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HomeMy WebLinkAbout2002-06-04 RMLD Board of Commissioners MinutesReading Municipal Light Board of Commissioners Regular Session 230 Ash Street Reading, MA 01867 June 4, 2002 Start Time of Regular Session: 8:25 p.m. End Time of Regular Session: 10:35 p.m. Attendees Commissioners: Messrs. Pacino, Hughes, Soli and Herlihy RMLD Staff: Mr. Cameron, Acting General Manager and Mr. Blomley Mses. Antonio, Cavagnaro, Gottwald and O'Leary CAB: Messrs. Lessard and Carakastane RMLD Liaisons: Mr. Cummings, Town of Reading, Board of Selectmen Mr. Veno, Town of North Reading, Board of Selectmen Guests: Mr. Hechenbleikner, Town Manager, Town of Reading Mr. Hines, Chair, Town of Reading Board of Selectmen RMLD Employees: Ms. Blomley Messrs. Butler, Donahoe and Price RECEIVEp TO VIN CLERK F r- ` ~c sJ IBC, MASS'. ` ZUR JUL 10 A 11: 3 f This meeting is being video taped for distribution to the community television stations in Reading, North Reading, Wilmington and Lynnfield. Tapes of this meeting can be purchased from RCTV ($2 tape). Mr. Hughes, Chairman of the Board, called the meeting to order at 8:25 p.m. Mr. Hughes reported Commissioner Ames is on vacation therefore will not be in attendance at this meeting and informed the Chair beforehand. Report of the Chairman of the Board Recommendation of the Citizen's Advisory Board relative to the Melanson Heath reimbursement Mr. Lessard stated at the Citizen's Advisory Board meeting prior to the RMLD Board meeting, the Citizen's Advisory Board voted 2:3:0, not in favor of Reading Municipal Light Department paying for the Melanson Heath report and the audit. Mr. Pacino inquired can we ask as to the reasons why? Mr. Lessard replied there were a few reasons and he can give his reasons as he has stated before during his tenure as a CAB member for the last ten to twelve years it was explained to him the Town of Reading owns the Light Department thus bears the liability of the Light Department associated with it, the return it receives on investment is one plus seven million dollars for next year. The liability has come. The Town has liability and does not believe all communities all rate payers should pay for that in light of the fact the Light Commissioners decided to have their own audit performed which is over twice the amount of the Melanson Heath audit. The rate payers of the three communities should not pay twice, the fourth community owns it, he made his feelings known to the Wilmington Board of Selectmen who voted unanimously not in favor of paying (reimbursing) for it. Mr. Veno wanted Mr. Lessard to read into the minutes the vote by break out by Town representation. Mr. Veno stated it will be very important in the future. Mr. Lessard replied the vote for reimbursement of the audit was as follows: the two representatives from Wilmington voted against, the North Reading representative voted against, the Lynnfield and Reading representative voted in favor. Mr. Hines noted he and Mr. Hechenbleikner were here at the RMLD Board of Commissioners meeting to state the case for the Town of Reading for the reimbursement; it is only appropriate. The oversight is an independent audit. The Reading Oversight Task Force was formed by the Board of Selectmen as it needed all the communities to participate. This has been the argument and discussion before, given the CAB recommendation and it is only a recommendation. His hope is the Board of Commission will vote to reimburse the Town._ Mr. Hines pointed out all the representatives on the CAB-voted-consistent with the vote of their elected Board, the glaring exception was North Reading. Jun-P 4, 2002 Report of the Chairman of the Board Recommendation of the Citizen's Advisory Board relative to the Melanson Heath reimbursement Mr. Hines noted the Reading Board of Selectmen is thankful to their friends in North Reading for their unanimous support given to the Reading Board of Selectmen through the difficult examination of the IG report, and for the unanimous recommendation that the Town of Reading be reimbursed for the audit. Due to the inconsistency Mr. Hines would advocate the Reading Municipal Light Board of Commissioners take this into consideration when they are voting on the issue of reimbursing the Town of Reading. Mr. Veno stated he wanted to go on record with the Commission that he implores they pay for the audit. The Town of North Reading is one hundred percent behind the payment, the North Reading Board of Selectmen are one hundred percent behind this unanimously. Everyone in the Town supports this. It is only right it be paid for by all. There is no question the Town of North Reading does want to share in the cost of this audit. The audit is completed. Most of us wanted this. It is only right and proper that the Town of Reading be reimbursed. Mr. Veno stated he is supporting the people of the Town of North Reading. Mr. Hughes noted he would not entertain any motion relating to the Melanson Heath reimbursement until the full Commission is present to include Mr. Ames' vote at the June 12`h meeting. The sense of the Commission was to defer this vote until the next meeting. Mr. Soli inquired should there be a motion to table this? Mr. Pacino stated no it is not necessary; it is at the Chairman's discretion. Mr. Hughes replied he would like to table this until the full Board is present to vote. Written Procedure for the General Manager Search Subcommittee Mr. Hughes noted Mr. Ames requested this at the last RMLD Board of Commissioners meeting, on 13t` May. Mr. Hughes highlighted some of the material we drafted up, referring to himself and the Human Resource person in the Department. Mr. Hughes stated advertising would be in industry publications for APPA, NEPPA and The Boston Globe starting mid June and continuing until July. Mr. Hughes also noted the open position will appear on the RMLD's web page as well as being posted Search interviews, a select number of ccandidates will evert to the Committee will foreview resumes and r interviews, tourrssandp tetin s. The for g h Committee will recommend finalists to be brought back to meet with the RMLD Board of Commissioners. Mr. Hughes commented on some of the above discussed items and mentioned it may not be required if we utilize an executive search firm to perform some of the functions. Mr. Hughes pointed out he and Beth Ellen discussed, who will comprise the Search Committee. It will be up to the Search Committee to determine and discuss if they want to do it "in house" or if they would rather have an executive search firm do the road work out in the field. Mr. Hughes noted this has not been decided upon yet because the actual folks (the Search Committee) have not gotten together to meet each other and to set up a table of organization. Mr. Cummings inquired at what point is the decision going to be made to use the services of an executive search firm? Mr. Hughes replied when he gets together with the members. Only he and Ms. Antonio have discussed setting up this Search Committee. The members of the Search Committee have not met as of yet. Mr. Hughes noted when we get this group together within the next two weeks. The Search Committee will decide whether they want to do it in house bearing in mind the summer the other schedules people have or would you rather go to a executive search firm. It will be up to them to decide. Mr. Cummings inquired wouldn't it be up to the Board of Commissioners to decide on how to expend that kind of money? Mr. Hughes replied they would bring it back to the Board. Mr. Cummings inquired at what point will the Board of Commissioners decide on what the budget will be for this kind of search? Mr. Hughes replied it has not really been discussed yet. It will not be an open purse. We have not put any figure on it yet. Mr. Cummings questioned how would a search firm know what their constraints are if you do not set that in place? ___O___~_ +.av.. aatas 1v1111UtGJ June 4, 2002 Written Procedure for the General Manager Search Subcommittee Mr. Hughes replied we will decide this on the night of the meeting. Mr. Pacino noted he would address Mr. Cummings inquiry. The Search Committee has not even met yet, have not organized yet, all Mr. Cummings' questions are very good questions and legitimate concerns but the Search Committee needs to meet and ask those same questions of itself. Mr. Pacino noted they need to put together a budget and decide what the best course of action will be; it is just starting at this point. Mr. Cummings reiterated why is this Commission is not setting whatever budget, it has it in its mind, as part of the charge to the search firm. This kind of executive search you are talking about could run upwards to $50,000460,000. Mr. Pacino replied we are not hiring an executive search firm. It is a possibility. Maybe the search is all done by the members of the Commission themselves. Mr. Cummings inquired at what point are you going to make that decision? Mr. Pacino replied that decision will come after the first or second meeting of the Search Committee and they will come back to the Commission to set a budget for the Search Committee. Mr. Pacino pointed out that is how it was done the last time. It is how he visualizes this Committee will work. They will come forward with a budget, a proposed budget putting together our ideas and getting approval from the Commission to go forward. Mr. Hughes added to go forward with a budget. Mr. Cummings replied you will have a discussion relative to the charge. Mr. Pacino replied absolutely. Mr. Cummings inquired prior to setting up the Search Committee? Mr. Pacino replied no, the Search Committee in essence has been set up at this point there will be an organizational meeting of the Search Committee with the Search Committee deciding on which direction to go. They will come back to the Commission with a budget and get some direction with a recommendation to the Commmission as to what direction we will want to go in. It will be up to the Commission could say yes or the Commission could say no. Mr. Cummings inquired wouldn't it be better if the Commission has a discussion in advance to make that decision? Mr. Hughes replied we do not know what the feelings of the Search Committee is yet. Whether they want to go outside or keep it in house, we can't dictate this before they are organized. Mr. Cummings replied of course you can, you are the policy makers. Mr. Hughes replied I cannot, we cannot dictate to them as to what method they desire to go or what method will be most productive. Mr. Cummings replied it seems to him the Light Commissioners should set the policy of how the search will be conducted. That is policy by its very nature. Mr. Hughes replied it will be taken under consideration we will do that. Mr. Pacino requested of Mr. Cummings to amplify on what he sees the correct procedure should be, as he needs to know where he is coming from. Mr. Pacino is a bit confused as to what Mr. Cummings is asking, if he could amplify and clarify. Mr. Cummings noted in his opinion the fundamental decision, is whether you are or are not going to use a search firm because that, by its very nature will craft, the make up of the committee, its schedule, decision-making milestones, and the rest of the search process. By in large most of the Search Committees he has been involved with including the search for the Superintendent of Schools, have never used an executive search firm Mr. Cummings noted particularly as a rate payer when you are nickel and diming the Town of Reading for $46,000 and turn around and waste money on an executive search firm after spending $95,000 on audit that told you absolutely nothing, he thinks the Department should be very, very careful about professional services they engage in. .mob... 1111. Ll11g 1V1111U1G6 4 June 4, 2002 Written Procedure for the General Manager Search Subcommittee Mr. Pacino replied point well taken. We are here to talk to listen for input. Acting General Manager's Salary i Mr. Hughes noted no vote was taken at the last RMLD Board of Commissioners meeting due to Commissioner Soli's absence. Mr. Herlihy inquired why should they take a vote at this meeting due to Commissioner Ames' absence? Mr. Pacino wanted to know if all the Commissioners have all the information any additional information, as that was a concern from before. Mr. Hughes polled the Commission relative to receipt of all information. The Commission replied in the affirmative. Mr. Hughes stated this item would be tabled until the next meeting. Presentations May 2002 Rate Comparison Mr. Cameron noted as far as the presentation he is not making a big presentation on this, the information is pretty well self- explanatory. Commissioner Ames asked for this information. Mr. Cameron handed out a new page two for the books. Mr. Cameron pointed out the residential time of use, what it shows is the adjacent electric utilities in the service territory Massachusetts Electric, NSTAR, Peabody, Middleton and Wakefield. Mr. Cameron pointed out this is done on a monthly basis. Mr. Bilicki handles this. He is the residential rate expert. What this shows is that the total bill average for residential May 2002 residential annualized rates, last twelve months was $52.52 for a Reading Light residential customer using five hundred kilowatt hours and the average charge comes out to .1050¢ a kilowatt hour. Massachusetts Electric's average bill $55.37, about .11¢ a kilowatt-hour they are 5.42% higher than the RMLD's rate. NSTAR has an or unbundled rate and an average customer using five hundred kilowatt hours pays $63.34, or 1267¢ a kilowatt- hours almost 21 % higher than the RMLD's. Mr. Soli inquired if NSTAR is the former Boston Edison? Mr. Cameron replied yes, it is the former Boston Edison now called NSTAR. Mr. Cameron noted NSTAR is located in Stoneham and Woburn, Massachusetts Electric serves Andover. Mr. Cameron pointed out Peabody Municipal Light Department, which serves part of Lynnfield approximately 20% lower than the RMLD's. Mr. Cameron noted they have a 1.5%¢ negative fuel charge, the RMLD's is approximately 3¢ per kilowatt-hour. He doesn't have a good explanation on a negative fuel charge so he is unable to explain it. Mr. Pacino interjected these numbers are before the Purchase Power Adjustment are put in place? Mr. Cameron replied this is May 2002 the Purchase Power Adjustment does not come in effect until June. This will not reflect on rate analysis until June. Mr. Pacino inquired for Reading what is a rough ballpark number? Mr. Cameron replied this will cause a .6¢ reduction that averages to $3 dollars monthly the result will be a monthly. Mr. Cameron noted on the residential side Middleton Municipal Light Department average monthly bill is $44.40, 15% less than Reading and Wakefield is at $55.85,.1120 a kilowatt-hour 6% higher than the RMLD. Mr. Cameron went over the residential time of use and why customers would chose this rate as it entails a higher usage, a total of fifteen hundred kilowatt hours explaining six hundred hours on peak and nine hundred off peak is the mix they use. The average total bill for this customer would be almost $149.00, monthly or 9.92¢ a kilowatt-hour. These are annualized rates which take into consideration the-summer-and winter rates. Mass-Electric's-average monthly bill is $171.16 for their time of use rate, it is the same split, six hundred on peak and nine hundred off peak with regard to kilowatt hours, average bill 11.410 a kilowatt hour almost fifteen percent higher than the RMLD. xeguiar session meeting minutes June 4, 2002 Presentations May 2002 Rate Comparison NSTAR is higher by 39% their average bill is over $200, Peabody Light is 17% less than the RMLD at about .082¢ they do not have a time of use rate in Peabody, this rate the fifteen hundred kilowatt hours is applied same as the residential rates. Middleton's rate is about 12% less than the RMLD, they do not have a time of use rate, Wakefield, is about 5% more than the RMLD they do not have a time of use rate either. Mr. Cameron briefly overviewed the RMLD's average bill for commercial customer 25 KW; 7,300-kilowatt hour usage is about $705.00 per month. Massachusetts Electric with the same usage for the average commercial customer is about twenty three percent higher, NSTAR on their G2 rate, which would fit this time of customer usage, is at 15% higher than the RMLD's, Peabody is about 5% less than the RMLD average bill would be $670.00, Middleton is about 8% less than the RMLD at about $648.00, Wakefield is 18% higher than the RMLD at $834.70. Mr. Cameron went over the Industrial Time of Use, rate that is similar to the Commercial Time Of Use Rate only it is for larger industrial customers who have higher load factors, the RMLD rate's are almost 5% lower than a similar rate for Massachusetts Electric Company, 13% lower for NSTAR, Peabody, Middleton and Wakefield do not have these types of rates. However, Peabody's Commercial rate is lower than our time of use rate by 9.8 Middleton 8.4 % lower and Wakefield is almost 18% higher. Mr. Hughes inquired Peabody, Middleton and Wakefield does not have a large industrial base? Mr. Cameron replied compared to the RMLD, Peabody may but not Middleton or Wakefield. Mr. Pacino pointed out MIT has a reactor in Middleton. Mr. Soli inquired why Peabody and Middleton are lower? Mr. Cameron replied Peabody and Middleton are lower. Mr. Cameron replied the RMLD is trending down towards them, he is not sure with the PPA as it is right now the Department will get very close to them, if the Rate Stabilization Fund could get into the PPA we could trend down to them and be closer to them. Mr. Pacino had a question relative to Peabody that are lower by providing higher prompt payment discount. Mr. Cameron replied, yes they do offer a twenty percent discount. Mr. Pacino also inquired have they been over recovering in the past, huge over recovering amounts? Mr. Cameron replied as he understands it, when the PSA's at MMWEC were refinanced to a lower interest rate it enabled Peabody to give a bigger discount. Mr. Pacino pointed out he remembered that Peabody banked heavily on Seabrook power plant and they were hit with some huge costs back ten to twelve years ago. Mr. Herlihy questioned just to review, it is June when the PPA has kicked in and people should be seeing lower electric bills? Mr. Cameron replied yes, starting this month. Mr. Herlihy reiterated we have not been the lowest. Mr. Cameron replied no, he has not gone back in history to 1990 or 1991 as Mr. Soli pointed out in Policy 19 said we were going to be the lowest in the area. He misspoke when he thought it only was directed to the IOU's, he was mistaken it was the municipals. If Mr. Cameron could refund part of the Rate Stabilization Fund it would get the Department to lower rates more timely. Mr. Hughes inquired what is the Department's recommendation on this at this point? Mr. Pacino requested this information on a quarterly basis. He has been walking around stating the fact we have lower rates, this is a misstatement on his part, Arthur Carakastane was correct. Mr. Pacino noted we need to see this on a timely basis. -5.- -o-I lv-Lllls lvlnlutw June 4, 2002 Presentations May 2002 Rate Comparison Mr. Cameron noted, he does not see the need to make it a presentation item every month. He will make it informational item at the end of each month. Mr. Herlihy noted it could be in the back of the agenda, he is anxious for the implementation of the PPA. Mr. Herlihy pointed out Mr. Soli was correct with his take on the rates (his prior presentation demonstrating where the RMLD stood by rates). Mr. Pacino inquired when are they going to see the Cost of Service Study? Mr. Cameron noted there was a motion at the April 30'' meeting concerning the PPA charge. He stated earlier he got half a loaf that night in which the ability to put a PPA in place which only reflected the savings on a present day basis between on what our average revenue per kilowatt hour for power supply versus what our average cost per kilowatt hour for power supply is on a monthly basis. What Mr. Cameron and Mr. La Capra recommended is the Department give back on a kilowatt hour basis, that difference plus about $250,000 a month from the Rate Stabilization Fund. What they would do effectively is not only get to basically a cost of service level but it would get to flush back about three million dollars a year on a twelve month basis of Rate Stabilization money to a point where we could get to down to the eight and a half, nine million dollars, which is defensible to keep monies in there for certain events that could have a negative financial effect on the RMLD. At that meeting Commissioner Soli made a case for a one-time pay back of five million dollars in August based on a formula, which would include individual customer billings ratioed to total billings for the year ending July 31, 2002. Mr. Cameron noted he would go to the Citizen's Advisory Board with the motions and CAB would make their recommendations. The motions were, the one time customer refund totaling five million dollars which happen in August of 2002, the second motion, a Cost of Service Study be performed based on the exactly the rate structure we have right now. Mr. Cameron e-mailed them to the both Commissioners Ames and Soli and received comments. Mr. Cameron has brought these recommendations to the CAB this evening, the CAB has reviewed them however, there is no recommendation from the CAB at this time. ENE Financials for December 31, 2001 and 2000 Mr. Hughes commented he and other members of the Commission received from Commissioner Soli language comments to ENE. Mr. Cameron noted Commissioner Ames wanted a copy of the Financials for ENE, as there were questions on ENE. At the meeting with the FINCOM they will also be discussing ENE. Mr. Cameron noted he put in the audited financials statements for ENE. ENE is a wholesale energy trading company created by the Towns of Reading, Braintree, Taunton and Connecticut Municipal Electric Energy Cooperative. ENE was started with a $500,000 contribution from each member system, two million dollars in seed money to start it up. The monies came from savings the RMLD had accrued from taking advantage of certain NEPOOL rules for over fifteen months. The RMLD has saved over one million seven hundred fifty thousand dollars in energy costs. ENE was created as an LLC, which is a limited liability company the reasoning is the exposure to the founding members was limited to the $500,000, which was put in upfront. Mr. Cameron noted there is an Operating Agreement, which restricts additional monies going in without the consent of the founding members so capital calls cannot be made without permission of the founding members. ENE does a lot of asset management for Braintree, Taunton and Burlington, Vermont as they have generation. There are some companies they do asset management for that do not have generating plants. The RMLD does very little business with ENE, the Department does have an Operating Agreement that the Department pays on a monthly basis, they do some forecasting, they are a set of eyes out on the market, however, interaction is very limited. Financially, ENE lost money the first two years, the last two years they have made money, but there has been no cash distribution to the founding members. Right now the equity the RMLD has in ENE is about a little over $400,000 their net operating loss for the four year period has been about $80,000-$85,000. ENE's revenues for the most part are gained from the founding members. Recently, ENE has gone into energy conservation services the RMLD has hired them to represent them as an energy auditing firm for the Department's residential energy conservation services. To be in accordance with the law the RMLD has to have a company in place, which performs residential energy audits and will do the reporting to the Department of Energy Resources. The RMLD pays $3,000 a month to ENE for this service. By law an electric company in Massachusetts must spend one quarter of one percent of its total revenues on residential energy conservation services. The RMLD does not meet this criterion even with hiring ENE to residential energy conservation services. ENE is about the same cost as the company Conservation Services Group_(CSG) the department used inthe past.- Mr. -Cameron noted the contract could be rescinded in sixty days if the Department does not like its service. ENE is also in water conservation services their market being municipal entities, which is another avenue for new business. June 4, 2002 ENE Financials for December 31, 2001 and 2000 Mr. Cummings pointed out page two of seven of the report there is a note in the current assets due from related parties $1.5 million and note seven approximately 80-90% percent 2001-2002 was derived from the four members. His questions was who are the related parties and the bulk of the revenue being shown 2001 $2.3 million, that $1.5 million from that is due from its related parties and is the RMLD expensing money to this LLC that is now showing it as income? Mr. Cameron asked Mr. Cummings for clarification on the last part of his question. Mr. Cummings replied the RMLD is paying $3,000 for the residential energy conservation program, this is income to ENE? Mr. Cameron replied correct. Mr. Cummings noted the $1.5 million that is being shown as related parties is really the bulk of the revenue derived in 2001 of $2.3 million? Mr. Cameron replied he believes so. Mr. Cummings questioned, the RMLD is expensing monies in which it is only deriving twenty five percent back of the net income from? Mr. Cameron replied the Department has not received anything to date from ENE. Mr. Cameron replied yes the Department owns twenty five percent of the company. Mr. Cummings commented the Department owns twenty five percent of the company. Mr. Cummings noted the Department is paying money in, which this company is paying a bunch of overhead and the Department is not getting back anything until it reaches $2 million and then the Department will get only twenty five percent. Mr. Cameron replied he does not know when the Department will get a dividend; however, the model is similar to how Mr. Cummings outlined it. Mr. Pacino inquired the Department should be getting some money back as the Department is selling some power to them? Mr. Cameron replied the Department is not doing much with them in that area. Mr. Pacino noted Mr. Cummings' question is what makes up the $1.5 million from related parties Mr. Cummings replied it was the $2.3 million in revenue and where it is coming from the bulk of it looks to be related parties, the whole thing is questionable. The other question he had was note six long-term incentive plan for employees, who are the employees and what the incentive plan is? Mr. Herlihy replied it states certain key employees and he noticed this as well. Mr. Cummings noted the Department is spending "x" amount of dollars on residential energy conservation that the RMLD would get more bang for their buck doing it directly rather than going through and paying the overhead to another company to do it for the RMLD. Mr. Cameron noted the Department has looked at that in the past. It is not cheap for a company to keep on auditors to perform audits and the reporting as well. It is an expensive proposition. The State has put this formula in place for this money to be spent on conservation. Mr. Cummings noted this looks like a shelter to expend money out of RMLD out to another organization, which is going to take it as income. Mr. Cameron replied he believes this is not the way it was set up. Mr. Cummings noted when you look at 2001 it shows income as reimbursement from its members, what is the form of that reimbursement? Jun-- 4, 2002 ENE Financials for December 31, 2001 and 2000 Mr. Cameron replied it is billing. What happens for instance, the Operating Agreement the Department has is $5,000 per month and ENE does load and weather forecasting for the Department. ENE may call the Department on a deal. ENE revenues are largely from savings for the power deals they perform for them as they do not have an expanded Energy Services' group but