MINUTES OF THE
BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
___________________________
Tuesday, July 24, 2001
___________________________
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. Chairman Ronald Callen called the meeting to order.
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Present: |
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Absent: |
Commissioner Diane R. Royal. |
The Secretary declared a quorum present.
All said the Pledge of Allegiance.
Chairman Callen introduced Tim Haggart and Nancy A. Wonch and welcomed them to the Board as they start their four-year term as Commissioners of the Board of Water and Light.
APPROVAL OF MINUTES
Motion made by Commissioner Christian, seconded by Commissioner Duncan, to approve the minutes of regular session held June 26, 2001.
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.
None.
General Manager Pandy introduced BWL women’s water tapping team members Barbara Davis, Bobbi Johnson and Diana Paul. The fourth member, Patricia Clark, was not present. He reported that the BWL women’s team, in their first year of competition at the American Water Works Association (AWWA) national conference in Washington, D.C. (June 18-22), brought home a third place national trophy with a time of 2.27.59.
The BWL men’s team members Leon Flores, Jim Valentine, and Remecho Sanders took second place with a time of 1.23.47. The fourth member, Randy Jones, was not present.
Brian McLeod, Manager of Transmission and Distribution, thanked General Manager Pandy and the Commissioners for supporting the teams’ involvement in the AWWA water tapping competitions. He stated that both teams worked hard to prepare for the competition, and they are looking forward to taking first place at next year’s national event in New Orleans.
HUMAN RESOURCES COMMITTEE REPORT
The Human Resources Committee met on June 26, 2001, at 4:00 p.m. to consider salary adjustments for non-bargaining employees, Corporate Share the Success Incentives for non-bargaining and bargaining employees, and Process Incentives for eligible non-bargaining employees.
Committee members present were: Commissioners Ronald Callen, Rosemarie Aquilina, and Diane Royal. Commissioner David O’Leary was also present. Absent was Commissioner Nancy Duncan.
Linda Gardner, Director of Human Resources, presented the rationale for the recommended performance pay increase matrix and salary range adjustments for non-bargaining employees. Paul Reagan of Dorey, Reagan & Associates presented the results of the 2000-01 Benchmark Job Market Assessment, comparing salaries paid by the Board of Water and Light (BWL) in eight skill families with salaries for similar jobs in a variety of local, regional and national companies. The analysis indicated that BWL salaries in four of the eight skill families have fallen below competitive market rates and should be adjusted upward in amounts ranging from two percent to four percent. Pay in the other four skill families remains at or above the market.
Following review and discussion, the Human Resources Committee concurred with staff’s recommendations.
The Human Resources Committee recommends approval of the following resolutions:
RESOLVED, That the Performance Increase Matrix as reviewed with the Human Resources Committee be adopted.
RESOLVED FURTHER, That the Non-Bargaining Unit Skill Family Ranges for Fiscal Year 2001-02 be adjusted as follows:
(a) That Skill Family Ranges found to be below market be moved by the percentage required to be competitive with the market.
(b) That Skill Family Ranges requiring no competitive adjustment be moved upward by 1.75 percent (half the change in the CPI) to partially offset the effects of inflation.
Staff noted that the pay range recommendation would have no impact on individual pay increases for non-bargaining employees. That will be determined by the performance matrix recommendation. Conversely, the degree of movement of the pay ranges for certain employees will affect whether the employee’s annual performance increase rolls into their base pay or is awarded as a lump sum.
Resolution # 2001-7-2
Corporate Share the Success for Fiscal
Year 2001-02
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 the BWL and the incentive pay plan fund.
RESOLVED FURTHER, That payouts be based on BWL’s performance on its fiscal year 2002 corporate measures in four areas:
Financial Performance
Customer Satisfaction
Internal Business Processes
Employee Learning and Development
RESOLVED, that from 0 to 5.0% of fiscal year base pay be available for Process Incentive payments to eligible Non-Bargaining Unit employees.
RESOLVED FURTHER, That payouts will be made if BWL net income and the BWL-wide pool of hard dollar savings reach sufficient levels.
RESOLVED FURTHER, That payouts be based on Process performance on their Fiscal Year 2002 Process measures in four areas:
Financial Performance
Customer Satisfaction
Internal Business Processes
Employee Learning and Development
There being no further business, the meeting adjourned at 5:00 p.m.
Respectfully submitted,
Ronald C. Callen, Chair
Human Resources Committee
Moved by Commissioner Christian, seconded by Commissioner Creamer, that the
Report of the Human Resources Committee be accepted. (The resolutions
incorporated in the report were considered separately.)
Action: Carried unanimously.
