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Tuesday, July 25, 2000
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The Board of Commissioners met in regular session at 5:30 p.m., in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan. Chair Diane Royal called the meeting to order.

The Secretary declared a quorum present.

All said the Pledge of Allegiance.

ANNUAL ORGANIZATION MEETING

The Nominating Committee met on July 17, 2000, to review Commissioner survey responses for consideration of nominations for Board officers. By unanimous decision of the Nominating Committee, it is recommended that the following Commissioners be elected to the offices indicated:

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Slate of Officer Candidates

Resolution to Appoint Charter Staff Positions

RESOLVED, That the Board cast a unanimous vote for the reappointment of the following staff positions for fiscal year 2000-2001, or, until a successor is appointed, whichever last occurs:

Respectfully submitted,
Nominating Committee
Rosemarie E. Aquilina, Chair
Mark A. Murray
Judson M. Werbelow
Ernest J. Christian (Alternate)

Motion by Commissioner Christian, seconded by Commissioner Callen, to table the Resolution on the reappointment of the three Charter staff positions pending completion of their performance evaluations.

Action:   Carried unanimously.

Motion by Commissioner Christian, seconded by Commissioner Callen, to adopt the slate of Board officers as submitted by the Nominating Committee.

Action:   Carried unanimously.

APPROVAL OF MINUTES

Motion was made by Commissioner Callen, seconded by Commissioner Christian, to approve the minutes of regular session held June 27, 2000.

Carried unanimously.

PUBLIC COMMENTS

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING.

BWL employee Curt Gates introduced himself to the Commissioners as the new Business Manager of the International Brotherhood of Electrical Workers (IBEW), Local 352, representing BWL Bargaining Unit employees. Mr. Gates replaced former Business Manager Max Zemer, who recently retired from the BWL.

BWL employee Richard Taylor raised the following questions:

COMMUNICATIONS

Letter from Judson M. Werbelow, resigning his position as Commissioner of the Board of Water and Light effective immediately.

Communications received by E-mail and phone calls in support of the Renewable Energy Rider under consideration from the following individuals: Matt Anderson, Christina Carra, Elise Harvey, Antonia Marenich, Jan Patrick, Tim Rosenboom, Rebecca Skovill, and Ron Whitmore.

Acknowledged and placed on file.

REPORTS OF COMMITTEES

None.

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NEW WATER, ELECTRIC AND STEAM RATE SCHEDULES

RESOLVED, That the water, electric, and steam rate schedules listed below and detailed in the attached rate schedules be adopted and made effective for water, electric or steam consumption on or after January 1, 2001 (Note: Rates to be posted on the Internet.).

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These rates were the subject of a public hearing July 11, 2000. A transcript of that hearing is included in the board packet materials. Staff changes to the rate schedules filed with the city clerk were either included in the board materials for the hearing or read into the record at the public hearing.

Commissioner Callen disclosed that he plans to recuse himself from voting on the Renewable Energy Rider due to a potential conflict of interest through his involvement by providing consulting services to renewable energy proponents in the area.

Staff Attorney Wilhite noted that with only five Commissioners in attendance, there would not be enough votes to pass the resolution, as five affirmative votes are required to approve rate changes. He suggested separating out the Renewable Energy Rider and voting on the remainder of the rate schedules under consideration.

RESOLVED, To amend the resolution by delaying action on the Renewable Energy Rider (green power) until the next regular meeting.

RESOLVED FURTHER, That the water, electric, and steam rate schedules, as amended, be adopted and made effective on or after January 1, 2001.

Action: Adopted by the following vote:

NAYS:         None

ABSENT:    Aquilina and Murray.
                   Note: A Board vacancy exists; appointment confirmation is pending.

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SHARE THE SUCCESS

RESOLVED, That from 0 to 2.5% of fiscal year base pay be available for Corporate Share the Success payments to eligible Non-Bargaining and Bargaining Unit employees.

RESOLVED FURTHER, That the level of BWL net income will determine the extent to which the Corporate Share the Success incentive will be paid. Net income above the approved budgeted level will be allocated 50-50 between BWL and the incentive pay plan fund.

Financial Performance

Customer Satisfaction

Internal Business Processes

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In June 2000, the Personnel Committee reviewed components of variable pay plans for Non-Bargaining Unit employees and the proposed funding for those plans. Also in June 2000, the Commissioners approved implementation of variable pay plans for Non-Bargaining Unit employees. One component of that variable pay plan is Corporate Share

Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.

Action:   Carried unanimously.

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LEASING OF RAIL CARS

RESOLVED, That the Board of Water and Light (BWL) enter into a lease agreement with General Electric Railcar Services Corporation (GERSC) of Chicago, Illinois, a unit of General Electric Capital Corporation, for the supply of rail cars. The lease agreement particulars are as follows:

Discussion:   General Manager Pandy congratulated Richard Peffley - Director of Production, Steve Brennan - Manager of Production, and Ron Ishimoto of Coal and Rail Services, for finding a way to reduce the cost of shipping BWL coal. They seized the opportunity to use surplus coal cars at an attractive leasing rate that realized a cost savings of $.83 per ton. By leasing these railcars, the BWL is saving on the cost of the unit trains, which are 120-car trains that are hauled as one unit from the mine. The BWL is able to haul more tonnage because the aluminum cars are lighter. Also, there will be savings in labor productivity because of the superior rapid automatic door coal hoppers. Total savings are estimated at $800,000 per year. Staff plans to conduct a comparative analysis in the future on leasing versus direct purchase of railcar sets.