rely on ENE more heavily. Their power deals are different than the RMLD, a certain amount of power was sold at a certain price and then the savings they get from that power deal ENE would get a certain amount Braintree and Taunton would get a certain amount. Mr. Cameron noted there is activity that produces savings and some of that savings goes back to the member and some of that goes to ENE. Mr. Soli inquired ENE does not do this for the Department? Mr. Cameron replied the opportunity has not arisen for the RMLD and the agreement has been in place for over two years. Mr. Pacino noted in the Financials there were a couple of numbers he believes should be expanded upon, receivables of $1.2 million due from related parties of $1.5 million which is $2.7 million, however, sales of $2.3 million. On another issue related to the Financials, account payable $1.8 million, expenses of $1.6 million, payables are related to receivables. Mr. Cummings noted return of cash to affiliates $1.3 million and related parties; the due to and from related parties is the issue. Mr. Pacino explained the due to and from related parties, indirect reconciliation, and the important item is the net increase of cash flow. Mr. Soli LLC is the same as Arthur Anderson LLC? Mr. Pacino replied Arthur Anderson is an LLP. ENE Board of Director's Position Mr. Pacino made a motion seconded by Mr. Herlihy that the RMLD Board of Commissioners appoint Vincent F. Cameron, Jr. as Reading Municipal Light Department's Appointed Director to the Energy New England, LLC Board of Directors. Motion carried by a show of hands 4:0:0. Mr. Pacino inquired of Mr. Cameron what is he going to do? Mr. Cameron replied he had mentioned at one or two Board meetings ago when they were discussing ENE, Commissioner Herlihy had a question on this, the Department needs to take a hard look at the Service Agreement as they have not done any business with ENE power deals were found simultaneously and the need exists to evaluate to stay in that Operating Agreement. The RMLD has money on deposit with ENE, money to back up power deals. Mr. Cameron has been involved with the corporate part of ENE he will be more involved. Mr. Herlihy had inquired if the Department needs someone on the ENE Board; Mr. Cameron noted the Department has a half a million-dollar investment in this company. This company was formed to take advantage of the New England market which was held to believe in which the Department coupled with the same expertise at ENE. Energy trading is a high volume, low margin business. ENE is making some monies on trades. Mr. Cameron needs to find out more of the operations as a whole. Mr. Pacino inquired how long is the Department's agreement for? Mr. Cameron replied he also believes it is sixty days. Mr. Pacino reiterated if the Department wants to get out of this agreement it would be sixty days. Mr. Cameron replied yes, sixty days. Mr. Hughes inquired if the Energy Services at the Light Department is doing almost similar work, if not better work or more efficient than ENE? Mr. Cameron noted ENE concentrates on other matters. The RMLD's philosophy since Mr. Cameron's tenure at the RMLD has been in energy trading is the Department stays conservative. Mr. Cameron also pointed out the initiative has been to get the lowest price and fixed prices. June 4, 2002 ENE Board of Director's Position Mr. Cameron noted the Department does power deals at certain times. The second thing is the Department shapes it power supply so the Department does not have a lot of power supply left over at certain times of the year. A new power deal came in and was accepted in October. Calpine power deal load follows; take more in the summer and winter take less in the fall and the spring. The RMLD has shaped its power supply so it does not have to go out and do a lot of deals. Energy Services knows all the players in New England and many players outside of New England. Mr. Herlihy had asked at one time if the Department needed a representative on this Board. It seems to him the Department that was not getting much return by having a member on the Board but it is clear to him now looking through the financial information and all the questions there are there will not be any return if there is no representation on the Board. Mr. Herlihy noted there are many questions. Mr. Pacino inquired if at some point invite someone from ENE to come and speak to the Commission? Mr. Herlihy replied it would be good idea. Replace Commissioner Ames as signer on Account Payable Warrant Subcommittee Mr. Hughes stated as discussed at the April 16a' RMLD Board of Commissioners Meeting, Commissioner Ames' term of thirty days has expired. There needs to be a motion made for someone to take Mr. Ames' place as a signer on the Accounts Payable Warrant Subcommittee. Mr. Hughes noted the accounts payable signers presently would be Messrs. Soli and Herlihy. Mr. Hughes would volunteer to sign the accounts payable and he discussed it with Acting General Manager and the Accounting Manager, Mr. Fournier, anything related to the legal case of Tine, the Accountant would highlight it and bring it to the Acting General Manager. Mr. Pacino inquired the primary signers would be Messrs. Hughes, Soli and Herlihy and the first back up is Mr. Ames and Mr. Pacino becomes the second back up. Mr. Pacino wishes Mr. Ames was at the meeting to explain his position. Messrs. Hughes and Pacino have met on criteria there is no way they can come up with objective criteria and they can only come up to subjective criteria, it is a judgment call for each individual Commissioner if all documents are signed. Commissioners are elected officials they should sign. Mr. Hughes suggested to table this in Mr. Ames' absence. Mr. Pacino wanted to hear Mr. Ames' concerns directly from him. Mr. Pacino volunteered to be first back up this time and the Commission agreed to this in light of Mr. Ames' absence. Mr. Cummings questioned if there are four Commissioners present why is signing the warrant a problem? Mr. Pacino replied signatures are required on non-meeting nights. Mr. Cummings received three voice mails absolutely astonished that the Commission, Board of Light Commissioners, was not signing the warrants. Mr. Cameron replied he believed it was the School Committee he was talking about. Mr. Cummings replied we were also talking about the Light Department after the Selectmen's meeting; the calls were specifically about the Light Department. Mr. Cameron replied he does not ever remember the warrants going up to Town Hall without three signatures. Mr. Cameron did point out there are certain times when the Department receives a power supply bill and that bill could be a million dollars and needs to be paid right away. Ms. Klepeis is aware these from time to time and if Mr. Hechenbleikner has a question he will call. Mr. Cummings is only relaying to him the importance the people placed on the Light Board, which has the responsibility of signing the warrants. Mr. Cameron reiterated he couldn't remember the warrants going up without three signatures. Mr. Pacino replied Ms. Foti is on the phone for_three signatures, - Mr. Hughes inquired of Mr. Cummings of the warrants which are orchestrated by Town Hall how many of the Selectmen sign these? 