At the request of Chairman Callen, Human Resources Director Linda Gardner briefed the Commissioners on the three compensation-related resolutions included in the committee report. She provided background on how the Performance Increase Matrix and Skill Family Ranges for non-bargaining employees were developed. Non-Bargaining unit employees would be subject to a performance increase in the range of 0 to 7.5 percent, based on the proposed Performance Increase Matrix. The Skill Family Ranges would be moved from 1.75 percent to 4 percent.
Moved by Commissioner Christian, seconded by Commissioner Creamer, that the Non-Bargaining Salary Recommendations for Fiscal Year 2001-02 (Resolution # 2001-7-1) be adopted.
Action: Carried unanimously.
Moved by Commissioner Christian, seconded by Commissioner Creamer, that the Corporate Share the Success payment recommendation for Fiscal Year 2001-02 (Resolution # 2001-7-2) be adopted.
Action: Carried unanimously.
Moved by Commissioner Christian, seconded by Commissioner Duncan, that the Process Incentive pay recommendation for Fiscal Year 2001-02 (Resolution # 2001-7-3) be adopted.
Action: Carried unanimously.
GENERAL MANAGER’S RECOMMENDATIONS
Background materials on items presented are on file in the Office of the Corporate Secretary.
RESOLVED, that the attached rate schedule, Fire Hydrant Charges Rate No. 6, be adopted and made effective January 1, 2001.
Staff Commentary: This rate schedule was the subject of a public hearing on June 26, 2001 and no comments were received. The proposed rates would be retroactive back to January 1, 2001. Since this is the correction of an error, staff delayed the implementation of the incorrect rates. All customers on this rate have been billed the lower rate since that date.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Action:
Carried unanimously.
RESOLVED, that the attached rate schedules, Steam Rates 1, 2 and 3 be adopted and made effective August 1, 2001.
Staff Commentary: These rate schedules were the subject of a public hearing on June 26, 2001 and no comments were received. Implementation effective August 1, 2001 will change the calculation of the steam fuel cost adjustment applied to sales in August 2001.
Moved by Commissioner Haggart, seconded by Commissioner Christian, that the resolution be approved.
Action:
Carried unanimously.
Resolution # 2001-7-6
RELEASE OF EASEMENT (Corner of Lenawee and Capitol – Recorded 2/21/30)
WHEREAS, Frank L. Young and Eva F. Young executed a certain easement conveying and warranting to the Board of Water & Light forever, such rights as recorded in Liber 17 of Miscellaneous Records, Page 485, in the Register of Deeds, Ingham County, Michigan, February 21, 1930; and
WHEREAS, Tom Marchesano, P.E., representing Michigan Catholic Conference, owner of part of Block 148, Original Plat, City of Lansing, has requested the release of said easement, more specifically described as follows:
Easement Description: The land on which said right is granted is described as follows: The East forty-four and one half (44-1/2) feet of the North five (5) feet of the South eighteen (18) feet of the West ninety-four (94) feet and, the south eighteen (18) feet of the West five (5) feet of the East seventy-eight (78) feet of Lot Five (5). All of the above described lands being in Block One Hundred and Forty-Eight (148) in the City of Lansing, County of Ingham, State of Michigan.
WHEREAS, this easement as described above is not needed to continue the operations of the Board of Water and Light.
NOW THEREFORE, BE IT RESOLVED, That the Board of Commissioners of the Board of Water and Light release, discharge and vacate said easement on the above described property and that the General Manager and Corporate Secretary be authorized to execute the release of easement, subject to the requirement of the Lansing City Charter. Further that the Corporate Secretary be directed to record the release of easement with the Ingham County Register of Deeds.
Staff Commentary: This easement was for steam lines that probably served residential customers prior to the hotel and restaurant/lounge being constructed at the corner of Lenawee and South Capitol Avenue. The steam lines are abandoned and the easement is no longer required.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Action:
Carried unanimously.
WHEREAS, Capitol Park Motor Hotel, Inc. executed a certain easement conveying and warranting to the Board of Water & Light forever, such rights as recorded in Liber 1383 of Deeds, Page 585, in the Register of Deeds, Ingham County, Michigan, December 9, 1981; and
WHEREAS, Tom Marchesano, P.E., representing Michigan Catholic Conference, owner of part of Block 148, Original Plat, City of Lansing, has requested the release of said easement, more specifically described as follows:
Easement Description: The land on which said right is granted is described as follows: That part of lots 1, 2, 11 and 12 of Block 148, Original Plat of the City of Lansing, Ingham County, Michigan, described as: Beginning on the North line of Block 148 at a point 122.0 feet East of the North West corner of Block 148; thence South 80.5 feet on a line 17.0 feet of the East wall of the six story apartment building; thence East 69.6 feet along an existing building wall; thence North 65.4 feet; thence East 30 feet; thence North 15 feet to the North line of block 148; thence West along the North line of Block 148 to the point of beginning.
