MINUTES OF THE
BOARD OF COMMISSIONERS' MEETING
LANSING BOARD OF WATER AND LIGHT
___________________________
___________________________
The Board of Commissioners met in the Boardroom of the Administrative Offices,
1232 Haco Drive, Lansing, Michigan.
|
Present: |
Commissioners Ronald C. Callen, Nancy
W. Duncan, Tim Haggart, Ifield P.
Joseph, Connie Marin, Diane R. Royal, Robin M. Smith and Nancy Wonch |
|
Absent: |
None |
The Secretary declared a quorum present.
Chairperson Royal called the meeting to order at 5:30 p.m.
Motion by Commissioner Callen, seconded by Commissioner Haggart, to approve the minutes of the regular Board meeting held September 23, 2003.
Carried unanimously.
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.
Curt Gates, Business Manager of IBEW Local 352, presented an update on negotiations between Local 352 and the Board of Water and Light from the union point of view. He reported that a mediation date for the management and union negotiating teams has been set for December 8, 2003. Mr. Gates expressed concern with the health care premium sharing proposal for employees and retirees and noted that BWL has always taken care of retires’ health care premiums and pension adjustments. He noted that IBEW Local 352 was chartered in 1903 and is now 100 years old. Mr. Gates stated that the BWL family spirit seems to be a thing of the past, and he emphasized the importance of focusing on people.
Tracy Tolbert of Customer Service stated that she has been employed by BWL since 1980. She said that BWL employees are proud of their work and urged that the union contract reflect the rate of pay they deserve. She stated that in the past, management and the union worked together to maintain a family atmosphere and assured employees received a fair and equitable income. She stated that BWL employees work hard to keep the lights on and to promptly restore power and water services during outages. She noted that Customer Service employees are usually the first point of contact when customers call; consequently, they must be knowledgeable about many aspects of BWL business and operations. She asked that people be the focus during contract negotiations to assure a fair and equitable outcome. She noted that the May 2003 issue of the Board Digest reported that skill family range adjustments for non-bargaining employees would vary between 2% and 5%, and also that individual performance increases would range from 0% to 7.5 percent. Ms. Tolbert asked that this be kept in mind during negotiations.
Michael Stocum of Customer Account Services stated that he has been a BWL employee for almost twenty years. He said that management indicated the proposal it offered to the union was a reflection of proposals put forth by Detroit Edison (DTE) and Consumers Power (CP) to their employees as these two utilities ventured forth and met the challenges and opportunities presented by deregulation. He noted that both DTE and CP gained by the experience, and now they are prepared to deal with the consequences. Mr. Stocum stated that BWL must create a future that looks outward not inward. He stated his belief that BWL missed a money-making opportunity because it was looking inward and focused at making a profit off a lower payroll by reducing the number of employees. Mr. Stocum stated that a positive future cannot be built with the proposal presented because it is a creature of the past and indicative of an attitude that may fatally cripple the BWL. He asked for wisdom, intellect and urged thoughtful consideration of the implications the proposal will have on the BWL.
Gerald Houghtaling, Journeyman Lineworker, and a ten-year BWL employee indicated he has lived in the City of Lansing his entire life except for six years spent in the U. S. Navy. He stated that he considers himself the definition of “Hometown People-Hometown Power.” He expressed disappointment with the progress of contract negotiations. He said BWL employees are the workers customers see in their neighborhoods and streets in all kinds of adverse weather. He noted that lineworkers are on the job repairing downed wires minutes after a storm. He stated that he agrees with General Manager Novick in that the BWL needs to concentrate on rates, reliability and service. He noted that according to a recent customer satisfaction survey, nine out of ten ratepayers consider the BWL the utility of choice. Mr. Houghtaling stated that he believes employee morale is low because management’s proposal is inequitable in the pay and over-time category. He expressed concern over his welfare at the BWL and the welfare of his family.
James Farrington, BWL Lineworker, stated that he is a life-long resident of the City of Lansing and a proud BWL employee. He noted that over the past three years, the BWL hired a consultant to conduct two employee satisfaction surveys of which the findings indicated low employee morale. Mr. Farrington said that he believes employees distrust upper management because management’s actions do not promote the best interests of employees and customers. He stated that it was wrong for management’s negotiating team to tell union employees that they are paid too much and that their benefit package should be slashed. He said that General Manager Novick recently told employees that they are all one team serving the best interest of BWL customers. He noted that the percentage of the July 2003 pay increase to non-bargaining employees was higher than what is being offered to the bargaining employees. He expressed opposition to proposed premium sharing for health care.
Tom Miller, BWL Retiree, expressed concern with the impact the proposed premium sharing for health care will have on his pension. He stated that premium sharing for health care will be a burden for BWL retirees who are on a fixed income.
On behalf of the Board, Chairperson Royal thanked those who came to the meeting to express their views regarding contract negotiations. She noted that the Board has heard from both management and the union, and each team raised valid points. She said that collective bargaining is often a difficult process. She stated that in an ideal situation, each party comes to the table with their best wish list; both sides must give and take, and eventually reach a mutually acceptable contract agreement. Commissioner Royal noted that the management and union negotiating teams have agreed to non-binding mediation scheduled to begin December 8th. During mediation, both teams will have an opportunity to step back and reassess where they stand and hopefully move forward. She announced that this is an inappropriate time for the Commissioners to intervene and that the Board has faith in both the union and management and the overall negotiating process. She urged both teams to continue with contract talks through the bargaining process and said she is hopeful that these difficult issues will be resolved with a fair and equitable agreement.
Linemen Rodeo Participants Honored. Vice President of Operations Bill Cook
introduced the BWL employees who competed in the 20th Linemen’s
Rodeo in Kansas City. The journeymen
participants were James Chandler, James Farrington and Ron Davis. The apprentice participants were Tom Bayle
and Russ Marion. Mr. Cook noted that
there were approximately 240 teams and 240 apprentices participated in the rodeo. BWL teams and apprentices represented the
BWL very well.
COMMITTEE REPORTS
COMMITTEE OF THE WHOLE REPORT
(Resolution 2003-11-1)
Present: Commissioners Callen, Duncan, Joseph, Marin,
and Wonch.
Excused
Absences: Commissioners Haggart, Royal,
and Wonch.
The Committee of the Whole met on October 14, 2003 at 5:30 p.m. to discuss the following issues:
1. Board of Water and Light’s (BWL) Communications Program
2. General Manager’s Fiscal Year 2003-04 Objectives
I. Communications Program
Communications Director John Strickler presented an overview of the BWL’s communications strategy, expenditures and benchmark results against other utilities. He reported that the program supports the BWL’s vision of being the only utility customers will accept. The program’s primary objective is to build and support the BWL’s brand identity as Lansing’s hometown utility. Secondary objectives are to help management achieve corporate goals, keep customers and employees informed about issues and developments that affect the utility and to promote new products and services.
Four major program components and their spending levels were summarized.
Chili Cook-Off: To promote downtown Lansing and its riverfront area.
Silver Bells in the City: Kicks off the holiday season and attracts between 60,000 and 80,000 visitors to downtown Lansing.
Lansing Lugnuts: A corporate sponsorship with the Lansing Class A Minor League baseball team.
Staff reported that a recommendation for a new three-year outside service contract to provide communications, marketing, advertising and public relations services would be brought to the Board at the November 25th meeting. The process used in selecting the top firm from the four agencies that submitted proposals was thoroughly reviewed.
Following discussion, the Commissioners concurred with the communication strategy and agreed to consider a resolution for awarding a contract for communications marketing, advertising and public relations services at the November Board meeting.
Respectfully submitted,
Nancy Duncan, Chair Pro Tem
Committee of the Whole
Motion by Commissioner Duncan, seconded by Commissioner Haggart, to approve the report as presented.
Action: Carried unanimously.
FINANCE COMMITTEE REPORT
(Resolution 2003-11-2)
Present: Committee Members Callen, Duncan, Joseph,
and Smith.
The Finance Committee met on October 28, 2003 at 5:30 p.m. to review and discuss the following issues:
1.
External Auditor’s Report of the Board of Water and Light
(BWL) Enterprise Fund
2. Wyandotte’s Request for Membership to the Michigan Public Power Agency (MPPA)
3. MPPA Power Pool Agreement Amendment
4. Coal and Rail Strategy
5. Nixon Farms Development
6. BWL Property Disposal Policy
I. Annual Audit Review BWL
Enterprise Fund
External Auditors Larry Cooley, Frank Audia, Tricia Walhorn from Plante & Moran presented the results of the audit for fiscal year ended June 30, 2003 for the Board of Water and Light (BWL) Enterprise Fund. The auditors discussed their responsibility under generally accepted auditing standards. As a result of the change in the application of SFAS No. 71, the auditors reviewed extraordinary items not recorded in revenue and those recorded as expenditures. They gave a presentation that included a three-year comparison of operating revenue, operating expenses, and operating income or loss. A comparative analysis was also presented on the bond debt service requirements, kilowatt hours generated versus purchased, and significant fuel costs. The auditors reviewed their Management Letter comments and responded to questions. General Manager Novick noted that responses to the Management Letter are being prepared for review with the Commissioners at a later time.
[Commissioner Joseph arrived at 6:04 p.m.]
The Committee met privately with the external auditors without staff present as has been customarily done over the past years. To meet filing requirements with the City, a copy of the fiscal year 2003 audit report of the BWL Enterprise Fund has been filed with the Lansing City Clerk. Copies have also been provided to the Lansing City Council and the Mayor. The Finance Committee recommends the following resolution:
Resolution
Authorizing the Filing of the
BWL Enterprise Fund Audit Report with the State Treasurer
(Resolution 2003-11-3)
RESOLVED, That the Corporate Secretary is hereby directed to file a copy of the fiscal year 2003 audit report of the Board of Water and Light Enterprise Fund and the report on auditing procedures with the State Treasurer as required by the Uniform Budgeting and Accounting Act (Public Act 2 of 1968, as amended).
II. Wyandotte
Request for MPPA Membership
Vice President of Operations Bill Cook reported that the City of Wyandotte has requested membership in the Michigan Public Power Agency (MPPA). The process for becoming a new member requires amendments to the MPPA Articles of Incorporation to be adopted by the governing body of each member and published and filed in the same manner as the original Articles of Incorporation. The amendments were reviewed and the Finance Committee concurred with the membership process. A resolution approving amendments to the Fourth Amended Articles of Incorporation of Michigan Public Power Agency will be submitted to the Board for approval at the November 25th meeting.
III. Amendment
to MPPA Power Pool Agreement
Vice President of Operations Bill Cook gave a brief presentation that included a historical overview of the original Michigan Public Power Agency (MPPA) Power Pool Agreement written back in 1989 and early 1990, which was prior to the actual startup of the Power Pool in mid-1992. An amendment under development is being proposed primarily to update the Agreement to bring it into conformance with present Power Pool operations and billing procedures. The present operations reflect changes that were made since the inception of the Pool as a result of unforeseen circumstances to correct procedures that did not work as expected and to reflect changes in the electric industry. Changes in power costs, charges or revenues from present procedures should only improve the situation for the BWL. Once the MPPA Project Committee approves the amendment, it will be forwarded to each member city for individual technical and legal review and, ultimately Board approvals. Each member Board must approve the amendment. Staff anticipates bringing this forward for Board consideration when appropriate.
IV. Coal
and Rail Strategy
Fuel Procurement Manager Ron Ishimoto reported on the BWL’s coal and rail strategy. He noted that existing BWL contracts for rail cars, coal, and destination rail transportation are due to expire on December 31, 2003. He gave a historical overview of the Board’s decision to convert the Eckert and Erickson Stations to burn Western coal to lower generation costs, meet environmental requirements for sulfur dioxide (SO2), and meet future competition. Burning Western coal safely and efficiently required extensive modifications to the BWL generating plants. He presented a comparative analysis that showed that leasing rail cars versus direct purchase offers significant economic and operational advantages. Leasing also ensures availability of cars for timely delivery of coal. The bid process for the rail cars, coal supply, and origin rail carriers was reviewed in detail. The benefits and disadvantages for having one coal source were discussed and a comparison of fuel cost was presented. Following the presentation and discussion, the Committee concurred with staff’s proposal. Staff will submit resolutions for coal and rail contracts for Board consideration at the November 25th meeting.
IV. Nixon
Farms Development
Doug Wood, Manager of System Integrity and Customer Projects, reported on a potential electric service project in Delta Township called Nixon Farms, also known as Grand Ledge Investment Group, LLC (GLIC). The development is a mix of retail, apartments, manufactured housing, and single-family housing surrounding 150 acres at the corner of Saginaw Highway and Nixon Road. Mr. Wood reviewed the history of the project since 2002 involving previous negotiations with BWL, however the developer declined the initial offer. The developer has since contacted the BWL to discuss several alternatives, which has led to a conceptual agreement. The essence of the proposal is that the BWL will provide the electric infrastructure with a capped dollar amount to serve the development for which in return the developer will guarantee payback of the BWL investment within 15 years through an irrevocable bank letter of credit. Mr. Wood outlined the provisions of the current proposal and project economics. General Manager Novick noted that the irrevocable bank letter of credit from the developer is a critical component in making this agreement work. In addition to the provisions presented, the conceptual agreement is contingent upon the following parameters:
BWL must be able to build the infrastructure (secure governmental permits and telephone poles)
Necessary easements must be obtained
BWL funding availability
BWL Board approval
The Finance Committee is satisfied with the conceptual agreement. At such time that management is ready to move to the next level with the project, the Committee requests that additional analysis detailing the growth potential and projected revenue assumptions be provided for review.
V.