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HomeMy WebLinkAbout2006-02-15 RMLD Board of Commissioners MinutesV Reading Municipal Light Board of Commissioners L = j Regular Session C ; K 230 Ash Street n Reading, MA 01867 February 15, 2006 P 12*- 2 Start Time of Regular Session: 7:37 p.m. End Time of Regular Session: 9:22 p.m. Attendees: Commissioners: Herlihy, Pacino, Soli, Kearns, and Hahn RMLD Staff: Messrs. Cameron, Fournier and Dion Mses. Parenteau and Antonio CAB: Ms. O'Neill Guest: Attorney Ken Barna, Rubin and Rudman Chairman Herlihy called the meeting to order at 7:37 p.m. Chairman Herlihy read the following statement into the record, "This meeting of the Reading Municipal Light Department (RMLD) Board of Commissioners February 15, 2006 is being broadcast 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." Report of the Chairman of the Board Presentation to the Town of Reading Selectmen relative to Calpine Chairman Herlihy said that the RMLD has made its presentation to the Board of Selectmen from the various towns the RMLD services relative to the Calpine bankruptcy. Chairman Herlihy pointed out that Calpine filed for bankruptcy; they were one of the major power suppliers for the RMLD, and at the presentations to the Selectmen the potential ramifications were addressed. Chairman Herlihy pointed out that they met with the Town of Reading Board of Selectmen a week and a half ago to discuss this issue. Mr. Cameron added that the RMLD has met with the Town of North Reading, Board of Selectmen and the Town of Wilmington, Board of Selectmen. Mr. Cameron said that the meetings were informative, went well and pertinent questions were asked at these meetings by the Selectmen. Mr. Cameron commented that he would be making a presentation to the Town of Lynnfield, Board of Selectmen on February 21. Chairman Herlihy stated that this is the strategy the RMLD is utilizing as a means of keeping all the towns the RMLD services as well as its ratepayers up to date on the Calpine issue. Update on Cost of Service Study Chairman Herlihy said that at the last RMLD Board meeting they had requested an update on the Cost of Service Study. Mr. Cameron said that he put together a memorandum contained in this evening's Board books, which has an analysis on the customer rate classes. Mr. Cameron is trying to bring the Board up to date on what the RMLD has done in the past relative to the Cost of Service. Mr. Cameron explained the contents of his memo. Mr. Cameron said there is a need to look at the rates again with a 'Cost of Service Study. Mr. Cameron added what the General Manager Subcommittee has put in his Performance Review Items for this year ensures that he will be back to the Board by the end of this year with a Cost of Service Study. Mr. Cameron will be working with the Rate and Power Supply Subcommittee on this. Mr. Hahn said that he vaguely recalls the Department would be gathering some power usage data on the schools. Regular Session Minutes 2 February 15, 2006 Report of the Chairman of the Board Update on Cost of Service Study Mr. Cameron said that last August, the Department installed hourly demand recording meters at all the schools in the service territory. Mr. Cameron explained that the Department wanted one year of demand data from the schools in order to look at the school rate. Mr. Cameron stated that this provides the Department with a demand allocation for the schools based on actual demand data. Mr. Hahn said that in parallel with that, as he understood it there are two steps in the Cost of Service Study. The first would be gathering all the costs then allocating such costs. Mr. Hahn asked while waiting on the meter data, could it move forward on accumulating the testing year cost to be used for this Study? Mr. Cameron replied that it is the intention to use the upcoming fiscal year costs as the test year cost. Mr. Cameron said that as the data is collected it can be used in the Cost of Service model. Mr. Hahn asked if the Department would have that data when the budget is submitted. Mr. Cameron said yes, the budget should be fine and can be updated accordingly. Ms. Kearns asked that given the interest in green power expressed in one community in the customer survey, would that affect the Cost of Service Study? Mr. Cameron replied that green power is going to be handled via the Fuel Charge therefore it will not affect the Cost of Service Study. Chairman Herlihy thanked Mr. Cameron for putting