WHEREAS, this easement as described above is not needed to continue the operations of the Board of Water and Light.
NOW THEREFORE, BE IT RESOLVED, That the Board of Commissioners of the Board of Water and Light release, discharge and vacate said easement on the above described property and that the General Manager and Corporate Secretary be authorized to execute the release of easement, subject to the requirement of the Lansing City Charter. Further that the Corporate Secretary be directed to record the release of easement with the Ingham County Register of Deeds.
Staff Commentary: This easement was for electric, water, and steam facilities serving the hotel and restaurant/lounge constructed at the corner of Lenawee and South Capitol Avenue. The steam lines are abandoned and the electric and water facilities are being relocated.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Action:
Carried unanimously.
WHEREAS, Capitol Park Limited Dividend Housing Association executed a certain easement conveying and warranting to the Board of Water & Light forever, such rights as recorded in Liber 1385 of Deeds, Page 1157, in the Register of Deeds, Ingham County, Michigan, January 19, 1982; and
WHEREAS, Tom Marchesano, P.E., representing Michigan Catholic Conference, owner of part of Block 148, Original Plat, City of Lansing, has requested the release of said easement, more specifically described as follows:
Easement Description: The East 17 feet of the North 80.5 feet of that part of lots 8, 9, 10, 11, and 12, Block 148, Original Plat of the City of Lansing Ingham County, Michigan, described as: beginning at the NW corner of Lot 12, Block 148; thence East 122.0 feet on the North line of Block 148; thence South 90.0 feet on a line 17.0 feet East of the East wall of the hotel; thence Southwesterly 7.1 feet; thence South 72.0 feet on a line 12.0 feet East of the East wall of the hotel; thence East 4.0 feet; thence South 163.0 feet to the South line of Lot 8; then West 121.0 feet to the West line of Block 148; thence North 330.0 feet on the West line of Block 148 to the point of beginning. Also, the East 36.0 feet of the West 99.0 feet of Lot 7, Block 148, Original Plat of the City of Lansing, Ingham County, Michigan.
WHEREAS, this easement as described above is not needed to continue the operations of the Board of Water and Light.
NOW THEREFORE, BE IT RESOLVED, That the Board of Commissioners of the Board of Water and Light release, discharge and vacate said easement on the above described property and that the General Manager and Corporate Secretary be authorized to execute the release of easement, subject to the requirement of the Lansing City Charter. Further that the Corporate Secretary be directed to record the release of easement with the Ingham County Register of Deeds.
This easement was for electric, water, and steam facilities serving the hotel and restaurant/lounge constructed at the corner of Lenawee and South Capital Avenue. The steam lines are abandoned and the electric and water facilities are being relocated.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Action:
Carried unanimously.
WHEREAS, Harry J. Digby executed a certain easement conveying and warranting to the Board of Water & Light forever, such rights as recorded in Liber 17 of Miscellaneous Records, Page 483, in the Register of Deeds, Ingham County, Michigan, February 21, 1930, and
WHEREAS, Tom Marchesano, P.E., representing Michigan Catholic Conference, owner of part of Block 148, Original Plat, City of Lansing, has requested the release of said easement, more specifically described as follows:
Easement Description: The land on which said right is granted is described as follows: the East ninety-six (96) feet of the North five (5) feet of the South eighteen (18) feet; also the South thirteen (13) feet of the West five (5) feet of the East sixteen (16) feet; also the South thirteen (13) feet of East five (5) feet of the West sixty-nine (69) feet; and also the North fifty-one (51) feet of the East five (5) feet of Lot eight (8). All of the above described lands being in Block One Hundred and Forty-Eight (148) in the City of Lansing, County of Ingham, State of Michigan.
WHEREAS, this easement as described above is not needed to continue the operations of the Board of Water and Light.
NOW THEREFORE, BE IT RESOLVED, That the Board of Commissioners of the Board of Water and Light release, discharge and vacate said easement on the above described property and that the General Manager and Corporate Secretary be authorized to execute the release of easement, subject to the requirement of the Lansing City Charter. Further that the Corporate Secretary be directed to record the release of easement with the Ingham County Register of Deeds.
Staff Commentary: This easement was for steam lines that probably served residential customers prior to the hotel and restaurant/lounge being constructed at the corner of Lenawee and South Capitol Avenue. The steam lines are abandoned and the easement is no longer required.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Action: Carried unanimously.