1 V June 4, 2002 Replace Commissioner Ames as signer on Account Payable Warrant Subcommittee Mr. Cummings replied the Selectmen do not sign the warrants, just the Town Manager. Mr. Hechenbleikner pointed out that is because of Town of Reading Home Rule Charter. Mr. Hughes noted the Commission requires three signatures. Mr. Cummings replied the School Committee requires four. Mr. Hechenbleikner pointed out if you recall when the Commission came to the Selectmen and suggested a process whereby it could be delegated to one person it was indicated this could be done only by a change in the Charter. The Charter establishes how bills are signed and it is silent on it as it is for the Light Board therefore it becomes a majority of the Light Board same as School Committee, Library Board of Trustees and Board of Assessors. Mr. Pacino pointed out the bottom line there are three signatures. The Commission at one time did try to go with one signature and that was withdrawn and it never made it to Town Meeting. Mr. Hughes noted this will be tabled to the next meeting and there are sufficient signatures for this Friday. Rate Stabilization Transfer Mr. Pacino made a motion seconded by Mr. Soli that the RMLD Board of Commissioners authorize the transfer the amount of $680,505.00 from the Department's Rate Stabilization Fund and deposit it into the Department's Operating Fund on the recommendation of the Acting General Manager. Motion carried 4:0:0. Mr. Cameron explained this is the amount of money the RMLD collected over its allowed eight percent return and normally this money gets put into the Rate Stabilization Fund. Mr. Soli inquired he wanted more information on this. Mr. Cameron pointed out he apologized as he explained it backwards, it is a under recovery comes from the Rate Stabilization " Fund into the Department's operating fund. Mr. Pacino inquired as to what caused it to be an under recovery. Mr. Cameron replied the Department's expenses did not match its revenue which including the eight percent return. Citizen's Advisory Board, Selectmen Liaison, and Customer Comments Mr. Hughes asked if there any comments there were none. Acting General Manager's Report Town of Reading Municipal Light Department Employees' Retirement Trust Mr. Cameron noted there are forms for Commissioners Soli and Herlihy to fill out, as they are not formally trustees of the Employees' Retirement Trust. The two new Commissioners sign the forms and they are notarized and become Trustees. Mr. Pacino inquired if a formal vote needs to be taken do they need to sign the forms? Mr. Cameron replied no. Mr. Blomley explained the Commission established the Trust back in 1966 as a way to pay the Department's obligation to the Town of Reading for the RMLD employees within the retirement system. The Commission wanted to set up a fund to be available to pay RMLD's obligation on the retirement system. Every two years there is an audit performed and the recommendation is made as to what the transfer amount should be. The last audit performed was in 2001 and is performed at two year increments, then the Trustees report to the General Manager in January on the amount to be transferred then in turn the Town of Reading bills the Department for its obligation into the Trust. Mr. Pacino clarified it is not an audit, it is an actuarial study. The intent is the Retirement Trust as to fully fund the retirement benefit of all employees, therefore an actuarial study is performed and there is monies put into the Trust in order to fully fund the employee's retirement benefits, it is under the state retirement system. Jure 4, 2002 v 11 Acting General Manager's Report Town of Reading Municipal Light Department Employees' Retirement Trust Mr. Hechenbleikner replied it is under the umbrella of the state retirement system for the Town of Reading it is under umbrella rules and regulations for Public Employee Retirement Commission (PERAC). Mr. Pacino pointed out it is the intent of the Commission to ensure the funds are safeguarded, protected and invested properly and watch over the funds the retirement is provided for all employees. Mr. Blomley further explained in order to be a Trustee one has to be a Board member, but you do not have to be a Trustee. Exception/Removal Sheets for Accounts Payable and Payroll Warrants Mr. Cameron noted recently he and Mr. Fournier had discussions in regards to the Accounts Payable Exceptions and Removal sheets, which are two separate items. Mr. Cameron further demonstrated for example if Mr. Fournier would bring to the Commission if he disagreed with the General Manager on a certain payable. This would be a mechanism in which the Commission could review comments from the Accounting Manager. Mr. Cameron pointed out the Removal Sheet is an item he would like to put in place. Mr. Cameron noted this was due to the fact the accounts payable warrant was written on and the Department prefers this go up Town Hall clean. Mr. Cameron had discussions with Mr. Soli relative to a Removal Sheet as bills could be put aside via the removal sheet and not negatively impacts the rest of the process. Mr. Cameron has come up with a form for removals and showed it to the Commission. Mr. Pacino wanted the procedure for an item not being paid. Mr. Cameron explained an account payable goes into the warrant and it should not be paid the check is returned to the Department and is redeposited. Mr. Cameron noted the Department would like to address any removals with the Commission first. Mr. Pacino wanted to know if it comes back to the RMLD how will the Commission have this knowledge? Mr. Cameron noted there will be a follow-up set up. Mr. Hughes reiterated the Commission will use the sheets as opposed to writing on the warrants Mr. Cameron also wanted to address Mr. Soli multiple payables from one vendor be put in a slash folder, however, it would be voluminous and cumbersome for the Department. Mr. Cameron noted Mr. Fournier can run a detail sheet of the payables, run a tape and have a calculator to address this. Mr. Cameron reiterated if there are not three signatures then the warrants will not go up to Town Hall. Response to Commissioner Herlihy's inquiry relative to energy audits of the Reading schools. Mr. Cameron noted he has a copy of the audit the Department performed for approximately six years ago for the Town of Reading which included all the schools, Town Garage, Town Hall, the old fire station, new fire station, the old police station. Mr. Cameron noted if the Town desires Mr. Seldon, Energy Services could contact the Facilities person at the Reading public schools if you want an updated audit as he is not sure what measures have been put into place. Mr. Hechenbleikner noted he was involved when the energy audits were performed and thought they were helpful what has changed, is there are buildings in existence now, which were not there then. Mr. Hechenbleikner advised against performing an energy audit at the high school and renovations with Killam and Barrows. Mr. Hechenbleikner suggested contacting the Facilities people in the Superintendent's office. Mr. Herlihy had a question, constituent's concern and his own, when would you perform the next audit? Mr. Hechenbleikner suggested going to the Acting General Manager determine what has changed since the last time in terms of energy services, when does it make sense to do this again, he is unsure if there is a defined time. Mr. Hechenbleikner pointed out if his memory serves him correctly he believes the Department did this for the other communities. Mr. Cameron replied yes they were done for the other communities - Mr. Herlihy pointed out with respect to ENE, the Department has no energy audit business for them to do this would give them lsomething to do. June 4, 2002 Response to Commissioner Herlihy's inquiry relative to energy audits of the Reading schools. Mr. Cameron replied this is commercial energy audits; the Department pays ENE for residential energy audits. Mr. Cameron pointed out the Department has performed energy audits for large commercial customers involving large equipment. Mr. Cameron noted Energy Services is also used in this area. Mr. Herlihy noted it is an underutilized mechanism; the Department should be promoting energy efficiency. Mr. Cummings noted he sat on the School Committee when the energy audits were performed and as Mr. Cameron previously stated they were done for all four communities. Mr. Cummings pointed out at the time of the audits; the publicly traded companies were also investing their own funds in performing energy audits, which the Town does not have the ability to do. The information was great, however, the school department never had the money to implement anything except in a new building. Mr. Cummings suggested doing in conjunction with building new schools as it has been done. Mr. Hechenbleikner replied there were some lighting changes and electric eyes at Town Hall and it was not done exhaustively at the schools on a trial basis. Mr. Cameron pointed out he believes the Department performed an analysis which shows the IOU's have aggressive conservation programs in some instances that make no sense to him. You can take those savings on a per kilowatt basis and slot them into an avoided cost calculation which says is it cheaper this way than to buy more power. It is elementary way of looking at it and you do it on a present worth basis if that type of analysis would deem measures positively. Every kilowatt you do not have to buy is a savings to the ratepayers. Mr. Cummings replied part of the discussion paying versus non-paying and the rate of return is the fact of the matter is the School Department does not pull load at peak hours the return would be less. Mr. Cameron replied that was integral to the study. Mr. Hechenbleikner stated the proper protocol is to go to the Superintendent of Schools. Messrs. Hughes and Pacino also stated to include the other towns as well. Mr. Cameron replied he would. Transformer Oil Spill at 500 Research Drive Wilmington, MA Mr. Cameron noted a year ago last March there was an incident relative to a pad mount transformer the Department owns at 500 Research Drive in Wilmington. Oil was spilled out of the transformer and the Department believed that the oil and clean up were contained, however, the Department found out it was not contained to the extent the Department originally believed. Clean Harbors has been performing clean up and do not have a final total. The Department has a Hazardous Waste Fund which was developed over the last five years in the amount of about half a million dollars. Mr. Blomley pointed out the clean up estimate is about $100,000. Mr. Donahoe noted cost to date on this is around $100,000. Mr. Blomley pointed out the Department thought it was closer to final cleanup. Mr. Cameron noted the Department is getting close. Mr. Cameron wanted the Commission to be aware there will be more Clean Harbor bills. Mr. Cameron noted measures have been put in place to have one person responsible for looking at these spills on a more in depth basis so it is contained in a timelier manner. Mr. Hughes pointed out on this issue that Mr. Cameron has provided updates on a timely basis. Mr. Soli has two questions one related and on unrelated. Mr. Soli wanted to know when the incident occurred was it new construction or in place? Mr. Cameron replied it was older and existing. Mr. Soli has an unrelated question. Are their connection fees for new customers? June 4, 2002 v 1 Transformer Oil Spill at 500 Research Drive Wilmington, MA Mr. Cameron replied no. The Department does not in the classical sense have a connection fee. Mr. Cameron noted customers might have to pay the Department a credit on underground construction but when a customer asks for a service connection there is no set charge. Mr. Soli used the example of a contractor putting in a subdivision and the Department has to run two miles of line several transformers does the developer charge for that. Mr. Cameron replied it depends on how many homes are contained within that development. Mr. Cameron noted on a per customer basis the Department gives a pole and the telephone company gives a pole. Mr. Soli inquired on new construction Mr. Cameron replied it depends on whether it is underground or overhead construction. Mr. Cameron noted if it is overhead the Department will do the construction, if it is underground they would pay the difference between the overhead and underground construction. Potential Sale of Danvers Electric Division Mr. Cameron noted this was an informational item, which was in The Salem Evening News there was a debate in Danvers over the sale of Danvers Electric Department. Concord Municipal Light Plant Rate Increase Mr. Cameron noted he receives newsletters from various other light departments this one Concord Municipal Light Department there is a rate increase of 3.5% across the board in June affecting all customers caused by reduced electricity sales and the continuing sluggish economy is a factor. Mr. Cameron noted this ties back into the Rate Stabilization Fund. Two of the reasons are there sluggish economy and climatic conditions has a lot to do with revenues. Mr. Pacino pointed out earlier in this meeting there was a transfer out the Rate Stabilization Fund specifically covering this type of situation. Board Discussion Policies Review Discussion (Commissioner Soli) Mr. Soli wished Mr. Ames could be at the meeting so he could provide a status update as to how the policy reviews were going. Mr. Soli noted there is one item a policy in which he referred to as a "the gag rules for employees". Currently, the policy states "the policy of the Board to communicate and interact with all RMLD employees only through the General Manager." If the Commission wants to speak to an employee it can only be done through the General Manager, this is not an issue, however, if the employees want to