this information together in an expeditious manner. Chairman Herlihy is concerned about the school rate because schools are charged the same rate as the small commercial customer and he does not think it is a fair metric. Selectmen Liaison, Citizens' Advisory Board and Customer Comments Chairman Herlihy asked those in attendance if they had any comments. Ms. O'Neill replied that she had no comments. Chairman Herlihy said that he received a letter from Principal, Patricia de Garavilla, of the Joshua Eaton School. Chairman Herlihy said that Grace Marie Tully a student at the Joshua Eaton School won First Prize in the Grade 3 Electrical Safety Contest sponsored.by the RMLD. Chairman Herlihy said that the Joshua Eaton School appreciates the $200 gift certificate for art supplies for the school. Report of RMLD Board Subcommittees Meeting with the Town of Reading, Town Accountant (Vice Chair Soli) Mr. Soli said that quarterly, the Accounting Subcommittee meets with the Town of Reading, Town Accountant. Mr. Soli said this is the first meeting with the new Town Accountant and it was an opportunity to explain the process. Mr. Soli pointed out that both the Town Accountant and Town Finance Director will be using Melanson & Heath for their audit. General Manager Subcommittee Meeting (Commissioner Hahn) Mr. Hahn said that the General Manager Subcommittee met a week ago and the agenda for that meeting was to review the performance of the General Manager. Mr. Hahn explained the General Manager has a contract with the Light Department that contains a Performance Plan, which sets forth certain goals and accomplishments that need to be met. Mr. Hahn said that the Subcommittee reviewed how well the General Manager stacked up against those goals. Mr. Hahn said that the vast majority of the goals were achieved. Mr. Hahn commented that in accordance with the Agreement, the Subcommittee has agreed on a four percent increase, which is consistent with the agreement reached. Mr. Hahn said the Subcommittee voted on this. Regular Session Minutes February 15, 2006 Report of RMLD Board Subcommittees General Manager Subcommittee Meeting (Commissioner Hahn) Ms. Kearns inquired of Mr. Hahn as to whether the General Manager's contract called for the four percent figure contingent upon the approval of the General Manager's performance by the Subcommittee, or whether 4% was a number the Subcommittee came up with? Mr. Hahn replied that the General Manager's contract calls for a scoring system that is tied into the Performance Plan that was established a year ago. Mr. Hahn replied that there are several factors. Mr. Hahn explained that the increase in the Consumer Price Index for the Northeast portion of the United States is one factor. Mr. Hahn explained that the increase can be more than that by virtue of the fact that more goals are achieved. Mr. Hahn said that the formula in the contract combined within the performance assessment actually yielded a number in excess of four percent. The four percent was a number agreed to by the General Manager and the Subcommittee. The four percent is less than the strict formula in the contract approach. Ms. Kearns asked of Mr. Hahn if he knows what was the increase in the collective bargaining agreements for this year? Ms. Antonio replied that depended upon the union, the raises were 3.0 to 3.5%o this year. Ms. Kearns inquired if any of the unions got 4%? Ms. Antonio replied that the first year in one of the union contracts had a 4% increase, but not in 2006. Chairman Herlihy stated that one of the best accomplishments since he has been on the Board is the development of the matrix by Vice Chair Soli that provides a substantive approach to review the performance of the General Manager. Mr. Hahn agreed with Chairman Herlihy's comment. Mr. Hahn wanted to note that the General Manager has had an opportunity to deal with problems. Mr. Hahn said that the General Manager has done a very good job. Mr. Hahn pointed out that one example is the Calpine issue, which is complex and the General Manager has done a very good job dealing with that. Mr. Hahn also noted that the easement issue at Inwood Drive was another complex problem. Mr. Hahn said that not only did Mr. Cameron negotiate a deal to bring in $150,000 to the RMLD but also secured $245,000 to the Town of Reading. Mr. Hahn said in general, the system is reliable and in very good shape and rates are very good, which is indicative of good performance. Mr. Pacino wanted to know if the Committee had set goals for the current year? Are there any recommendations for the General Manager? Mr. Hahn replied that Mr. Soli did the lion's share of the work on this year's Performance Plan. Mr. Hahn said that some of the goals were kept, but a couple were added and there is a package listing these. Mr. Hahn offered to have these for the Board members. Ms. Kearns said that she would like to review all the new Performance Plan criteria Mr. Cameron said that the Board will get these for next month's meeting Mr. Hahn made a motion seconded by Mr. Soli that on the recommendation of the Reading Municipal Light Board General Manager Subcommittee, that the General Manager's compensation from the period February 7, 2006 through February 6, 2007 be increased by four percent. Motion carried 5:0:0. Community Relations Subcommittee (Secretary Kearns) Ms. Kearns said that the Community Relations Subcommittee met on February 1. Ms. Kearns said the Committee addressed two issues at this meeting. The first item was how best to inform the customers and community about the Calpine bankruptcy. Ms. Kearns said that an outline of a press release was discussed. Regular Session Minutes February 15, 2006 Report of RMLD Board Subcommittees Community Relations Subcommittee (Secretary Kearns) Ms. Kearns said the Committee discussed with the General Manager who he should speak with and about what, and what should be said to the towns and Selectmen because of the increase in rates. Ms. Kearns congratulated Ms. Gottwald for coming up with a very coordinated global approach on that issue. Ms. Kearns said the second item discussed was how to utilize the results of the Customer Survey Satisfaction information that was taken in December 2005. Ms. Kearns wanted to point out four questions on which there were numeric differentials found among the towns. Ms. Kearns said that one survey question was, "What do you think of our rates, high, low or okay?" The overall customer satisfaction on this issue was 78.3%. The towns that differed by more than 5% of that total were Wilmington and North Reading. Another question with distinctions was the question on the interest in obtaining green power. The overall rating was 69.5%0. Reading had an 82% interest in green power and Wilmington had 59% in green power. Another issue relating to green power was "Are you willing to pay a surcharge for this?" The overall response was 58%. Reading had a 69.3% who said they would, 51% Wilmington, Lynnfield 49% and North Reading 63%. One final area is which the Town responses differed was, "Were you satisfied with the customer contact when dealing with the Reading Municipal Light Department?" The overall rating was 95.8%, but Lynnfield's response was 90.3%. Ms. Kearns thanked Mr. Cameron for collecting those questions where the differences between the Town's responses were greater than 5%. Chairman Herlihy added that the RMLD is committed to getting out the message relative to the Calpine bankruptcy. Mr. Cameron said that there will be flyers in the March bills stating what is happening with the Calpine bankruptcy and how it will affect the Fuel Charge. Green Power Subcommittee (Chairman Herlihy) Chairman Herlihy said that this Subcommittee met for the first time before the Board meeting and noted that the survey has borne out that there is interest in alternative energy by the RMLD's ratepayers. Chairman Herlihy said that he intends to spend significant time on this issue at the next Board meeting. Pension Trust Subcommittee (Commissioner Pacino) Mr. Pacino said that the Pension Trust Subcommittee met before the meeting. Mr. Pacino noted that the Department put a request for an actuarial study out to three vendors, Price Waterhouse Coopers (PWC), Segal Company and Stone Consulting who performed the current actuarial were sent bids. Mr. Pacino said that PWC did not bid; Segal Company came in at approximately $15,000 bid, Stone $5,750. Mr. Pacino made a motion seconded by Ms. Kearns that the Subcommittee's unanimous recommendation was that Stone Consulting be engaged to perform an actuarial study for the Light Department Motion carried 5:0:0. Action Items 2005-10 Replacement Relay Panels Mr. Soli asked what are these items and what are they for? Mr. Dion replied that the replacement replay panels are part of the capital plan to upgrade the Gaw Substation this year. Mr. Dion said that the Department is replacing the oil circuit breakers on the 115 kV and 35 kV sides and the relay panels will control and protect them. Mr. Dion noted that there were three vendors and SMC met the specifications. Mr. Cameron asked Mr. Dion to provide a quick update on the breakers. Mr. Dion said that Peter Price, RMLD Distribution Project Engineer is leading the project and they have completed the conversion to the 115 kV, SF6 breakers. At the beginning of this year they started on the 35 kV breakers, and one set has been completed and they are working on the second one this weekend. It is a thorough process and they will be completed, before the end of the fiscal year. He said the panels are expected here in twelve weeks and will be worked on in the spring. Regular Session Minutes February 15, 2006 Action Items 2005-10 Replacement Relay Panels Ms. Kearns asked Mr. Dion why he thought SMC was more qualified since it was not the lowest bidder? Mr. Dion replied that it is only a $54 difference and Keystone did not provide onsite support for the preliminary analysis of the replacement panels. Mr. Dion said that the requirement in the specifications was that their field engineer comes out with our engineer, and they took exception to that in the bid. Mr. Hahn asked Mr. Dion if they were on budget? Mr. Dion replied that they were pretty much on budget. Ms. Kearns made a motion seconded by Mr. Pacino that bid 2005-10 for Replacement Relay Panels be awarded to SMC Electrical Products, Inc. for a total cost of $90,132.00 as the lowest qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. 2006-1 Single Phase Pole Mounted Transformers Ms. Kearns asked if Graybar was not the lowest bidder on the 475 KVA? Mr. Dion replied that the way these items were bid for each item within that bid you could select the lowest evaluated cost. The RMLD does a total life cycle cost analysis to determine the lowest bidder so it is not on capital cost alone but on capital cost and operating cost. Mr. Hahn wanted an explanation on the total amount of $504,965. Mr. Dion said that he would provide Mr. Hahn with that information. Ms. Kearns made a motion seconded by Mr. Pacino that bid 2006-1 for Single Phase Pole Mounted Transformers be awarded to Graybar for a total cost of $146,460.00 as the lowest qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. 2006-2 Three-Phase Pole-Mounted Transformers Ms. Kearns said that this is a large bid. Why is there only one bidder? Mr. Dion replied that there are not many vendors manufacturing three phase pad mount transformers. Mr. Dion added that some chose not to bid. Mr. Dion said that both Howard and General Electric are not offering the product and at one time they were major players. Ms. Kearns asked if an alternate design to the three phase could be done such as three single phases? Mr. Dion replied that the Department is making the right choice with this selection. Mr. Dion said that the market has changed and the result is fewer vendors in this arena. Ms. Kearns made a motion seconded by Mr. Pacino that bid 2006-2 for Three Phase Pole Mounted Transformers be awarded to WESCO for a total cost of $42,178.00 as the only qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. f 2006-3 Single Phase Pad Mounted Transformer Ms. Kearns stated that it is incredulous that for a bid of $113,291.00 there was only one qualified bid. Mr. Dion replied there were two other bidders, but they could not meet the specifications on the bid for shipping, and they were disqualified. Regular Session Minutes 6 February 15, 2006 Action Items 2006-3 Single Phase Pad Mounted Transformer Ms. Kearns pointed out to Mr. Dion that Graybar is lower than Power Sales Group. Mr. Dion replied that the lead-time for delivery for Graybar is twenty to twenty two weeks. Mr. Cameron added that there are physical constraints on some of the transformers in the RMLD's system. Mr. Cameron said that some of the configurations are not compatible with the design used by the RMLD. Mr. Cameron noted that in itself causes restrictions on what transformers can be used on the system. Mr. Dion stated that the cost per unit is about $100 to $200 more. Mr. Dion explained to change out the configurations would cost more in labor time to reconfigure these transformers. Mr. Soli suggested that because of the delivery schedule required by the Department, Graybar is not a qualified bidder, perhaps the next time the bids can go out earlier so that delivery is not a disqualifying factor. Ms. Kearns made a motion seconded by Mr. Pacino that bid 2006-3 for Single Phase Pad Mounted Transformers be awarded to Power Sales Group for a total cost of $113,291.00 as the only qualified bidder on the recommendation of the General Manager. Motion carried 4:0:1. Ms. Kearns voted against the motion. 