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HomeMy WebLinkAbout2006-06-21 RMLD Board of Commissioners MinutesReading Municipal Light Board of Commissioners Regular Session 230 Ash Street Reading, MA 01867 June 21, 2006 Start Time of Regular Session: 7:40 p.m. End Time of Regular Session: 10:26 p.m. Attendees: Commissioners: Messrs. Pacino, Soli, Hahn, Mses. Kearns and O'Neill t RMLD Staff. Messrs. Cameron, Dion, Fournier and Seldon Mses. Antonio, Benson, Cavagnaro, O'Leary and Parenteau Citizens' Advisory Board: Messrs. Lessard, Norton, Vale and Herlihy Guests: Mr. Stone, Stone Consulting, Inc.„ - Mr. D'Addario, Mses. Snyder and Sopchak, Cities for Climate Protyction C'n c ~ E-• Chairman Pacino called the meeting to order at 7:40 p.m. Chairman Pacino took items out of order on the agenda to accommodate the guests that were present. This meeting of the Reading Municipal Light Department (RMLD) Board of Commissioners June 21, 2006 is being broadcast live at the RMLD's office at 230 Ash Street, Reading, MA. Live broadcasts are available only in Reading due to technology constraints. This meeting is being video taped for distribution to the community television stations in North Reading, Wilmington and Lynnfield. Action Item Actuarial Valuation (Stone Consulting, Inc.) Mr. Cameron introduced Mr. Larry Stone of Stone Consulting, Inc., who would be presenting the results of the Actuarial Study. Mr. Stone said that he performed the Actuarial Valuation as of January 1, 2006. It involved measuring the liabilities, the retirement benefits paid to current employees compared to the assets to determine the unfunded liability going forward. Mr. Stone stated that the current funding is based on the last Actuarial Valuation he had performed as of January 1, 2003. Mr. Stone said that in his finding it shows the contribution will be lower based on the prior Actuarial Valuation. Mr. Stone explained that the assumptions used in his valuation: 7.25% Interest Rate, 4.75% Salary Assumption (based on following one person through cost of living increases, promotions,' step increases, longevity and merit increases) and Use Market Value of Assets. Mr. Stone said that the Town of Reading uses asset smoothing whereas the RMLD does not. Mr. Stone said that the assets to offset the benefits (RMLD's investments) are composed of moneys that are in a trust fund in relatively conservative fixed income investments such as CD's and bonds, which provides a lower rate of return. Mr. Stone said that the Reading Retirement System funds are in the thrift fund, which is a state fund that is more aggressively invested. They are invested in equity funds, equity like investments and only 15% are in fixed investments. There is more volatility, however, the result is a greater rate of return than with the RMLD's money. Mr. Stone stated that the current contribution for fiscal 2006 is $352,061 whereas the prior valuation contribution amount was $612,533, a substantial reduction in the contribution amount. Mr. Stone said that the reason for the reduced contribution amount is because the RMLD has fewer employees, lower than expected payroll, and asset gains in the Reading Retirement System assets. v Mr. Stone went over the Asset Valuation in which the RMLD assets are $7,495,395 and the Reading Retirement is $25,646,162, which represents a 33.4% increase from the January 1, 2003 market value of $24,852,158. x\ Regular Session Meeting Minutes June 21, 2006 Action Item Actuarial Valuation (Stone Consulting, Inc.) Mr. Stone pointed out that the Governmental Accounting Standards Board (GASB) issued Statements 43 and 45. These state that you need to recognize the liability for other post employment benefits. Typically, that means medical insurance provided to retirees as well as life and/or dental insurance. This liability has never been reflected on Financial Statements, but it has to be recognized on the books. This statement does not create a funding requirement, however, it needs to be calculated and recognized on Financial Statements. Chairman Pacino said that funding could be a large number and a decision will have to be made with the Town of Reading on this funding. Chairman Pacino said that perhaps a new trust could be set up. Motion Ms. Kearns made a motion seconded by Mr. Soli that the RMLD Board of Commissioners contribute $352,061 into the RMLD Pension Trust for fiscal year 2006 based upon the calculation from Stone Consulting, Inc. Motion carried 4:1:0. Ms. O'Neill voted against the motion. Ms. O'Neill asked if an Actuarial Valuation Study will be performed for the Health Insurance portion? Chairman Pacino said that the Health Insurance portion will have to be discussed with the Department. Cities for Climate Protection (CCP) 123 Pledge Ms. Benson reported that CCP has started its campaign. Ms. Benson said that at Reading Town Day citizens of Reading pledged to make lifestyle changes to reduce CO2 emissions. Ms. Benson said that the Town of Reading Selectmen took the pledge earlier this week. The CCP is looking to the Board to pledge to embrace energy conservation measures as well as reduce C02 emissions. Chairman Pacino thanked the CCP for their attendance and efforts. Ms. Benson mentioned that the other members of the Committee who were present, Mr. D'Addario, Mses. Snyder and Sopchak. Ms. O'Neill wanted an update from the Cities for Climate Protection Committee. Mr. D'Addario said that currently they have a student intern, Emily Kumpel, a graduate of Johns Hopkins University with a degree in Mechanical Engineering, working for them. Mr. D'Addario stated that the intern will