WHEREAS, the Charter Township of Windsor (TOWNSHIP) is in need of a water distribution system to service certain designated areas of the TOWNSHIP; and
WHEREAS, the TOWNSHIP is authorized to enter into an Agreement with the Board for water service, and
WHEREAS, the Board owns and operates a water supply system and distribution system and has determined that its water supply and distribution system is adequate to provide services to the TOWNSHIP subject to the limitations and conditions set forth in the Water Service Agreement; be it
RESOLVED, that the Board authorizes the General Manager and Corporate Secretary to enter into a Water Service Agreement and Supplemental Agreements to provide service to Windsor Township within the WATER SERVICE AREA, subject to approval of all documents by the staff attorney.
Moved by Commissioner Duncan, seconded by Commissioner Christian, that the resolution be approved.
Discussion: General Manager Pandy reported that Windsor is a new township to be served by the BWL. A new residential and commercial development is going into that area, with the developer paying all of the water system extension costs. This will be an expense neutral item for the BWL.
General Manager Pandy also reported that with the Board’s authorization at the June 26, 2001 meeting, R. W. Beck has been engaged to do a performance audit on growth and expansion, cost accounting methods, customer profitability and rate and fee processes and practices. An independent evaluation will be reviewed with the Board in the near future.
Action:
Carried unanimously.
Resolution # 2001-7-11
GRANTING OF EASEMENT – CARRIER CREEK
DRAIN DRAINAGE (MAIN DRAIN)
RESOLVED, that in exchange for a payment of not less than $500.00, the Board authorizes the granting of an easement to the Carrier Creek Drain Drainage District #326 (Main Drain) for the construction, operation, maintenance and improvement of a certain county drain, subject to the approval of City Council as required under Article 2, Section 5-203.3 of the Lansing City Charter. The Easement Area is located on a portion of the east side of the Erickson Station property in Delta Township. Descriptions of both the Board of Water and Light Property and the Easement Area are given below.
The Property owned by the BOARD is located at the street address 3725 S. Canal Road, located in Delta Township, County of Eaton, State of Michigan and legally described as:
BOARD OF WATER AND LIGHT-OWNED PROPERTY:
Beginning at the Center of Section 34, T. 4 N., R. 3 W., Delta Township, Eaton County, Michigan: thence S 89°58’53” E 660.24 ft. along the east-west 1/4 line of Section 34; thence S 27°21’43” E 893.10 ft.; thence N 61°39’11” E 284.86 ft.; thence N 55°36’28” E 1597.68 ft., more or less, to the east line of section 34; thence S 00°03’24” E 36.33 ft. on the section line; thence S 55°36’28” W 3192.57 ft., more or less, to the north-south 1/4 line; thence along the north-south 1/4 line N 00°11’34” W 1595.36 ft., more or less, to the point of beginning.
EASEMENT AREA DESCRIPTION:
An easement over the above described parcel said easement being 100 feet in width being 50 feet on each side of a line described as beginning at the southeast corner of the West 1/2 of the West 1/2 of the West 1/2 of the Northeast 1/4 of Section 34, T4N, R3W, Delta Township, Eaton County, Michigan: thence Southeasterly 1140 feet, more or less, to a point on the northerly right of way line of the CN Railroad lying 1041 feet northeasterly from the intersection of said northerly right of way line and the north and south 1/4 line of said Section 34. The side lines of said easement to be lengthened or shortened to terminate at the northerly and southerly lines of the above described parcel.
Staff Commentary: The easement will permit the Eaton County Drain Commission to operate a certain county drain in a location easterly of the existing power plant building and coal supply trackage. The Board of Water and Light currently operates water lines, electrical lines and communications lines on part of the Easement Area and may have the need in the future to install additional facilities within the Easement Area. Immediate access to any of these existing or future additional facilities may be necessary at any time and therefore, as a condition of granting the easement, staff will require provisions allowing the Board immediate access and the ability to install additional facilities.
Moved by Commissioner Creamer, seconded by Commissioner Duncan, that the resolution be approved.
Action: Carried unanimously.
Resolution # 2001-7-12
GRANTING OF EASEMENT – CARRIER CREEK DRAIN DRAINAGE (BYPASS
DRAIN)
RESOLVED, That in exchange for a payment of not less than $500.00, the Board authorizes the granting of an easement to the Carrier Creek Drain Drainage District #326 (Bypass Drain) for the construction, operation, maintenance and improvement of a certain county drain, subject to the approval of City Council as required under Article 2, Section 5-203.3 of the Lansing City Charter. The Easement Area is located on a portion of the east side of the Erickson Station property in Delta Township. Descriptions of both the Board of Water and Light Property and the Easement Area are given below.
The Property owned by the BOARD is located at the street address 3725 S. Canal Road, located in Delta Township, County of Eaton, State of Michigan and legally described as:
BOARD OF WATER AND LIGHT-OWNED PROPERTY:
Beginning at the Center of Section 34, T. 4 N., R. 3 W., Delta Township, Eaton County, Michigan: thence S 89°58’53” E 660.24 ft. along the east-west 1/4 line of Section 34; thence S 27°21’43” E 893.10 ft.; thence N 61°39’11” E 284.86 ft.; thence N 55°36’28” E 1597.68 ft., more or less, to the east line of section 34; thence S 00°03’24” E 36.33 ft. on the section line; thence S 55°36’28” W 3192.57 ft., more or less, to the north-south 1/4 line; thence along the north-south 1/4 line N 00°11’34” W 1595.36 ft., more or less, to the point of beginning.
EASEMENT AREA DESCRIPTION:
An easement over the above described parcel said easement more particularly described as commencing at the center of Section 34, T4N, R3W, Delta Township, Eaton County, Michigan; thence S 89°58’53” E along the east and west 1/4 line of said Section 34 a distance of 660.24 feet; thence S 27°21’43” E 842.7 ft. to the true point of beginning of the easement herein described: thence continuing S 27°21’43” E 50.38 feet; thence S 55°36’28” W parallel with the northerly right of way line of the CN Railroad 266.11 feet; thence S 34°23’32” E 60 feet, more or less, to said right of way line; thence S 55°36’28” W along said right of way line 50 feet; thence N 34°23’32” W 110 feet; thence N 55°36’28” E parallel with said northerly right of way line 322.27 feet, more or less, to the Point of Beginning.
Staff Commentary: The easement will permit the Eaton County Drain Commission to operate a certain county drain in a location easterly of the existing power plant building and coal supply trackage. The Board of Water and Light currently operates water lines, electrical lines and communications lines on part of the Easement Area and may have the need in the future to install additional facilities within the Easement Area. Immediate access to any of these existing or future additional facilities may be necessary at any time and therefore, as a condition of granting the easement, staff will require provisions allowing the Board immediate access and the ability to install additional facilities.
Moved by Commissioner Creamer, seconded by Commissioner Duncan, that the resolution be approved.
Action:
Carried unanimously.
Resolution # 2001-7-13
COMFORT STREET PROPERTY – Northwest Well Field
RESOLVED, That the 22.8 acres of land at Sunset Street (Comfort Street Property), which is under the jurisdiction of the BWL but no longer required in its entirety for BWL purposes, be transferred to the Department of Parks and Recreation or such other City department as the Mayor may determine appropriate, in consideration of the payment of $39,350 to the BWL and subject to the City assuming all environmental liability associated with the parcels, and indemnifying the BWL against the same.
RESOLVED FURTHER that this transfer shall be subject to a “use agreement” for BWL purposes and any easements or restrictions of record.
Staff Commentary: This is a substitute resolution from the one provided in the Board meeting packet (Agenda item VII.J). BWL acquired this land in three parcels from 1944 to 1964; total consideration paid by BWL for the land was $39,350. More detailed information on this parcel is outlined in the Board meeting packet.
Moved by Commissioner Haggart, seconded by Commissioner Creamer, that the resolution be approved.
Discussion: General Manager Pandy reported that the City is acquiring this property at a discounted price due to their willingness to assume potential environment liability connected with the parcels. The City of Lansing needs to acquire riverfront property by an August 2001 timeline to offset land they conveyed for the new condominium development along Turner Street at Old Town. The Department of Natural Resources is requiring that sufficient land be acquired to offset land the City relinquished for the Ferguson condominium development. Mr. Pandy noted that the BWL has made some attempt to dispose of the property in the recent past, but street access to the property created an obstacle for development.
In response to Commissioner Creamer’s question on indemnification, Staff Attorney Wilhite stated that a separate document setting forth the terms of the indemnification is being prepared.
General Manager Pandy noted that the City of Lansing and the BWL have another real estate matter to negotiate. This involves a portion of BWL property on Wise Road, which the City would like to acquire for park use. The City is interested in extending Benjamin Davis Park into a skateboard park and nature trails and would like to acquire some of the Wise Road land for that purpose.
Action: Carried unanimously.
General Manager Pandy presented two additional resolutions for Board consideration:
Resolution # 2001-7-14
BWL TO ENTER INTO POWER SALES CONTRACT
WITH MPPA TO PURCHASE 1MW OF GREEN POWER
WHEREAS, the Michigan Municipal Power Agency (MPPA) was organized under Act 448 of the Public Acts of Michigan of 1976 (the “Act”) to provide a means for those Michigan municipalities which are members of MPPA to secure electric power and energy for their present and future needs; and
WHEREAS, MPPA is empowered by the Act, among other things, to purchase, sell, transmit or otherwise use electric power and energy within or without the State of Michigan; and
WHEREAS, the Board of Water and Light of the City of Lansing (BWL) has requested MPPA to obtain green power energy on its behalf; and
WHEREAS, the BWL is a participant in the MPPA Green Power Project (Project), and
WHEREAS, MPPA will enter into an Agreement with Granger Electric Company and Tower Kleber Limited Partnership to obtain 1 MW of green power energy for BWL from the Project, and
WHEREAS, MPPA has entered into Agreement with Consumers Energy Company (“Consumers”) to provide the necessary transmission to transmit the energy from Granger Electric Company and Tower Kleber Limited Partnership to BWL,
NOW, THEREFORE, BE IT RESOLVED, That the BWL will enter into a Power Purchase Agreement with MPPA for the purpose of purchasing green power as follows:
1. Beginning August 1, 2001, and continuing until July 31, 2006 MPPA will purchase from Granger Electric Company and Tower Kleber Limited Partnership and deliver to BWL, on behalf of BWL, the actual annual energy supply and the associated Michigan Independent Power Producers Association Tradable Tags.
2. MPPA will purchase all the net energy generated from the Project at the rate set forth in the agreements between MPPA and Granger Electric Company and Tower Kleber Limited Partnership.
3. MPPA will deliver the energy to BWL.
4. BWL will be responsible for capacity and energy losses on the Consumers transmission system.
5. MPPA will bill BWL for the costs incurred under the agreements between MPPA and Granger and between MPPA and Tower Kleber Limited Partnership, as well as any incremental transmission charges incurred by MPPA in delivering the energy, all on a monthly basis.
Staff Commentary: In April 2001, the Board authorized staff to negotiate with green power suppliers for 1Mw of green energy to supply the BWL Green Wise Program. Staff has been working with MPPA to finalize such agreements. Inasmuch as the BWL is a member of the MPPA Power Pool and the MPPA Green Power Project, the direct agreements with the green power suppliers must be with MPPA. The BWL in turn, must contract with MPPA to purchase the green power from MPPA. Formal agreements between MPPA and the suppliers, as well as between the BWL and MPPA, have been developed and are ready to execute. Before MPPA signs the agreements with the suppliers, it must first have a signed contract with the BWL. This resolution authorizes the entering into the contract with MPPA. An update to the recommendation from the April 2001 meeting is outlined below. Copies of proposed agreements between MPPA and the respective suppliers and MPPA and the BWL are available upon request.
Green Power Recommendation - July 24, 2001 Update
As a result of agreements negotiated with MPPA and the renewable suppliers, staff expects to purchase 1 Mw of renewable power. Staff intends to have a portfolio approach whereas .5 MW is from biomass (landfill gas) located in Lansing and the other .5 MW is from small hydro plants (500 kW each) located in Cheboygan County, Michigan.
This will allow the BWL to sell 2717 blocks of 250 kWh/month to customers who will be willing to pay the existing green power rate of $7.50 per block.
Moved by Commissioner Creamer, seconded by Commissioner Christian, that the resolution be approved.
Discussion: General Manager Pandy noted that Board Resolution 2001-6-7 (adopted June 26, 2001) authorized the BWL to participate in the MPPA Green Power Project for the purpose of determining the economics and feasibility of obtaining energy from the MPPA Green Power Project. The proposed resolution above would authorize the BWL to participate in the project through MPPA.
Commissioner Callen question whether staff was going to wait until the program is subscribed before committing to the suppliers. Assistant General Manager Cook noted that it was staff’s recommendation that the supply be secured in advance of full subscription, and negotiations have been held under that premise.
Assistant General Manager Bill Cook reported that since the launch of the Green Wise program on June 28th, 300 customers have signed up, representing 10% of the 3,000-subscription availability--this represents 3% of the BWL’s nearly 100,000 electric residential customers. Mr. Cook noted that 3% is typically a number that most utilities across the nation who are offering a green power program set as their goal. Green Wise brochure inserts are being mailed to all BWL electric customers with their utility bills through the month of July.
Mr. Pandy reported that the BWL was recognized for its Green Wise Electric Power Program at the July 16, 2001 City Council meeting by Congressman Mike Rogers. Chairman Callen and Mr. Pandy were present to receive the Congressional tribute. In response to Commissioner Creamer’s inquiry, Communications Director John Strickler reported that the BWL has allocated approximately $130,000 for promoting the green power program ($30,000 for marketing costs and $100,000 for brand image advertising in connection with green power.) Commissioner Creamer remarked that contrary to what some green power advocates have reported, the BWL is clearly allocating a fair amount of time, effort and funds into the green power project.
Action:
After considerable discussion, the motion was carried unanimously.