2006-4 Three Phase Pad Mounted Transformers. Mr. Soli said that the cost of these units have gone up a bit. Mr. Dion replied that the costs of higher KVA have gone up since forecasted last year. Ms. Kearns made a motion seconded by Mr. Pacino that bid 2006-4 for Three Phase Pad Mounted Transformers be awarded to Power Sales Group for a total cost of $21,717.00 as the lowest qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. 2006-3 Single Phase Pad Mounted Transformers Ms, Kearns made a motion seconded by Mr. Pacino that bid 2006-4 for Three Phase Pad Mounted Transformers be awarded to WESCO for a total cost of $181,319.00 as the lowest qualified bidder on the recommendation of the General Manager. Motion carried 5:0:0. General Manager's Report Financial Report, December 31, 2005 Mr. Fournier said the December 31, 2005, Financial Report represents the first six months of this year. Mr. Fournier gave a summary of the large items in his report. Mr. Soli asked if the last Calpine bill was included in Mr. Fournier's Report? Mr. Fournier replied that December was the last month for the Calpine bill. Mr. Soli reiterated for January there would be no Calpine bill. Quarterly Financial Update Operating Budget Actual versus Budget Mr. Fournier said on the Variance Report all five divisions are under budget for the first six months. Mr. Fournier said that Purchase Power Base Cost exceeded the budgeted amount due to transmission costs; the Purchase Power Fuel is over budget due to Calpine. Regular Session Minutes 7 February 15, 2006 General Manager's Report Capital Budget Actual versus Budget Mr. Fournier said this report shows that for the first six months of the year the RMLD has spent $2.2 million out of the budgeted $4.7 million. Mr. Soli asked if the Oil Circuit breakers are one eighth of its total budget? Mr. Dion replied that the breakers were booked in the last fiscal year and there was money in this fiscal year for them so that is the reason for the difference. Mr. Fournier replied that last fiscal year the materials came in for the Oil Circuit breaker project. Mr. Fournier said that the report shows the traditional fixed assets such as vehicles, meter purchases and transformers. Mr. Fournier added the third category, which is routine construction, is a "catch all" category. Mr. Fournier said that in fiscal year 2007, they are stressing the importance of using the correct Work Order Numbers. Mr. Hahn asked if the column "annual budget" is for the whole fiscal year? Mr. Fournier replied yes, it is for the whole fiscal year. Mr. Hahn said that the numbers represent six months' of actual monies spent. Mr. Hahn noted that under Routine Construction $917,000 was spent whereas the line had been budgeted was $169,000. He asked, "Is this reflective of the Work Orders not being properly charged? Mr. Fournier replied some of the $917,000 reflects service and streetlight installation. Mr. Fournier said that they are fine-tuning this report. Mr. Dion replied that one of the distribution projects listed on the Capital Budget is complete but did not make it into the December Financials. Chairman Herlihy said that while he was in attendance at the American Public Power Association he learned that municipals were using defibrillators within the community as a resource. He said that he was under the understanding that the Department purchased this equipment. Mr. Fournier replied that the defibrillators were purchased in the last fiscal year. Six Year Plan Mr. Fournier stated that the Six Year Plan shows six months actual and six months budget and goes out to 2011. Mr. Fournier added that with the budget due April 7, the Six Year Plan would be revisited with knowing a little bit more where the Department stands with Calpine. Mr. Fournier said it reflects six months actual of the 2006 fiscal year and six months projected financial information. Mr. Fournier said the Six Year Plan reflects no anticipated rate increases and no increase in debt service or bonds. Mr. Fournier said that the capital fund will be in line with the budget and Rate Stabilization within the guidelines set by the Board. Ms. Kearns asked if the bond payables were going to be zero by 