Action:   Carried unanimously.

General Manager Pandy presented the following late item for consideration:

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INCREASE TO CAPITAL BUDGET

RESOLVED, That the BWL Capital Budget for Fiscal Year 2001 be increased $3,154,000 to accommodate the following project:

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This project will upgrade the 20-inch steam main to General Motors Plant #6 by replacing failed or questionable bellows type expansion joints with upgraded slip joints in manholes. This project also includes expanded trap station installations. Upgrade of this steam main is recommended due to concerns over the integrity of the existing steam main, which provides the only source of steam to the GM Plant #6 complex.

The timing of this project is critical and must allow the line to be placed back into service by September 2000.

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Discussion:   General Manager Pandy briefed the Board on the status of the 20-inch steam main repair and financial ramifications. The work schedule, cash flow and funding was reviewed in detail, and a written report prepared by Assistant General Manager Bill Cook and Chief Financial Officer Dana Tousley, dated July 24, 2000, was provided to the Commissioners summarizing actions taken to date. Mr. Pandy noted that the total cost for the steam main repair effort is estimated to be $4,102,740 (which breaks down to $949,600 for O&M and $3,153,140 for capital).

There was lengthy discussion relative to efforts to be taken to recover losses associated with this failure.

Action:   Carried unanimously.

NEW BUSINESS

None.

GENERAL MANAGER'S REMARKS

Ottawa Station Redevelopment. Reported that interest in the Ottawa Power Station continues to heighten. He briefed on the various parties who have expressed interest.

Received written proposal for a telecommunications facility plus two restaurants.

Staff Attorney Larry Wilhite is taking the lead for BWL negotiations with prospective users. An analysis of what is determined to be the best use for the BWL, the City and the downtown will be provided to the Commissioners in the near future. Mr. Pandy invited input from the Commissioners relative to proposed development suggestions.

Commissioner Royal urged caution when negotiating proposals based on a short decision time line or schedule.

Nitrogen Oxides (NOx) Compliance Overview. General Manager Pandy handed out a memo prepared by Nicholas Burwell, Manager of Environmental Services, dated July 20, 2000, regarding compliance with NOx regulations that are part of the amendments to the Clean Air Act. He noted that Michigan is in a problem situation as are other Midwest states that have been challenged by the Northeast states as to the amount of emissions that occur in Michigan. The Michigan Department of Environmental Quality (MDEQ) has been fighting this at the federal level, but is not doing very well. Russ Harding, MDEQ Director, has indicated he is not optimistic about prevailing in court and is advising industry in the State of Michigan to prepare to meet the May 1, 2003 Nox requirements. Compliance options range from technological to administrative. Various vendors have verbally provided varying estimates of how much it will cost the BWL to comply with these potential Nox requirements. Compliance methodologies range from $9 million to as high as $250 million. Staff is staying close to this issue and is exploring alternative solutions.

Great Lakes Renewable Energy Fair. The Great Lakes Renewable Energy Association is holding its sixth annual Renewable Energy Fair in Lansing on August 4-6, 2000, at the Riverfront Park and Lansing Community College. The BWL is one of the sponsors of this event. Commissioners were urged to attend. A brochure was handed out.

REMARKS BY COMMISSIONERS

Commissioner Creamer asked for more information on the Lansing Home Ownership Program and the LISC home improvement program for employees who locate in the City of Lansing. He asked for an overview of program guidelines and its utilization by BWL employees.

Adopted by the following vote:

NAYS:         None

ABSENT:    Aquilina and Murray.
                   Note: A Board vacancy exists; appointment confirmation is pending.

The Board returned to open session at 6:55 p.m.

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Settlement of Employment Claim

WHEREAS, the Board of Commissioners is authorized to approve settlement of employment claims; and

WHEREAS, the Staff Attorney, with the concurrence of the Director of Human Resources, has recommended that the Board of Water and Light settle the employment claim against it as filed in the Ingham County Circuit Court and docketed as No. 99-91064-NZ; and

RESOLVED, That the Board of Commissioners authorizes settlement of the above captioned employment claim in the amount as recommended by the Staff Attorney in a confidential letter of July 19, 2000, and that such amount shall be paid in consideration of the release of all claims and resignation from employment by the plaintiff.

RESOLVED FURTHER, That the General Manager is authorized to execute all documents related to the settlement of this claim.

Action:   Carried unanimously.

EXCUSED ABSENCES

On motion by Commissioner Christian, seconded by Commissioner Callen, that the absences of Commissioners Aquilina and Murray be excused.

Carried unanimously.

PUBLIC COMMENTS

THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY BOARD OF WATER AND LIGHT SUBJECT.

No persons spoke.

ADJOURNMENT

On motion by Commissioner Callen, seconded by Commissioner Christian, the meeting adjourned by unanimous consent at 6:57 p.m.

                                            /s/ Mary E. Sova, Secretary

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Marilynn Slade, City Clerk