perform her data input at the RMLD. Mr. D'Addario reported that at Reading Town Day they received pledges that translate into 170 tons of CO2 saved, but their goal is 400 tons of CO2. They are working on the first phase of data collection to see where the energy expenditures are the greatest in the Town. Ms. Snyder said that there are five milestones involved in this process. The first milestone is to collect all the data on energy use and then produce a baseline. Ms. Snyder explained that electricity, gas, oil, transportation, and solid waste are topics for which data would be collected. Ms. Snyder said that when you save on emissions, you also save money. The second step is an action plan to track progress. The Committee has to go to the Selectmen with a goal that the Town of Reading can meet. Mr. D'Addario added that the CCP does ask residents, as part of the pledge, if they are willing to spend more for green energy. Mr. Cameron said that he has had discussions with the Board about the support the RMLD is giving to the CCP. Mr. Cameron stated that Ms. Benson was able to justify this cost. Mr. Cameron added that there is workspace available in Energy Services as well as a laptop to use on a temporary basis for the data entry effort. Mr. Cameron said that he is offering the same resources to the other towns the RMLD serves if they partake in this program. All RMLD Board members signed a pledge to support the CCP program and to embrace energy conservation and to reduce CO2 emissions. Regular Session Meeting Minutes June 21, 2006 Minutes March 16 Ms. Kearns made a motion seconded by Mr. Soli to approve the Regular Session meeting minutes of March 16, 2006, with the changes presented by Secretary Soli. Motion carried 3:0:2. Chairman Pacino and Ms. O'Neill abstained. March 28 Ms. Kearns made a motion seconded by Mr. Soli to approve the Regular Session meeting minutes of March 28, 2006, as presented. Motion carried 3:0:2. Chairman Pacino and Ms. O'Neill abstained. March 29 Ms. Kearns made a motion seconded by Mr. Soli to approve the Regular Session meeting minutes of March 29, 2006, with the changes presented by Secretary Soli. Motion carried 4:0:1. Ms. O'Neill abstained. May 17 Mr. Soli made a motion seconded by Mr. Hahn to approve the Regular Session meeting minutes of May 17, 2006, as presented. Motion carried 5:0:0. Report of the Chairman of the Board Position on Town of Reading Audit Committee, this term expires on June 30, 2006. Ms. Kearns made a motion seconded by Mr. Hahn to have Chairman Pacino serve on the Town of Reading Audit Committee. Motion carried 5:0:0. Fact Finding on Wind Turbines - Chairman Pacino said that the Department has a zero tolerance policy on conflict of interest. Chairman Pacino said that the specific issue involved the opportunity for the Commission to do some fact finding on wind turbines. Chairman Pacino would like the Policy Subcommittee to look at the policy in place on the Conflict of Interest Rules and adopt the state guidelines. Mr. Soli stated that he has signed up for the wind turbine tour being run by a non-profit organization. He is attending this as a private citizen to learn about the wind turbines. General Manager's Report April 30, 2006 Financial Report Mr. Fournier reported that the Change in Assets for the month of April was a little over $2.0 million of which $1.4 million is related to Fuel. The Year to Date actual versus budget Base Revenue is up $600,000, reflecting the increase in kilowatt hours sold, 2.3% higher than budgeted. The Fuel Revenue exceeds the Expense by $644,000 over budget. Mr. Fournier reported that Purchase Base Power Expense is up over $800,000, attributable to transmission costs. Operating expenses are $816,000 under budget. Mr. Fournier said that the Maintenance Expense is down $260,000 and the Facilities Manager Division is down $100,000. Mr. Fournier said that the cash balance is strong. Mr. Soli had a question about the Deferred Fuel Reserve Fund, which is currently at $3.4 million. It is the target level of $1.75 million. Will the Fund be at that level in two months? Mr. Cameron said that Energy Services has to get this down to the $1.75 million level by the end of the calendar year. Ms. Kearns asked that since she signs the Account Payable Warrant weekly, she has noticed the customer refunds, and wondered if the number of residential and commercial customers leaving the system has increased? Mr. Cameron replied that at the end of January 2006, there were 27,458 customers, and by the end of April, this had increased to 27,515. Regular Session Meeting Minutes June 21, 2006 4 General Manager's Report April 30, 2006 Financial Report Ms. O'Neill asked if moneys are being moved into the Professional Services budget from other areas? Mr. Fournier replied that the overall budget for Outside Services is a little over $500,000. Mr. Fournier explained that Calpine litigation was unforeseen when preparing the budget a year ago. Mr. Soli asked what was spent on the roof project? Mr. Cameron replied that the roof in the garage needed to be replaced and consulting work needed to perform that could not be capitalized. Power Supply Update Ms. Parenteau reported that on the Purchase Power for April, energy purchases in April 2006 were approximately the same as April 2005 at 52.7 million kilowatt hours sold. April energy costs were approximately $2.34 million including the Calpine settlement. The RMLD over collected by $1.4 million, which resulted in the Deferred Fuel Reserve (DFR) having a balance of $3.4 million. Ms. Kearns asked, because customers have asked her, where the $40 million from