Resolution # 2001-7-15
RESOLVED, That the liabilities related to the BWL’s self-insured Workers’
Compensation Program be recorded and a corresponding SFAS 71 deferred expense be
recognized and amortized as payments are processed.
Staff Commentary: The BWL has adopted as part of its accounting policies, Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation.” This statement allows the BWL to defer the recognition of revenues and expenses, effectively recording an asset or liability, until a later period when these revenues or expenses have been considered by the BWL’s ratemaking body (the Board) in its establishment of allowable rates. This is an accounting change recommended by Deloitte & Touche during the last audit, and management concurs. Cambridge Integrated Services Group, Inc. provides the claim management services for the Self-Insured Workers’ Compensation Program and provides an actuarial estimate of the future workers’ compensation liability. As of June 30, 2001, the estimated uninsured liability is $1,307,475. There is no effect on the income statement, but the balance sheet will show increased liabilities and a deferred expense.
Moved by Commissioner Christian, seconded by Commissioner Duncan, that the resolution be approved.
Action: Carried unanimously.
UNFINISHED BUSINESS
None.
NEW BUSINESS
None.
RESOLUTIONS
GENERAL MANAGER'S REMARKS
Electric System Nearly Sets a Peak. General Manager Pandy reported that the BWL system nearly set a gross peak today at 509.45 Mw. A sheet depicting historical peak values for the BWL and the Michigan Public Power Agency was distributed. MPPA also nearly set a peak on July 24th at 732.88 Mw. The BWL system has a peak capacity of 650 Mw, with a 16% reserve requirement. On non-peak days, the BWL maintains an approximately 30% reserve. Mr. Pandy congratulated Dick Peffley, Director of Production, and his staff for their hard work this spring in maintaining all units in good operation and achieving a remarkable output in spite of the very hot weather.
Customer Attitude Survey Results Reviewed. Director of Communications, John Strickler, presented an executive summary of the results of the semi-annual residential customer survey conducted in May by Market Strategies, Inc. (MSI). Mr. Strickler reported that the BWL’s electric customer satisfaction level stayed about the same, while others in the industry have slipped by about 8%. The survey shows a disparity in customer satisfaction between the water and electric utilities over the last three surveys. This is believed to be due in part to service interruptions from the combined sewer overflow project and the long standing problem of confusion over rates-- the BWL bills for the City of Lansing’s sewer services. The survey indicates that the BWL ranked above average in 21 of 22 benchmark comparisons measured by MSI. A copy of the report was provided to each Commissioner with the meeting packet.
Mr. Strickler noted that the overall customer satisfaction results for commercial and industrial customers were similar to the results of the electric utility results for residential customers. Commercial and industrial customers are surveyed every other year.
In response to questions raised by Commissioners Duncan and Callen, Mr. Strickler reported that staff is in the process of rerunning a model using the latest customer attitude survey results to better focus advertising and other resource dollars. This information will be shared with the Board.
Emergency Action Plan Exercise Planned. General Manager Pandy reported that the BWL is going to exercise an emergency action plan simulating a dam break. The first tabletop exercise will be August 15th. A functional exercise involving other city departments is scheduled to take place on September 12th simulating the consequences of a severe rain condition with high water levels and the failure of the Moores Park Dam. Other simulated disasters will involve water main breaks, electric line breaks and businesses and homes flooded. An annual emergency action plan exercise is required by the City and the Federal Energy Environmental Regulatory Commission (FERC) to ensure there is good communication between all city departments and that a reliable response plan is in place.
REMARKS BY COMMISSIONERS
Ottawa Station Update. Commissioner Duncan requested an update on the Ottawa Station redevelopment project.
Peter Berns, Chief Operating Officer of Convergency Center Corporation, was present to brief the Board on the status of the Ottawa Station redevelopment project. He reported that at the request of his partner, the name of his local development partner must remain anonymous. This is due to the fact that since project negotiations started, the price for the Ottawa Station property “has been a moving target.” The shape of the deal for Convergency Centers Corporation and the local developer has changed since the onset of negotiations. Mr. Berns emphasized that based on the current sale price, the telecom hotel project at Ottawa Station is not financially feasible. He noted that he is cognizant of the value and emotional aspects this property has to the BWL and the City as it endeavors to redevelop the downtown area, however, the sale price does not allow his partner to make a firm commitment. Mr. Berns suggested finding a way to come closer to the original deal. He stated that if the Board chooses to pursue other options, he would completely understand.
Commissioner Duncan asked what the time frames are for reaching resolution.
Mr. Berns responded that the Ottawa Station redevelopment project would have to become a more open conversation when it comes to the acquisition cost. Initially, when discussions started approximately nine months ago, Convergency Centers was basically looking at a zero cost to take control of the property for development. Since that time, the cost of the property has dramatically increased. Mr. Berns said that if the original number can be negotiated, he would be very excited about doing the project.
There being no further questions, the Commissioners thanked Mr. Berns for his update.
Inquiries on Sole Source Report. Commissioner Duncan reported that in reviewing the Quarterly Sole Source Report for the period covering April 1 through June 30, 2001, she noticed a phrase that was repeatedly used for one of the reason clauses, which stated: “compatibility, continuity, standardization.” She asked if when agreement is made for a sole source purchase, whether the original purchase with which the BWL is trying to be compatible was competitively procured. One example she pointed to pertained to a clothing item.
General Manager Pandy said he would look into the procedure for that particular purchase and report back to the Board.
On a related issue in the Quarterly Sole Source Report, Commissioner Christian inquired about a purchase order with the reason clause stating, “only vendor meeting time constraints.” He asked if the BWL or the vendor generated the time constraints. He emphasized the importance of long-range planning to assure the best bidding process to ultimately lower the total cost of the job.
Director of Production Dick Peffley reported that the example cited, related to onsite stack airflow curve testing, which was scheduled one year in advance. The Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (DEQ) require the testing. Mr. Peffley clarified that one of the units failed the first round of testing. After the unit was repaired, it left a short time frame to take a second test to meet the certification deadline.
General Manager Pandy reported that staff continuously reviews its planned capital projects related to production and delivery of services. He noted that the capital projects forecast is sometimes modified as the result of schedule requirements from City of Lansing projects or other factors outside of the BWL’s normal parameters. Mr. Pandy emphasized that as part of competitive strategy each Process of the BWL endeavors to perform work efficiently and economically. Barring time constraints, materials and services for all projects are competitively bid.
Separate Water Meters for Outside Watering Advocated. Commissioner Creamer requested that the issue of separate water meters for lawn sprinkling be included as an agenda item for the joint dinner meeting with the Lansing City Council scheduled for August 23rd. He expressed concern that Lansing customers are not watering their lawns because the expense has become prohibitive due to outside water usage being tied to the sewer charge.
Request to Review Senior Citizen Electric Rate. Commissioner Creamer requested a management review of the Senior Citizen Rate No. 21 for electric service. He noted that during extremely hot weather, the commodity charge threshold for the first 300 kWh is rapidly reached.
Chief Financial Officer Dana Tousley responded that the economic crossover point between the standard Residential Electric Service Rate No. 1 and the Senior Citizen Rate No. 21 is reached at 600 kWh per month. After that threshold, a premium rate is charged. Mr. Tousley agreed to prepare a report outlining the parameters of the Senior Citizen Rate that shows the financial impact of raising the threshold for that rate during peak months. This information will be sent to the Commissioners.
Commissioner Christian congratulated BWL employee Calvin Jones on his recent appointment to the Waverly Community Schools Board of Education.
Tree Management Policy Concerns Discussed. Commissioner Callen expressed concern with the BWL’s new Tree Management Policy. He asked if the policy is more aggressive than has been adopted in recent times. He commented that some of the items listed in the Tree Clearing Practices sheet under the Tree Clearing Guidelines seemed harsh. Commissioner Callen noted that trees are an enormous resource.
General Manger Pandy responded that the Tree Management Policy is more aggressive. The BWL system will now be scheduled for tree trimming on a four to five-year cycle. This new effort is under the direction of BWL Forester Pete Baker. The goal is to reduce the number of tree-related outages, which accounts for about 20% of system outages. Mr. Pandy reported that the BWL’s forester works closely with the City of Lansing’s forester to determine the best approach in dealing with particular tree-related situations and homeowners. He noted that from an economic standpoint, it is more costly to remove a tree than to trim a tree. A presentation on this topic was given to members of the City Council on July 12th. Mr. Pandy offered to bring this matter to the Board for review and input.
Commissioner Creamer suggested referring this item to a Board subcommittee for review and discussion. Other tree-related issues to explore include: (1) the financial impact of removing tree stumps and (2) the types of trees the City of Lansing is planting on right of ways and their growth rate.
Committee Assignments Pending. Commissioner Callen announced that he will be making Board committee assignments shortly, based on committee preferences indicated by the Commissioners.
EXCUSED ABSENCE
On motion by Commissioner Duncan and seconded by Commissioner Haggart, that the absence of Commissioner Royal 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.
None.
ADJOURNMENT
On motion by Commissioner Duncan, and seconded by Commissioner Wonch, the meeting adjourned by unanimous consent at 7:08 p.m.
/s/ Mary E. Sova, Secretary
Filed with Lansing City Clerk
July 30, 2001