. Fournier presented the Financial Report, October 31, 2006. Mr. Fournier reported that overall the Department is $600,000 under budget. Mr. Soli suggested a schedule for the distribution of the Calpine planned payouts. Mr. Fournier said that all five divisions are under budget. Ms. Kearns asked whether legal services arbitration was over by $219? Ms. Kearns said that all Departments are under in legal costs except that item. Ms. O'Neill wanted Mr. Fournier's assessment of where the Department is vis d vis overtime and labor costs. Mr. Fournier said that most departments are coming in on budgeted numbers or a little over. Mr. Fournier commented there are three areas in which overtime expense exceeded the budget: Line, Station and Engineering Department. Mr. Fournier explained the overtime is attributable to shift coverage. Ms. Kearns asked, "During the budget process do you take overtime into account?" Mr. Fournier replied that overtime is a best estimate when preparing the budget. Mr. Fournier said that with the Payroll Warrant there is an overtime report with it. Ms. O'Neill asked Mr. Fournier for direction on overtime because the rest of the year projections reflect that some departments are over budget. Mr. Fournier said that once the Station Operator position is filled there will be a decrease in overtime, the Line Department overtime will depend on if there is a rough winter. Mr. Fournier said that Overtime usage is not random or haphazard. Mr. Fournier said that bi-weekly there is overtime report generated that goes with the Payroll Warrant. Power Supply Update Ms. Parenteau said that the load is approximately the same as it was in- the prior month. This month last year was 105 megawatts whereas this year it is 101 megawatts. Ms. Parenteau said that energy costs were $2.5 million, slightly less than 4.5¢ a kilowatt-hour, which represents a ten percent increase from September. Ms. Parenteau said that the Deferred Fuel Reserve is $4.7 million. The ISO spot market for day ahead and real time averaged an eleven to twelve percent increase as compared to September. Ms. Kearns said that in late August it was discussed that buying electricity in the spot market seemed to be the most economic way to buy electricity and asked whether that has changed? Ms. Parenteau replied that it is good to have a portion of the Department's portfolio from the spot market to take advantage of the decreasing natural gas prices. From a power supply portfolio outlook it is prudent. Ms. Kearns said that in August and September the spot market was a good place to be although it has been volatile. Ms. Parenteau explained that in October, Seabrook was on scheduled maintenance, so Energy Services opted to purchase ten-megawatts. That energy was secured at $64.50, which was slightly higher than the average market, therefore the spot market was a good place to be in October. Mr. Cameron added that Commissioner O'Neill wanted a report on Cities for Climate Protection and that report will be given in January or February.. Mr. Dion said that the overages in the overtime budget have occurred in his Department. He explained that Engineering overtime is all outage response. Line Department overtime is mostly shift coverage costs, and in the Station they were down two employees and overtime was due to shift coverage. Regular Session Minutes 6 December 13, 2006 General Manager's Report - Energy and Operations Update/Monthly Reliability Report Mr. Dion pointed out that routine construction is a bit overstated and will be corrected in the next month's report. Mr. Dion discussed porcelain cutouts, pole setting transfers and overhead construction upgrades. Ms. Kearns asked whether the money allocated for vehicles had been spent? Mr. Dion replied that two vehicles, Ford Escape hybrids, have been ordered and they are due in this month. Mr. Dion anticipates that in January they will go out to bid on a line truck. Ms. Kearns added that the amount the Department spends on vehicle maintenance is significant. Mr. Cameron added there is a plan in place; the Department has a ten-year life cycle on the trucks. Ms. Kearns said that perhaps the ten-year assumption based on the maintenance expense should be reviewed and that maybe eight years or another number is a better assumption. Mr. Soli pointed out it appears that routine construction will go above budget based on the current projections. Mr. Dion said that his goal is to get everything done. Mr. Dion said they are endeavoring to get all the routine construction projects completed. Mr. Dion explained that the Reading downtown streetlight project will provide more funding and there may be other items that could be scaled down to accommodate this. Mr. Herlihy asked about underground work in new residential developments and is the Department prepared to have a workforce in the future that can accommodate this? Mr. Dion replied that underground requires less maintenance and the staff is trained to handle both overhead and underground work. Mr. Dion said that overhead distribution will not go away but underground design is more prevalent in residential developments. Mr. Dion said that for large residential developments underground is an option. Mr. Dion said that most residential developments prefer underground versus overhead lines. Mr. Dion reported on Customer Average Interruption Duration Index (CAIDI) and System Average Interruption Frequency Index (SAIFI) and said that the Department is below the industry average in both areas. Ms. O'Neill asked for an explanation on the outages in October. Mr. Dion said it was attributable to wind storms that caused outages. Department of Energy (DOE) Distribution Transformer Standards Mr. Dion said there was an article in the American Public Power Association's; Public Power Weekly, which urged the electric utilities to increase the efficiency levels for transformers. Mr. Dion explained that transformer efficiency is measured by using life cycle costs. Mr. Dion said the Department already uses life cycle costs analysis for transformers. T-Shirt Awards Ceremony Ms. Gottwald said that the T-Shirt Awards Ceremony would take place on Thursday, January 4, 2007. Good Neighbor Energy Fund Ms. Gottwald reported that customers would be receiving Good Neighbor Energy Fund envelopes in their bills in January if they wish to donate. Regular Session Minutes December 13, 2006 General Manager's Report American Public Power Association (APPA) Legislative Rally The 2007 APPALegislative Rally will take place March 12 to March 15. Mr. Cameron explained that he has attended this in the past and finds it valuable to visit New England representatives. Mr. Soli made a motion seconded by Mr. Hahn that the Board authorizing overnight travel for the General Manager to attend the American Public Power Association Legislative Rally. Motion carried 5:0:0. Northeast Public Power Association Annual Membership Meeting, December 8, 2006 Mr. Cameron reported that APPA representatives spoke at this meeting on the legislative outlook. Mr. Cameron said the 2007 budget included NEPPA membership. Charitable Contributions for Energy Efficient Measures This is based on the motion the RMLD Board made at its March 29, 2006 meeting. Mr. Cameron said that earlier this year the Board had instructed him to look into a plan whereby customers would make donations to be used for energy efficient measures in town buildings, with the Department being the clearinghouse for the funds. Mr. Cameron received information from the Town of Wellesley as suggested by CAB member Mr. Vale. Mr. Cameron said that he believes that there is a sticking point relative to the tax-deductible status and legal counsel is researching it. On another matter, Ms. Kearns inquired about the $25,000 to agencies for fuel assistance measures Ms. Gottwald stated that those funds were distributed to federal agencies for the low income and cover Wilmington, North Reading, Reading, and Lynnfield. Ms. Gottwald said that customers who qualify for fuel assistance can qualify for the HART program. Ms. Kearns wanted to know why this is not included in the budget. Mr. Cameron explained that the Department collects twenty-five cents a month from the customers for residential energy audit expense. Ms. O'Neill stated that she would like an update on the Green Choice program put on the next agenda. Ms. O'Neill added that she would like to see a public relations push on the program in January. Board Discussion Rate Comparisons, November 2006 Mr. Cameron reported on the Rate Comparisons: Residential rate, Peabody 5.56 % and Middleton 10.95 % lower than the RMLD Residential Time of Use, Middleton 4.11% lower Commercial Rate, RMLD is the lowest Small Commercial Peabody 7.12% and Middleton 8.15% lower than the RMLD Industrial Time of Use, Middleton 1.17% lower than the RMLD. Ms. Kearns complimented Mr. Bilicki for this format. Mr. Herlihy said that the RMLD is the lowest commercial customer rate around and according to the survey they are not aware of this. Ms. Kearns said the results of the commercial survey and RMLD's reliability should be sent to the press. Capital Budget Format Changes (Secretary Soli) Mr. Soli said that the Capital Budget could be clearer with additions of an Executive Summary and Overview, listing of projects and priorities. Mr. Soli said that an Overview would contain such items as scheduling priorities, budget implications and cost to date, etc. Regular Session Minutes December 13, 2006 Board Discussion Capital Budget Format Changes (Secretary Soli) Mr. Cameron stated that he would discuss Mr. Soli's suggestions to the budget format with Messrs. Fournier and Dion. Strategic Planning (Commissioner O'Neill) Ms. O'Neill stated that she would like to set up a Strategic Planning meeting for the end of January. Next Meeting Dates Thursday, January 4, 2007, T-Shirt Ceremony Wednesday, January 17, 2007 Motion to Adjourn At 9:37 p.m. Mr. Soli made a motion seconded by Mr. Hahn to adjourn the Regular Session. Motion carried by show of hands 5:0:0. A true copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Robert Soli, Secretary RMLD Board of Commissioners