the Calpine settlement is accounted for? Ms. Parenteau replied that Mr. Fournier has set aside these funds in a separate Massachusetts Municipal Depository Trust (MMDT) account, a conservative investment earning roughly 5% per year. Energy Services calculates the difference between the replacement costs of contracts and the actual cost of the Calpine contract and the cost differential is withdrawn on a monthly basis. Green Power Program Mr. Cameron said that the Board has directed the Department to come up with a green power program before the end of June. Ms. Parenteau said that as a result of the residential customer survey and a directive from the RMLD Board in March, the RMLD has developed an optional green power rate that is being called "Green Choice". This optional rate will allow customers to support the continuation of renewable generators already in existence and encourage the growth and use of renewable generated electricity. Ms. Parenteau reported that the RMLD is structuring this rate in blocks of 100 kilowatt hours with each block priced at $3.00 per block. Ms. ONeill said that the Green Power Subcommittee met on June 7 and voted to endorse this green power program presented by the staff. The Subcommittee is pleased with the program and recommends that the Board adopt the program. Mr. Soli asked if a rate filing is required? Mr. Cameron said that it will have to be filed, but will be easily adjusted, like the Fuel Charge. Discussion followed. Mr. Norton said that the CAB voted to recommend the green power program at its meeting this evening. Ms. ONeill made a motion seconded by Mr. Soli that the Board endorse the Green Power choice program and the Department take the steps necessary to implement the program with the recommended target for implementation of September, 2006. Motion carried 5:0:0. Mr. Herlihy said that he is proud of the Board and thanks the CAB for its involvement because they were important in making it happen. Regular Session Meeting Minutes June 21, 2006 General Manager's Report Minutes and Motions for Funding Levels Mr. Cameron put these minutes on the agenda in response to the issue being raised at the last RMLD Board meeting based on the memo he had prepared on the $3 million refund. These meeting minutes show the amounts for the Rate Stabilization Fund, Operating Fund Cash, and Deferred Fuel Reserve Fund. Ms. O'Neill pointed out that the Board had only voted on the target level of one these funds, the Rate Stabilization Fund. No official vote has been taken on the other two. Ms. O'Neill also brought up the concept of strategic planning. Ms. Kearns agrees that the Board should engage in a strategic plan and asked so when she first came on the Board. Mr. Cameron said that currently the Department has a Six Year Plan with updates that is an internal guide. Mr. Cameron had a plan from senior staff, which he put on hold. Mr. Hahn pointed out that at the APPA Conference in Chicago, he attended there was a session on strategic planning with a presenter who was a dean of a business school. The thrust of the presenter's speech was services. Mr. Hahn suggested acquiring the services of an outside facilitator for a strategic plan. Letter from Kristin Bond, Enrichment Committee, Barrows PTO This letter is thanking Mses. Gottwald and Maillett for their presentation. Mr. Cameron said that Mses. Gottwald and Maillett regularly make school presentations with Hazard Hamlet, an electronic display on the hazards of electricity. Ms. Gottwald said that in the interest of conservation they are looking at purchasing a display to bring out to the - schools. Ms. Gottwald said that they are thinking of changing the theme of the annual safety T-Shirt contest to conservation. Board Discussion Rate Comparisons, May 2006 and June 2006 Mr. Cameron said that there is a new rate comparison, which is in a self-explanatory format. Mr. Cameron stated that the only utility below the RMLD is Middleton with the exception of the small commercial rate in Wakefield, which is lower than the RMLD's. Ms. O'Neill said that at the recent Green Power Subcommittee that a program for conservation be made available from the staff to include revamping and revitalizing this program. Ms. Kearns agreed. The Commissioners took the pledge, there is a need to put meat to the bones, not just have words. Mr. Vale said that there are a number energy efficiency programs in addition to what the RMLD offers. Mr. Vale suggested trying the Northeast Energy Efficiency Partnership and Northeast Energy Council as well as the Division of Energy Resources. Discussion followed. Next Meeting Dates Wednesday, July 19, 2006 NEPPA Conference, August 20 to August 23, 2006 Wednesday, August 30, 2006 RMLD Board of Commissioners Subcommittee Meetings Subcommittee meetings will be posted if deemed necessary by the Commissioners. RMLD Board Rotation at Citizens' Advisory Board (CAB) Meetings No date has been set for the next Citizens' Advisory Board meeting. Regular Session Meeting Minutes June 21, 2006 Executive Session (General Manager's Conference Room) At 9:34 p.m. Mr. Soli made a motion seconded by Mr. Hahn that the Board go into Executive Session to discuss strategy with respect to litigation, and to return to Regular Session for the sole purpose of adjournment. Chairman Pacino called for a poll of the Board: Mr. Hahn, Aye; Mr. Soli, Aye; Mr. Pacino, Aye; Ms. Kearns and Ms. O'Neill, Aye. Motion carried 5:0:0. Motion to Adjourn At 10:26 p.m. Mr. Soli made a motion seconded by Mr. Hahn to adjourn the Regular Session. Motion carried 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