2010, did the Department plan to get future bonding? Mr. Fournier replied based on the capital budget project needs there is no need to go out for bonding. Mr. Pacino added that the Reading Municipal Light Department has to go before the Town of Reading, Town Meeting to secure bonds. Mr. Soli asked whether the report represented a decrease from 2008 to 2011 in the Operating Income? Mr. Fournier replied that it did because this is based on the Department making its eight percent that is how the number falls out. Regular Session Minutes February 15, 2006 General Manager's Report Six Year Plan Mr. Soli suggested that the fuel prices should be looked at in the next revision of the Six Year Plan. Ms. Kearns asked if as a result of the Calpine bankruptcy, the Board purchased its own generating facility, will this affect the Six Year Plan? Mr. Fournier replied that he is unsure if that decision is going to be made in two months, but if it occurs it will impact the Six Year Plan. Pension Trust Mr. Fournier said that for the six months the annual payment to the Town of Reading has been made in the amount of $886,276. Mr. Fournier said there is $1 million in cash and $6.5 million in investments. American Public Power Association (APPA) 2006 Reliable Public Power Provider (RP3) Award The RMLD has received a Platinum level in the RP3 Award Program. Chairman Herlihy said that a report on this would be made at the next meeting. Mr. Cameron suggested that Ms. Parenteau give an update on the Power Supply for December. Ms. Parenteau updated the Board on the December, Purchase Power Report. Schedule for Operating and Capital Budget The RMLD Board at its last meeting requested this information. Mr. Cameron commented that on March 31, the CAB and RMLD Board would receive the first draft of the Operating and Capital Budgets. Mr. Cameron added the CAB has a thirty-day review period. Mr. Cameron said the CAB recommendations will come back to the Board by May 1. Mr. Cameron pointed out the RMLD Board will try to meet two times, once on each budget, between May 1 and the beginning of June. Mr. Cameron mentioned in early June, the Operating and Capital, budgets will come out of the Subcommittee and be presented to the Board for approval. Mr. Cameron added on another matter, the RMLD donated money to three organizations that serve the service territory with respect to upgrading heating systems, insulation and fuel assistance for low-income residents. Mr. Cameron said he received a nice letter from a couple in Reading thanking the RMLD for its assistance for the work that will be performed on their heating system. Mr. Cameron said that the last quote in the letter was, "That it was well worth it to stay in Reading for the last forty-six years." Mr. Soli asked a question how individuals can find out about such programs. Mr. Cameron replied each town has a listing of such individuals and that is how they are provided the information. Board Discussion Rate Comparisons, January 2006 Mr. Cameron explained the results of the rate comparisons with the electric utilities adjacent to the RMLD's service territory. E- Mail Explanation for Account Payable and Payroll Removal Sheets Chairman Herlihy said these are self-explanatory. Next Meeting Dates Chairman Herlihy is going to have Quincy Vale make a presentation on green power at the next RMLD Board meeting. Chairman Herlihy presented the Good Neighbor Energy Fund envelope and encouraged participation if possible. Regular Session Minutes February 15, 2006 Ms. Kearns said she has a disagreement with Mr. Cameron on whether the Reading Municipal Light Department needs to purchase Employment Practice Liabilities Insurance and would like to have discussion to see if it should be purchased through PURMA. Chairman Herlihy said this could be addressed at the next meeting. Thursday, March 16, 2006 Wednesday, March 29, 2006 RMLD Board of Commissioners Subcommittee Meetings RMLD Board Rotation at Citizens' Advisory Board (CAB) Meetings Chairman Herlihy stated these would be scheduled off line. Executive Session At 8:45 p.m. Ms. Kearns made a motion seconded by Mr. Soli 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. Motion carried 5:0:0. Chairman Herlihy called for a poll of the vote: Mr. Hahn, Aye; Mr. Soli; Aye, Mr. Herlihy, Aye; Ms. Kearns, Aye; and Mr. Pacino, Aye. Motion to Adjourn At 9:22 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. Ellen C. Kearns, Secretary RMLD Board of Commissioners