speak with the Commissioners it is free speech, they should have the right to do it, there should not be a policy. Mr. Soli understands under the previous administration employees were punished for this. Mr. Soli wants to change five words so there is no gag rule on any employees they can talk to the Board members freely, it is their Constitutional right, but Board members should go through the General Manager. Mr. Soli would like to incorporate the following change in Policy 19, "to communicate and interact" and replace them with "to initiate communication and interaction" with all RMLD employees only through the General Manager. Mr. Soli made a motion seconded by Mr. Herlihy Policy 19, IV.A.4 to replace in the third line the words with "communicate and interact" with the words "to initiate communication and interaction". Motion carried by a show of hands 4:0:0. Mr. Patin asked if there are any other effects this has on Policy 19 any other changes? Mr. Soli noted it was the only one that stuck out. Ms. Antonio replied this is one policy Mr. Ames is looking to change. Mr. Butler pointed out-whether-or not you came to this policy is not going to make a difference to the employees because the lemployees will not be muzzled again like they were before. If you want to know where the employees are coming from as far as the Commissioners go, the employees blame the Commissioners as much as they blame the former General Manager for what happened here. June 4, 2002 .1 Board Discussion Policies Review Discussion (Commissioner Soli) Mr. Butler repeated we were not only muzzled, but also threatened with termination if we spoke to a certain sitting Commissioner, each and every employee was threatened with termination if they spoke to him about a certain thing. This is part of what the employees have been through it goes back to his statement about a blank check, so whether you change it or leave it as is, employees will not be muzzled again whether he has to go up to Town Hall or come back to the Commission. Mr. Butler noted some of things that went on he would like to go forward and get beyond. Mr. Butler noted for some reason items like this keep coming to the table, he has expressed a desire to move forward, as long as employees had their voice heard after he expressed that desire he was told he was wrong, his statement was wrong, that the General Manager was given a blank check and employees did not complain. Mr. Butler would like to discontinue that fight and move forward he will never not believe that the sitting Board was ultimately responsible for the former General Manager, they failed in that job and it effected virtually every employee here, he can list ten employees who no longer work at the RMLD because of the previous General Manager. So whether you decide to change this policy or not employees will be heard from now on. Mr. Pacino noted it would have been helpful to have this as part of agenda before the meeting although he has no objections. (Mr. Pacino was referring to Policy 19.) Mr. Hughes reiterated items going to be discussed at the Board meeting it is the requirement that these items be discussed with the Chair in conjunction with the General Manager Wednesday prior to the Board meeting. Summer Meeting Dates Mr. Hughes inquired if the proposed meeting dates due to summer vacations are July 8, 2002 and August 12, 2002 would it negatively impact the Department or the Commission members? Mr. Soli inquired if any some meetings on an alternative date besides Monday is it possible? Mr. Hughes replied they are Monday year round. Mr. Hughes inquired just the two dates mentioned or for the full year? Mr. Soli replied whatever he can get. Mr. Hughes replied he would take it under advisement until there is a full compliment of the Board. Mr. Hughes noted there would be a joint meeting on 12`" June FINCOM and the Commission at the RMLD; he extended an invitation to Mr. Lessard and the Citizen's Advisory Board. RMLD Board of Commissioners meeting held in other towns the RMLD services (Commissioner Herlihy) Mr. Herlihy noted during the day he works for a regional employment agency in the Merrimac Valley, they have quarterly meetings and they move their meetings around the region. Mr. Herlihy thought it would be a good idea in light of what has happened at the Department recently more as a public relations tool to show the Commission is reaching out to the other communities during the summer months. Mr. Herlihy stated it gives ratepayers and Selectmen a chance to meet with the Commission who may not otherwise come to Reading for a meeting, get the word out and allow ratepayers to voice their opinions and ideas. Mr. Herlihy pointed out it demonstrates, it is an affirmation of how important it is to have these communities. Mr. Herlihy noted there is not live coverage of the RMLD Board of Commissioners meeting; it is something the Commission needs to consider perhaps this can be addressed. Mr. Herlihy noted it is important for people to know the Commission is reaching out and is responsive and learn a few things. Mr. Pacino replied he is glad to see this back on the agenda, as he has been an advocate of this. Mr. Pacino noted it has been a couple of years since the Commission has undertaken this. The Commission has been to Wilmington, North Reading and Lynnfield, it is a great idea, no problem with moving the two upcoming meetings to accommodate this. Mr. Herlihy wanted to ensure any change in location constitutes a legal meeting. Mr. Hechenbleikner pointed out you may have an open meeting law problem, he suggested checking with counsel. Mr. Hechenbleikner noted the Light Department the RMLD is not a regional agency, it is a Town of Reading agency, the law as he understands states you must meet in the community in which you are located. Mr. Pacino believes thishas been checked and was-brought-up at Town Meeting by Mr. Van Magness had a concern with ,'Boards meeting outside the community. June 4, 2002 I ) RMLD Board of Commissioners meeting held in other towns the RMLD services (Commissioner Herlihy) Mr. Hechenbleikner replied he has an opinion from the Attorney General's office a body of the Town of Reading cannot meet outside the Town of Reading, it was a School Committee at that time he further suggested to check with counsel. Mr. Lessard pointed out this is a good idea he has always been proponent of the RMLD having meetings televised. Mr. Lessard applauded Mr. Herlihy for this idea. Mr. Lessard thought it was a good idea to go to Wihnington if there is a way of doing it around legal issues. Mr. Hughes wanted to thank the viewing public to further service them and are available and all the folks here this evening. Mr. Hughes complimented the expertise by the staff of the RMLD. Motion to Adjourn At 10:35 p.m., Mr. Pacino made a motion seconded by Mr. Soli to adjourn the Regular Session. Motion carried by a show of hands 4:0:0. A true copy of the RMLD Board of Commissioners minutes as approved by a majority of the Commission. Philip B. Pacino Secretary RMLD Board of Commissioners