Final – Approved by Board 9/28/04
MINUTES OF THE
BOARD OF COMMISSIONERS' MEETING
__________________________
___________________________
The Board of Commissioners met in the Boardroom of the Administrative Offices,
1232 Haco Drive, Lansing, Michigan.
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Present: |
Commissioners Gary L. Calkins, Ronald
C. Callen, Nancy W. Duncan, Tim
Haggart,
Santiago Rios, and Robin M. Smith. |
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Absent: |
Commissioners Ifield P. Joseph, and
Nancy Wonch |
The Secretary declared a quorum present.
Chairman Callen called the meeting to order at 5:40 p.m. He announced that the Board’s Rules of Administrative Procedure specify that the Board shall organize each year at its first regularly scheduled meeting in July by electing a Chair, Vice Chair and Chair Pro Tem. He called for the report of the Nominating Committee.
NOMINATING
COMMITTEE REPORT
Commissioners Present: Tim Haggart, Robin Smith, and Nancy Wonch (Chair)
Absent was Commissioner Nancy Duncan.
The Nominating Committee met on June 30, 2004 at 12 Noon to review Commissioner survey responses for consideration of nominations for Board officers.
The Nominating Committee recommends the following slate of officer candidates for Fiscal Year 2004-05:
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Chair: |
Robin Smith |
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Vice Chair: |
Nancy Duncan |
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Chair Pro Tem: |
Ron Callen |
There being no further business, the meeting adjourned at 12: 35 p.m.
Respectfully submitted,
NOMINATING COMMITTEE
Nancy Wonch, Chair
Motion by Commissioner Callen, seconded by Commissioner Rios, to approve the report as presented.
Action: Carried unanimously.
Motion by Commissioner Calkins, seconded by Commissioner Haggart, to approve the new slate of officers for Fiscal Year 2004-05.
Action: Carried unanimously.
Commissioner Callen congratulated Chair-elect Smith on her election and passed the gavel to her.
Chair Smith made the following remarks:
I want to
thank my colleagues for the vote of confidence. I look forward to working with all of you. I also look forward to working with our
General Manager Sandy Novick and his team for this fiscal year and, most
importantly, the ratepayers in this community.
There are many challenges and challenging issues we face right now in the
utility industry as well as at the Board of Water and Light. I look forward to providing superior utility
services to our customers while maintaining stable rates. The fulfillment of this responsibility to
our customers requires prudent planning as well as investment. The Lansing community is a great place to
live. I was born and raised here. I’m pleased to have the opportunity to serve
as Chair of this Board and I thank Commissioner Ron Callen, the outgoing chair
for the many times I’ve drawn on his wisdom, his expertise and experience; and
I’m sure in the days to come, I will continue to do so. Thank you.
Motion by Commissioner Callen, seconded by Commissioner Haggart, to approve the minutes of the regular Board meeting held May 25, 2004.
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.
James Clift, Policy Director of the Michigan Environmental Council (MEC), spoke on the subject of lead service pipes going to homes in Lansing and handed out a letter from MEC regarding this issue. Mr. Clift thanked the Board and management for holding educational open houses to provide information about lead in drinking water. He presented a summary of MEC’s four recommendations on how the BWL may want to proceed on the lead issue: (1)Testing: Publicize how schools are currently testing water systems in Lansing to insure children are not being exposed to lead while attending school; pay for water tests for any household with lead service lines that requests to be tested; and work with the Ingham County Health Department to provide a free blood test for any child less than six who is exhibiting symptoms that could be related to elevated lead levels.. (2) Public Education: Expand the public education campaign to include information related to health problems related to elevated lead levels in the body. (3) Protecting At-Risk Populations: The lead pipe replacement process should be accelerated to complete replacement over five years as opposed to the proposed ten years. (4) Get the Lead Out: Come together as a community effort to “Stand Up for Lansing – Get the Lead Out.” A multi-faceted campaign is proposed that would combine the efforts of the City of Lansing, the BWL, Ingham County Health Department, housing advocates and community groups in a campaign to reduce lead exposure by replacing lead pipes and insuring lead paint hazards are minimized. Mr. Clift concluded his remarks by offering to work with the BWL on the lead issue.
Joan Bauer, President of the Lansing City Council, thanked the Commissioners and staff for attending the joint meeting with the City Council members this morning. Issues of mutual interest to the City Council and the BWL were discussed ranging from lead in drinking water and tree trimming. Councilmember Bauer echoed James Clift’s sentiments that we need to come together as a community to reduce lead exposure, whether it is hazards from lead paint or lead water services. She also supported Mr. Clift’s proposal to combine the efforts of the City, the BWL, and the State in a campaign to address the lead issue. Councilmember Bauer thanked Commissioner Ron Callen for his past service as Board Chair, and congratulated Commissioner Smith in her endeavor as the new Board Chair. She expressed her gratitude to all the Commissioners for volunteering their services on the Board to represent citizens for the common goal of providing a safe water supply, reliable electric service and low rates for all customers.
There were no communications.
COMMITTEE REPORTS
Present: Commissioners Calkins, Callen, Duncan, Haggart, Rios, (arrived 5:45) Smith and Wonch. Absent: Commissioner Joseph
The Committee of the Whole met on July 8, 2004 at 5:30 p.m. to discuss the following items:
There
were no comments made by the public at the meeting.
May Financials. Senior Vice President of Finance and Administration Dennis McFarland introduced Ms. Sue Sperry, Manager of Finance and Planning and recognized the efforts she is making in that area.
Mr. McFarland updated the Committee on the May Financial
Report. He reported that for the first
time this fiscal year, operating income had fallen slightly below budgeted
levels. He explained that May is
typically a “shoulder” month for the BWL, since it does not produce significant
heating or cooling temperatures to generate revenues. Because of this, a net loss of just under $1 million had been
budgeted for the month of May.
Unfortunately, when the actual numbers came in for May, the loss for the
month was approximately $3 million dollars, most of which could be attributed
to the Electric Utility. Mr. McFarland
identified those items accounting for the variance between Budgeted and Actual
Operating Income which included unanticipated maintenance costs at Erickson
Station, lower than anticipated net electric retail revenue and lower than
anticipated $/MWH received for wholesale electric sales. Mr. McFarland also described several pending
items which will most likely affect FY04 net income which included Ottawa
Station write down, and Environmental Emission Allowances/Liabilities.
Commissioner Rios Introduced. General Manager Sanford Novick introduced Santiago Rios, the new Board Commissioner. Mr. Rios is an attorney and has an extensive managerial background. He welcomed Mr. Rios and stated that a tour of BWL facilities will be arranged in the near future.
Six-Year Financial Forecast. The Six Year Financial Forecast was presented by Senior Vice President of Finance Dennis McFarland. Mr. McFarland emphasized that the forecast did not represent a Financial Plan but consisted of a base case scenario including known events and an extrapolation of current trends. He explained that this information was being presented to lay the groundwork for financial and strategic decision-making to follow. Mr. McFarland explained the major assumptions used in the forecast which included modest retail sales growth rates, anticipated General Motors (GM) plant closings, no rate increases, O & M annual increases of 2.5% and no new bond issues. A Forecasted Income Statement was presented which showed a slight net loss beginning in Fiscal Year 2007 and a total net loss of ~$32 million for the six year period of 2005 – 2010. The forecasted Cash Flow statement showed annual cash deficits for each of the six fiscal years for a total deficit of ~$66 million for the period. Mr. McFarland explained that the BWL was fortunate to begin the period with strong cash reserves since even in this base case scenario, the BWL would end the period with positive cash balances. Much discussion followed on individual Utility positions during the period, as well as cash reserve funds currently held by the Michigan Public Power Agency (MPPA). Mr. McFarland concluded the presentation by describing several open issues including the definition of “Financially Independent Utilities,” timing of water rate increases, timing of steam rate adjustments and the integration of strategic initiatives. It was determined that a six-month time frame would be reasonable for staff to develop further strategies on the six-year forecast and return to the Committee with a recommended financial plan.
Lead Task Force Report. General Manager Sanford Novick reiterated that he had previously discussed his concern about lead water services with the Board. He reported that BWL is in compliance with all state and Federal regulations for drinking water safety, but currently is not doing enough with this issue. He noted that BWL needs to be more proactive and aggressive. An article is anticipated to appear in Sunday’s, July 11th Lansing State Journal telling the public about the BWL’s 14,000 lead services. Annually the BWL has informed customers about issues with lead in drinking water. The BWL is in compliance, and is not required to replace the lead services. Director of Special Projects Clyde Dugan presented the Lead Task Force recommendations on implementing the accelerated lead replacement program. Mr. Dugan pointed out that there are many sources of lead. The BWL has determined that there is no detectable lead in the water supplied to our mains and no significant sources of lead in the distribution system. Water service lines from the street to homes can be made of numerous materials or combinations of materials that contain lead. The BWL is regulated under the Safe Drinking Water Act and maintains less than 15 parts per billion (ppb) of lead in at least 90% of samples taken from customer taps. The BWL is required to notify all customers annually on ways they can minimize their exposure to lead in the drinking water. The Task Force recommends a corrosion control program, and formal service replacement program. Service replacement priorities are: