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The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.
Present: Commissioners Gary Calkins, Ron Callen, Robert Cochran,
Joseph Graves,
Semone James, Santiago Rios, and Robin Smith.
(Note: 2nd Ward Vacancy exists.)
Absent: None.
The Secretary declared a quorum present.
Chairperson Smith asked all to rise for the Pledge of Allegiance to the Flag.
Chairperson Smith called the meeting to order at 5:30 p.m.
By motion of Commissioner Calkins, seconded by Commissioner Graves the minutes of the March 28, 2006 regular meeting were unanimously approved.
By motion of Commissioner Callen, seconded by Commissioner Graves the minutes of the April 18, 2006 special meeting were unanimously approved.
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBEJCT OR ON ANY OTHER SUBJECT NOW, OR AT THE END OF THE MEETING.
Joseph Davis, Business Manager of IBEW Local 352, addressed the Board regarding several letters he sent to the Commissioners regarding the union’s request to engage the services of an external Human Resources consultant to assess the quality of Human Resources practices, policies and delivery and to identify areas for change and improvement with specific recommendations. He reported that IBEW Local 352 has retained the services of John J. Castillo of Castillo and Associates to assist the union in addressing concerns that do not fall under “contractual issues.” One concern employees have is the phone monitoring system in the Customer Service Call Center. Mr. Davis asked for the following information concerning the phone monitoring system: (1) Who is responsible for the system? (2) Who authorizes the phone monitoring? (3) How is the monitoring conducted? (4) What is the purpose for monitoring phone calls? He asked for prompt development of a policy and procedure on the use of the telephone monitoring system with input from the union. Mr. Davis urged that discussions concerning health care premium sharing for retirees be done in open dialogue to keep all of them aware of how the decision was made.
Mayor Virg Bernero addressed the Board in his capacity as Mayor of Lansing. He stated that he believes there is an apparent lack of “institutional control, management oversight and accountability at the Board of Water and Light.” He pointed out that after consultation with some Commissioners and numerous BWL employees, he is convinced that all is not well at the BWL. He urged the Board to take swift and certain action to remedy the problems facing the organization. Among issues he specifically referenced were:
The absence of policies governing sensitive human resource functions such as conflict of interest, personal relationships between supervisors and subordinates.
A violation of personal privacy rights by a manager who listened in on the private conversations of a woman dealing with a personal matter.
A Lansing State Journal news report that a management employee was terminated due to an improper relationship with a subordinate.
The three-person line crew issue, which management was ordered by the courts to restore.
Safety concerns raised in a recent National Safety Council report.
A recent employee embezzlement incident involving nearly a half million dollars.
The use of BWL vehicles by contracted employees
Mayor Bernero stated that he finds it unacceptable that the Board of a major public corporation convenes for regularly scheduled meetings just six times a year. He urged the Board to meet more frequently, at least on a monthly basis in order to exercise oversight and enforce accountability. He called on the Board to take swift and effective action to investigate the matters outlined above to take necessary corrective actions and to bring the BWL back under public control and accountability.
Commissioner Graves responded that many of the Mayor’s comments he personally takes offense to because not only is the Mayor indicting the Board in the way business has been conducted, but he is also making sweeping judgments that are not supported in fact. Commissioner Graves said that he is not sure the Board is in the position to analyze and review the Mayor’s remarks without an opportunity to study them in a deliberative way because many of the comments made were general in nature and not specific. Commissioner Graves added that since the Mayor has met with some of the BWL Commissioners, he has not had the opportunity to meet with him. He asked to meet with the Mayor to review issues discussed with other members of the Board. Commissioner Graves further added that when appointed to this Board, he made a personal commitment that he would not leave this Board in any worse shape than when he found it. He pledged to represent the ratepayers of the City of Lansing by carefully reviewing every allegation brought to this Board and challenging management as well as speaking with IBEW representatives. He said that if other perspectives to the matter have not been brought forward, he would welcome that opportunity.
Mayor Bernero responded that he would be more than happy to meet with Commissioner Graves.
Commissioner Rios stated that he accepts the Mayor’s comments as a challenge for this Board to investigate the situation and to consider a different approach in resolving the problems. He welcomed continued dialogue with the Mayor and indicated that the Commissioners would work cooperatively and show due diligence in pursing these matters further.
Commissioner Graves responded that he agrees with Commissioner Rios in some respect, but noted there are other issues where there simply has to be agreement that the concerns are based on factual information. He noted there are times when unanimous agreement is simply not reached, which is within the Commissioners’ prerogative.
Chair Smith told the Mayor that the Board accepts the challenge regarding concerns presented and assured the Board’s commitment to perform due diligence with regard to these matters. She invited the Mayor to stay for the entire meeting to learn more about actions the Board has tried to initiate and plans to take later in the meeting concerning the various issues mentioned.
Commissioner Cochran stated that he concurs with Commissioner Rios’ comments relative to safety concerns. He said that he and others raised concerns regarding the lack of procedures at the BWL. He affirmed his support to the Mayor for coming before this Board to raise the attention level. Commissioner Cochran stated that in good faith he attempted to solve an issue raised by the union regarding eavesdropping allegations, but apparently the union did not like the answers obtained and attempted to “shoot the messenger.” He supported the Mayor’s concerns and promised to work diligently to resolve the situation.
David Cluley, retiree with 33 years of BWL service, stated that his wife, Virginia Cluley, is also a former BWL employee. He stated that Mrs. Cluley sent letters to Commissioners Smith, Callen and Rios asking them to review the legal situation involving her case, but no one responded. He alleged that the former Manager of Customer Service, whose employment was recently terminated, was “hand-picked” to take Virginia Cluley’s position. Mr. Cluley said he is unable to understand how an investigation can be held when the people making the complaint are not contacted.
Ron Byrnes, BWL retiree, expressed concern with the proposed 5% premium sharing recommendation before the Board for consideration. He said trust is not earned with retirees or other groups when they are told one thing by management and a different action is proposed to the Board. Mr. Byrnes said he heard General Manager Novick say over the last 15 months at least five times that if a change in retiree health care premiums is proposed, the retirees would be the first to know and asked for input. Mr. Byrnes read from a document (not available to the Board during the meeting) concerning post-retirement benefits and health insurance coverage an eligible individual would receive with no retiree insurance premium co-pay under the point-of-service plan and the traditional insurance plan. He noted that this contradicts with what the Board is being asked to decide tonight. Mr. Byrnes said that this language is spread out among many BWL documents including the union contract. He noted that lawsuits with respect to retiree co-pays on insurance premiums are coming out in favor of retirees in cases where specific guarantees were made.
Trenton Taylor addressed the Board concerning his long-time friendship with David and Virginia Cluley. He noted that they are all best friends. He reported that his wife, Joni Taylor, filed a Freedom of Information Act (FOIA) request with the BWL for copies of documents connected to Virginia Cluley’s case. The BWL denied her request. She challenged the BWL’s denial in Circuit Court, which was upheld in favor of Ms. Taylor and now this matter is going before the Appellate Court. Mr. Taylor criticized the amount of legal fees the BWL has paid to date for several pending legal cases involving former General Manager Joseph Pandy, the Cluleys and the Taylor claim. Mr. Taylor also commented that if he were a member of BWL’s management, he would offer to assist with the city’s financial problems by releasing some of the BWL’s surplus funds.
Max Zemer, BWL retiree, stated that he and his family have a combined 100-year history at the BWL. He reported that according to a national news report, states may have to increase their utility costs by 72% to 100% over the next couple of years due to deregulation and utilities divesting themselves of generation. Mr. Zemer referred to a recent scenario discussed at the last Board meeting regarding the feasibility of divesting BWL generation such as its partial share of Belle River’s Power Plant and the Eckert Station. He noted that anytime the Board talks about selling major BWL generation, it is an issue of public interest. Mr. Zemer expressed concern at management’s attempt to dismantle the BWL and causing unnecessary hardship within the organization. He stated that health care might cost the BWL money, but not nearly as much money as some of the mismanagement mistakes that have taken place in the last couple of years. Mr. Zemer said he would rather see mismanagement issues addressed than asking retirees to start paying part of their health care premiums. Mr. Zemer asked about the direction the BWL is heading: “Will it be a utility as it has been in the past or will it be some kind of a skeleton organization that farms out its work with disregard for its workers?”
Roger Jeffers, BWL retiree with over 30 years of service, stated that he was a former chair of the BWL’s employee committee on wage and pensions in the 1960’s and 1970’s when great strides were made to health benefits for employees. He noted that those benefits were negotiated in lieu of wages. The proposal now is to increase premium sharing for non-bargaining employees and retirees having to share 5% of their premium. Mr. Jeffers reminded the Board that retired employees gave up wages to receive improved health benefits.
Steve Cronk, a recent BWL employee with 40 years of service, stated that he supports many of Mayor Bernero’s remarks, particularly the statement about the lack of institutional control and management oversight. He expressed concern with management’s initial proposal relative to retirees being asked to share 5% of their health care insurance premium and 25% premium sharing for non-bargaining employees. He applauded the Commissioners for asking management at the May 11th Finance Committee to sharpen their pencils and find ways to reduce costs in order to lower premium sharing from the proposed 25% to 10% for non-bargaining employees, particularly since a 0% wage increase is being recommended. Mr. Cronk noted that retirees are a captive audience with many of them receiving small fixed pensions.
Tracy Tolbert, a 25 year BWL employee and currently working in Customer Service, thanked the Board for listening to all the comments made this evening. She reported that telephone monitoring in the Call Center has been in effect for several years, even before the manager that was terminated was brought in. She noted that questions were raised several years ago as to why employees and the public were not notified that calls were being monitored. She pointed out that calls were not recorded, but rather they were monitored. She stated that when phone monitoring procedures are developed, all perspectives should be considered from the customer service representative to the persons approving the policy. Ms. Tolbert stated that it is her hope that management, the union and retirees can all work together towards a common goal.
Chair Smith thanked all the speakers for their time to address the Board. She gave assurance that the Commissioners take all matters brought before the Board seriously and promised to perform due diligence with regard to the issues raised.
WAIVER TO ORDER OF BUSINESS
There being no objection, Chair Smith announced that the order of business was being modified to accommodate several guests.
Ingham County Drain Commissioner Paul Lindemann reported that the Groesbeck Drain is located west of Wood Street with Lake Lansing Road running through the center of it and goes north to the railroad and south to about one-third into the northern part of Groesbeck Golf Course and takes in a portion of the northern part of Bancroft Park. He noted that for the last thirty to forty years since the extension of David Street, now known as Lake Lansing Road, has never had a positive outlet for the storm water. Because of a variety of land use changes that have taken place, the Ingham County Drain Commissioner (ICDC) petitioned about 13 years ago to find a solution and put in a positive outlet for the drain to solve the problem with water recharging into the ground. The first petition consisted of about a $3 million expenditure to run a 36-inch pipe near the corner of Chamberlain and Lake Lansing Roads through the northern part of Lansing down Grand River Avenue through Old Town and discharge it into the Grand River. That part of the project was accomplished about six years ago. Subsequently, a second petition was started to put in a collection system. A few property owners challenged the ICDC’s right to be the collection system. This went all the way to the Supreme Court, which took about five years. Ultimately the ICDC prevailed in each case. This permitted the ICDC to obtain all the private and public easements along the route course of the new drain to be installed to collect the water and take it to the 36-inch pipe and onto the Grand River.
Mr. Lindemann reported that there are two remaining easements that are left to obtain with one running across the BWL’s North Lansing Landfill property and the northern part of the Groesbeck Golf Course. He stated that negotiations started with the BWL about four years ago to acquire the subject easement. He noted that staff has been extremely helpful in putting all the details together and working with his staff on all the numbers and necessary details to pass the final design stage. The bottom line is that an approximate ten acre parcel off the eastern end of the landfill needs to be acquired from the BWL to accommodate the storage. This would involve the construction of a wetland complex with ponds and sinuosity to move the water through the ponds and store it for a short while before it goes into the 3-foot pipe and onto the Grand River. The ponds would serve a multitude of purposes: It will clean and purify the water, provide an ecosystem which will enhance the whole area, and provide regional detention for all the properties including the thirty acres left for the BWL. It would also provide for a positive outlet for everyone else in that area, including the remaining thirty acres to tie into because Lake Lansing Road is scheduled for rebuild next year. Mr. Lindemann noted that the schedule is tight and the ICDC would like to have the ponds built and in the ground prior to the beginning of the construction of the rebuild of Lake Lansing Road. He stated that this project is down to crunch time because when the collector system is put in on Lake Lansing Road, the ICDC will need to have a place to temporarily store the water, and the pond system is ideal. Consequently the equipment must be in the ground sometime around August 2006.
Mr. Lindemann thanked BWL staff for their many hours of working with the Ingham County Drain Commission on this issue.
BWL General Counsel Amy Cavanaugh presented a summary of the proposed resolution before the Board for consideration. She reported that in accordance with Resolution 2004-9-9, staff negotiated with the ICDC to determine the appropriate terms and conditions necessary to allow the ICDC to install a pond system on the property while protecting the BWL and providing adequate consideration for the transaction. Staff and the ICDC have arrived at mutually agreeable terms.
The following resolution was presented for Board consideration:
Resolution 2006-5-1
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J. |
Approval of Sale of a Portion of the North Lansing Landfill Property to the Groesbeck Drain Drainage District |
RESOLVED, that the Board of Commissioners hereby declares surplus approximately
ten acres on the southeasterly portion of the North Lansing Landfill property
(the Parcel), leaving approximately thirty acres remaining in BWL hands.
FURTHER RESOLVED, that the Board of Commissioners approves the sale of the Parcel to the Groesbeck Drain Drainage District (District) in accordance with the following terms:
1. A purchase price of $200,000;
2. The BWL would grant the District an easement for a 100 foot strip along the property to install a detention system; this easement would allow the BWL to retain ownership of 100 feet within the waste mass;
3. In consideration for the easement, the District would permit the BWL, under defined circumstances, to discharge water meeting an NPDES permit into the Drain for a one-time fee of $100;
4. On the easement property, the District will bear all liability and indemnify the BWL against any liability loss or expense arising in any way from the District’s use of the easement;
5. There would be no additional detention required on the remaining thirty acres;
6. The District will limit its design to use a pipe in the existing roadbed area so the roadbed could continue to be used as a road in the future. The BWL will give the District a non-exclusive easement to use the road and the District will pay proportionate maintenance costs;
7. The District shall construct and maintain a fence separating the Parcel from the remaining property;
8. The BWL would retain the right to use the Parcel for monitoring wells and electrical and water distribution system in a manner that does not conflict with the District’s use;
9. The District will bear the cost of capping the water facility on the Parcel at the main and removing the equipment. The equipment shall be returned to the BWL.
FURTHER RESOLVED, that the BWL will obtain a new appraisal on the entire 40 acre North Lansing Landfill property. The new appraisal will take into consideration the impact of the use of the ten acres by the District for wetlands and detention. The new appraisal must demonstrate that the incremental increase in the value of the remaining thirty acres exceeds any incremental increase, exceeding $200,000, in what the ten-acre parcel would be appraised at for highest and best use. If the appraisal does not so demonstrate, the Commissioner’s approval is stayed for further evaluation.
FURTHER RESOLVED, that a Purchase and Sale Agreement memorializing these terms shall be sent to the Lansing City Council for approval.
Motion by Commissioner Calkins, seconded by Commissioner Rios, to adopt Resolution 2006-5-1 regarding approval of the sale of a portion of the North Lansing Landfill property to the Groesbeck Drain Drainage District.
Action: Carried unanimously.
COMMUNICATIONS
Three letters were received from Joseph D. Davis, Business Manager of IBEW, Local 352, dated May 3, 2006, May 9, 2006 and May 22, 2006 all expressing concern regarding the BWL’s telephone monitoring system in the Call Center and requesting an investigation of the matter.
Commissioner Rios suggested that the issued raised by the union in the three letters be moved to “New Business” for discussion later in the agenda. There being no objection, the Chair deferred discussion under “New Business.”
A letter from Commissioner Tim Haggart, dated May 19, 2006 submitting his resignation from the BWL Board of Commissioners effective immediately.
Received with regret and placed on file.
COMMITTEE REPORTS
Resolution 2006-5-2
COMMITTEE OF THE WHOLE REPORT
The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 4:00 p.m., Tuesday, March 28, 2006.
Chair Pro Tem Joseph Graves, Jr. called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Gary Calkins, Robert Cochran, Joseph Graves, Jr., Tim Haggart, Semone James, Santiago Rios, and Robin Smith. Absent was Commissioner Ron Callen.
Public Comment
There were no public comments.
Opening Remarks
Chair Pro Tem Joseph Graves, Jr. opened the meeting with an apology to the Commissioners for appearing to exhibit some impatience by sometimes accelerating the agenda. He acknowledged that moving topics too quickly is not fair to the Commissioners. He emphasized that the Board is faced with major policy issues related to environmental concerns, electric retail deregulation, fuel procurement strategies, cost of coal transportation, the integrated resource plan on power supply, the steam supply portfolio, and the Eckert Plant. The Board must focus on its policy role and avoid micromanaging. He stressed the importance for Board and management cooperation on determining the future direction of the BWL. He explained that decisions made with respect to major issues would significantly influence the viability of the organization. He reiterated that his impatience is sometimes driven by that focus.
Position of Director of Communications and Renewal of the Lobbyist Contract
Commissioner Graves asked Commissioner Rios to provide some background as to why he requested to have the first two items placed on the Committee of the Whole agenda concerning filling the position of Director of Communications and the BWL’s lobbyist contract. Commissioner Rios explained that he was surprised to learn of the impending retirement of the Director of Communications at a recent joint meeting with City Council and management’s plans to seek a replacement. He said that if anything else, the Board should receive a formal advance notice of impending top management departures. He noted that he was taken aback to learn there is no formal process for the Board to have input on advising and helping with key management employment issues and suggested it is the Board’s obligation to see that the organization acts in the best interests of its stakeholders. Further, he said that the Board has a responsibility for fiscal and personnel policies of the BWL. He also expressed concern that the Board was not given an opportunity for input on the renewal of the BWL’s governmental affairs contract. Commissioner Rios remarked that with the recent General Motors plant closures, the BWL’s income will be significantly impacted. Due to budgetary constraints, the Board is now challenged to determine how assets and funds are directed in order to achieve the organization’s goals and strategies, particularly in an environment where this community is being forced to cut back. He suggested that before filling the Communications Director position, the Board should join with management to discuss the functionality of the marketing/communications area to decide whether it is spending too little or too much and, as an alternative, to explore the possibility of hiring an external public relations firm.
Discussion Regarding the Lobbyist: Pat Harrington and Adrian Cazal of the lobbying firm of Muchmore, Harrington, Smalley & Associates, Inc. (MHSA) were present to give an overview of activities and services the firm provides to the BWL. Mr. Harrington reported of ongoing day-to-day interactions with BWL staff on public policy matters at local, state and federal levels. They have coordinated numerous meetings and scheduled tours of BWL facilities with state legislators, members of congress, and among industry leaders--both on the local and state levels. These meetings have offered excellent opportunities for staff to form good alliances with various groups to exchange viewpoints on major issues related to energy, water, environmental, coal and rail transportation. In addition, weekly and quarterly legislative reports are provided to staff. It was pointed out that staff presentations made at Board meetings are based on analyses provided by the lobbyist and embedded in those presentations.
Following discussion, Chair Pro Tem Graves deferred discussion regarding the level of direct involvement the Board should maintain with the lobbyist in conjunction with BWL staff until the next Committee of the Whole meeting. The Commissioners favor receiving quarterly reports, but postponed a decision with respect to how and by whom the information is to be presented.
Discussion Regarding Filling the Position of Director of Communications: Commissioner Graves reminded the Commissioners that there was an implied contractual understanding at the time when General Manager Novick was hired relative to direct reports and managing the individuals that report directly to him.
Commissioner Smith echoed remarks made by Commissioner Rios regarding the renewal of the lobbyist contract and discussion concerning the direction of the BWL’s marketing/communications function. She stated that the issue is about “philosophy” in seeking Board approval for top management hires, not the selection and evaluation of those employees.
Commissioner Calkins stated that he does not believe the Board should get involved in hiring key management positions.
Commissioner Haggart stated he has always been of the opinion that the Board should not micromanage other than the Board’s three direct employees. He indicated, however, that Commissioner Rios has raised good points and he would like to reflect on those issues a bit more.
Commissioner James stated that Commissioner Rios has raised some valid points that should be taken into consideration. She expressed concern with moving forward with the status quo and suggested that it would be in the best public interest to give the issues raised due consideration.
Commissioner Cochran said that while there seems to be apparent desire to have discussions about how the Board should proceed in hiring key management positions in the future, this would be a major change in responsibility from the way it has been done in the past. To get involved in the selection process of one key employee at the eleventh hour would be like derailing a train in haste. He urged that more thought be given in terms of changing what the General Manager perceives was essentially an understanding at the time he was hired.
Following lengthy discussion, it was moved by Commissioner Calkins, seconded by Commissioner Cochran, that the Board not be involved in filling the position of Director of Communications. Further, that management continue to operate under the current policy and move forward in filling the position. If the Board desires to review actions for future positions, it should be discussed at the next meeting as soon as possible.
The motion failed by the following vote:
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Voting Aye: |
Calkins, Cochran, Graves |
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Voting Nay: |
Haggart, James, Rios, Smith |
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Absent |
Callen |
Commissioner Graves referred the issue of approval authority for filling top
management positions to the next Committee of the Whole meeting. Staff was
directed to bring forth the following information:
On motion by Commissioner Smith, seconded by Commissioner Haggart, the meeting adjourned at 5:20 p.m.
Respectfully submitted,
Joseph E. Graves, Jr., Chair Pro Tem
Committee of the Whole
Motion by Commissioner Graves, seconded by Commissioner Calkins, to receive the Committee of the Whole Report as presented.
Action: Carried unanimously.
Resolution 2006-5-3
A meeting of the Human Resources Committee of the Board of Water and Light was held at the Executive Offices, Lansing, at 4:30 p.m., Monday, April 24, 2006.
Committee Chair Santiago Rios called the meeting to order and asked the secretary to call the roll. The following members of the Human Resources Committee were present: Commissioners Santiago Rios, Bob Cochran, Joseph Graves, Jr., and Ron Callen (alternate). Absent was Commissioner Tim Haggart.
Public Comment
There was no public comment.
FY 2007 Non-Bargaining Skill Family Range Adjustments and Performance Increase Matrix
Wendy Bradley, Human Resource Consultant for Employee Relations provided the committee with a recap of the market analysis conducted to determine the appropriate skill family range adjustments for non-bargaining employees’ (NBE) positions for FY 2007. Ms. Bradley indicated that the BWL annually reviews its skill family ranges for non-bargaining employees in an effort to keep salaries in line with comparable positions in a competitive marketplace. Rates of pay for benchmark jobs in each of the eight skill families were examined in order to offer competitive salary ranges for FY 2007. Range adjustments for each skill family are made in accordance with annual labor market salary movements for that family. Salary survey data were compiled for benchmark jobs in each BWL skill family from a variety of local, regional, and national samples and from utilities similar to the BWL’s revenue class, customer service base and number of employees. Data was then compared to current skill family range mid-points. Percentage differences between the survey data and the range mid-points were averaged, and the average percentage difference for each skill family was used as the basis for recommendations for skill family range adjustments. Recommendations for skill family range adjustments are made with the intent of keeping each skill family within + 10% of the market from one year to the next, which is the industry standard for competitive pay. Ms. Bradley noted that there are no direct cost impacts due to skill family range adjustments. Costs are determined by the performance increase matrix.
Ms. Bradley presented an overview of the factors considered in establishing the recommended FY 2007 non-bargaining performance increase matrix. The performance level matrix included internal factors such as the BWL’s ability to pay and the budget forecast. External factors included the state of the economy (CPI), and projections from other utilities and businesses.
General Manager Novick reported that although market salary surveys could support an increase, it is recommended that non-bargaining salaries be held level for FY 2007 based on current BWL financial projections and in consultation with Human Resources and senior staff. Management plans to budget an overall 0% salary increase for the FY 2007 salary year. Also, individual variable pay amounts would not be awarded to employees.
A detailed competitive compensation report was included with the meeting packet that addresses other factors for consideration, and for general knowledge of compensation for public power utilities.
After discussion, the Human Resources Committee took the following action:
On motion by Commissioner Callen, seconded by Commissioner Graves, the Human Resources Committee unanimously recommended the Board approve the skill family range adjustments. This item will be placed on the regular meeting agenda under General Manager’s Recommendations for Board action on May 23rd.
On motion by Commissioner Graves, seconded by Commissioner Rios, the Finance Committee unanimously recommended referring management’s recommended FY 2007 non-bargaining performance increase matrix to the Finance Committee for review and deliberation during discussion of the BWL’s FY 2007 financial plan on May 11th. The Finance Committee’s recommendation will be submitted to the Board on May 23rd .
Senior Vice President of Finance and Administration Dennis McFarland reported on the quarterly performance for the Defined Benefit Plan, Defined Contribution Plan and VEBA Retiree Benefit Plan and Trust for the period through December 31, 2005. He reported that the Defined Benefit plan has $123 million in assets, which is down in excess of $5 million from the previous year due to the payment of one year’s worth of defined benefits to pension plan participants and the transfer of funds from the defined benefit plan to the VEBA fund. Mr. McFarland pointed out that anything over and above 125% of the funded ratio in the defined benefit fund is transferred to the VEBA fund. The asset allocation approved by the Pension Fund Trustees is in compliance with the 60-70% asset allocation policy. The complete report presented by Mr. McFarland detailed the asset allocation, rate of return and the defined benefit funding status.
The Defined Contribution Plan has assets in the total amount of $116.9 million as of December 31, 2005. Mr. McFarland reviewed the defined contribution plan assets by class and gave an overview of the historical performance of the various funds. He noted that performance has been good across all the fund managers with the exception of two that had a weak performance the last few quarters. The two fund managers have been put on notice for improved performance. The historical performance benchmarks as of December 31, 2005 indicate the defined contribution plan has met or beat the benchmarks from the fixed income and equity side.
The VEBA Retirement Plan and Trust has net assets of $35.6 million for the period through December 31, 2005, which is up 43% from the year earlier. The asset allocation, rate of return and post-retirement benefit funding status were discussed in detail. It was pointed out that the actuarial valuation dated February 28, 2005, indicates the unfunded actuarial accrued liability for post-retirement benefit funding is $177.5 million. General Manager Novick noted that the BWL started booking the unfunded liability in 2005.
The detailed reports for the Defined Benefit, Defined Contribution, and VEBA are on file in the Corporate Secretary’s Office. The quarterly reports were provided for informational purposes. They do not require any committee action.
Associate Attorney Brandie Ekren presented an overview of updates made to the BWL Cafeteria Plan to bring it in line with changes in law and benefits offered in the Plan. The Plan document has been restated to include the benefit changes and changes in applicable laws such as HIPAA, COBRA and the IRS Code) that occurred since August 1, 1987. The document was also amended to include a grace period for the Medical Reimbursement Account as permitted by the IRS Notice 2005-42; whereby the Medical Reimbursement Plan would reimburse participants for expenses incurred during the two-and-half month period after the end of the Plan year. She noted that prior to IRS Notice 2005-42, unused monies were automatically forfeited if the participant did not incur enough claims prior to August 31st. The BWL plan year ends on August 31. As permitted by IRS Notice 2005-42, participants may incur expenses until November 15 and receive reimbursement with funds contributed during the plan year that ended on August 31.
Following discussion, the Human Resources Committee took the following action:
On motion by Commissioner Cochran, seconded by Commissioner Callen, the Human Resources Committee unanimously recommended the Board approve the proposed Cafeteria Plan restatement and grace period. This item will be placed on the Board meeting agenda under General Manager’s Recommendations on May 23rd.
Filling the Corporate Secretary Position.
Human Resources Director Mary Dwyer gave an overview of the process in place to fill the pending vacancy of the Corporate Secretary position with the retirement of Mary Sova in July 2006. The committee reviewed the job description and job notice. It was agreed to have the Human Resources Department post the position internally and externally simultaneously at the local and regional levels with qualified internal candidates given preference for the position. The committee directed Ms. Dwyer to move forward with the job posting with a status report given to the Board at the regular meeting on May 23rd. The committee agreed to have the General Counsel draft a Business Consultant Agreement should the need arise for the Board and employees of the BWL to consult with Ms. Sova concerning matters relating to the Corporate Secretary’s Office during the transition period. Ms. Sova has agreed to participate with a BWL assessment team in the selection process.
There being no further business, the Human Resources Committee adjourned at 6:25 p.m.
Respectfully submitted,
Santiago Rios, Chair
Human Resources Committee
Motion by Commissioner Rios, seconded by Commissioner Callen, to receive the Human Resources Committee report as presented.
Action: Carried unanimously.
EXECUTIVE COMMITTEE REPORT
The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 4:30 p.m., Tuesday, May 9, 2006.
Chair Robin Smith called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Gary Calkins, Joseph Graves, Jr., Santiago Rios, and. Robin Smith.
Public Comment
No persons spoke.
Executive Session
Moved by Commissioner Graves, seconded by Commissioner Calkins, to go into executive session to meet with General Counsel Amy Cavanaugh to discuss an attorney-client privileged communication pursuant to MCL 15.268(h). The motion was approved by the following vote:
Yeas: Commissioners Calkins, Graves, Rios, and Smith.
Nays: None
Absent: None
Carried unanimously.
At approximately 4:55 p.m., Chair Smith reconvened the Executive Committee meeting and announced that no action was taken in closed session.
Addition to the Agenda
On motion by Commissioner Rios, seconded by Commissioner Graves, on accepting an addition to the agenda to discuss a communication received from IBEW Business Manager Joseph Davis, dated May 9, 2006, regarding BWL telephone monitoring. Carried unanimously.
The committee discussed at length the issues raised in Mr. Davis’ letter, in which the union inquired about the status of the Board’s investigation of the BWL’s telephone monitoring procedure.
Commissioners Smith and Rios expressed concern that at times people with legitimate concerns have such little confidence in the process which helps resolve problems that they turn to the Board or the press to air their concerns and issues. The issue of trust is something that management and the union need to work on. Commissioner Graves stated that trust is a two-way avenue.
General Manager Sandy Novick stated that every complaint is taken seriously and appropriate action is taken. With regard to the allegations of illegal wiretapping at the BWL, Mr. Novick stated that he met with a special agent of the Federal Bureau of Investigation to discuss the allegations. The FBI agent informed BWL management that he had investigated the allegations and discovered no evidence of illegal activity.
The committee discussed how employee-related complaints should be brought forward for investigation. Commissioners Calkins and Graves stated that if an investigation of the allegations is the goal of the union, there are internal avenues to lodge complaints through the bargaining contract between the BWL and the union.
Human Resources Director Mary Dwyer stated that every effort is made to give employees a safe mechanism to pursue grievances. If an employee has documented evidence that something is being done inappropriately, they can first go through the grievance procedure, which ultimately ends up with an independent arbitrator or special conference.
Following discussion, General Manager Novick said he would meet with Mr. Davis to specifically discuss the union’s concerns. Mr. Davis will be asked to provide additional information and/or documented evidence that a violation of the law had been committed.
Commissioner Calkins suggested a periodic report to the Board on labor relations activities would be helpful to provide the Commissioners with a better perspective of labor issues. General Manager Novick agreed to make such a report available.
Status of Search Firm to Recruit the Position of Director of Internal Auditor
The committee received a status report on responses received from the RFP for Executive Search Services for recruitment of a Director of Internal Audit. It was reported that three sealed proposals were received. By consensus, the committee requested to interview the three vendors for subsequent recommendation to the full Board.
The committee agreed to proceed with the following process:
The sealed bids will be forwarded to the Human Resources Department for review and evaluation with staff from Material and Services Resource Center to assure the proposals meet the specifications.
Chair Smith will submit initial interview questions to the Human Resources Department for review and supplement with additional questions.
A list of proposed interview questions will then be forwarded to the full Board for review and comment.
The consultant personally conducting the search will be invited to make a presentation to the full Board on their search approach in delivering top candidates.
A question and answer period will follow
The Board will deliberate and select the top firm.
There being no further business, the Executive Committee adjourned at 5:45 p.m.
Respectfully submitted,
Robin Smith, Chair
Executive Committee
Motion by Commissioner Smith, seconded by Commissioner Rios, to receive the Executive Committee Report as presented.
Action: Carried unanimously.
The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 5:30 p.m., Thursday, May 11, 2006.
Finance Chair Ron Callen called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Ron Callen, Gary Calkins, Semone James, and Joseph Graves, Jr. Commissioner Bob Cochran was also present.
Public Comment
No persons spoke.
FY 2007 Financial Plan
General Manager Sandy Novick reported that the proposed FY 2007 O&M budget is being referred to as the financial plan` for the fiscal year beginning July 1, 2007. This is a step toward a structural change to address financial challenges and revenue deficiencies. Mr. Novick stated that staff will outline the financial projections for FY 2007 and options for the committee’s consideration to address future revenue deficiencies and the impact on customers if the shortcomings are addressed exclusively through rate increases.
Senior Vice President of Finance and Administration Dennis McFarland stated that as various approaches are discussed to address projected losses, the committee will be asked to consider a variety of options that could be available for keeping the BWL financially solvent. Mr. McFarland presented an overview of the BWL’s financial goals:
financial goals:
Commissioner James entered the meeting at 5:50 p.m.
The sales forecast for fy 2007 was compared with fy 2006:
|
|
|
|
% ’07 Budget to ’06 Budget |
|
Electric – Retail |
2,227,675 |
2,345,000
3,345,000 |
-5.0% |
Electric:
Water:
Steam:
Chilled Water:
Revenue Assumptions
- Electric: 1.5%
- Steam: 35%
- Margins will be affected by higher fuel costs & MISO fees
- Budgeted wholesale margin $5 million in FY 2006 and $12 million in FY 2007
Operating Expenses
- The financial equivalent of 25% for active employees and 5% for retirees
- Market prices thereafter
Capital Expenditures
Senior Vice President of Operations Bill Cook presented the FY 2007 Capital Budget. The FY 2007 capital budget includes the following assumptions:
The recommended FY 2007 capital budget in the amount of $35,476,000 was itemized by the four utilities including common facilities. The six-year capital forecast for FY 2007 – FY 2012 was also presented.
FY 2007 Operating and Capital Budgets
Following lengthy deliberation, the Finance Committee recommended a revision to management’s proposed FY 2007 financial plan to include the financial equivalent of health care premium sharing as follows:
The Finance Committee took the following action:
On motion by Commissioner Calkins, seconded by Commissioner Graves, the Finance Committee unanimously recommended the Board approve the proposed annual operating and maintenance budget and the capital budget covering FY 2007 as revised. Further, the Corporate Secretary is to file the budgets with the City Clerk and the Mayor’s Office in accordance with the Lansing City Charter. A formal resolution regarding these items will be placed on the Board meeting agenda for May 23rd under the General Manager’s Recommendations.
Rate Adjustments for Electric and Steam Utilities
Following extensive discussion regarding rate strategies to overcome projected revenue deficiencies in the Electric and Steam Utilities, the Finance Committee concluded that rate adjustments are necessary in view of reduced loads and to recover costs from inflationary increases in operating expenses. The rate case recommendation for electric is 1.5%. The implementation of any rate adjustment for electric should be across-the-board effective September 1, 2006. The rate case recommendation for steam is a 60% revenue increase allocated across rate schedules and customer classes to accommodate the increase effective September 1, 2006.
On motion by Commissioner James, seconded by Commissioner Graves, the Finance Committee unanimously recommended a rate hearing process to adjust electric and steam rates effective September 1, 2006. A formal resolution relative to setting the public hearings will be placed on the Board meeting agenda for May 23rd under the General Manager’s recommendations.
Commissioner Cochran left the room at 9:10 p.m.
Review FAS 71 Issues
Senior Vice President of Finance and Administration Dennis McFarland reported that generally accepted accounting principles require the BWL to record a liability for the estimated future costs of remediation and monitoring of environmental sites. These principles also require the BWL to charge current expenses with the estimated amount of the future cost of remediation. As a regulated utility and by using FAS 71, the BWL’s rate-making authority has the ability to defer the recognition of these expenses until they are incurred and future revenues are approved to recover these costs. Mr. McFarland stated that management recommends the approval of FAS 71 treatment for the environmental remediation costs associated with the Comfort Street site. Each future year, BWL will review the estimate and record appropriate adjustments. The Statement of Financial Accounting Standards (SFAS) #71 allows for the BWL to record the estimated liability and a “deferred expense.” This deferral permits the BWL to charge operating expense as actual costs are paid.
On motion by Commissioner Calkins, seconded by Commissioner Graves, the Finance Committee unanimously recommended the Board approve the SFAS #71 establishing regulatory assets for Comfort Street remediation. This item will be placed on the Board meeting agenda under General Manager’s Recommendations on May 23rd.
Amendments to Rules and Regulations
System Integrity & Customer Projects Manager Kellee Christensen reported that each year, staff reviews the Rules and Regulations, including fees and charges, and makes a recommendation to the Board of any proposed changes. Amendments to the Rules and Regulations for Electric, Water, Steam and Chilled Water utility services include the following:
Electric:
Revision of Rule 7.1 Responsibility for Payment of Bills, General, to add statement regarding not discontinuing service to residential, single unit services during the heating season and the use of “Service Limiters” during heating season.
Water, Steam and Chilled Water:
On motion by Commissioner Calkins, seconded by Commissioner Graves, the Finance Committee unanimously recommended the Board approve the proposed amendments to the Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services. FY 2007 Operating and Capital Budgets as attached. Further that the forecast for capital expenditures for the FY 2007-2012 be accepted as presented. This item will be placed on the Board meeting agenda under General Manager’s Recommendations on May 23rd.
There being no further business, the Finance Committee adjourned at 9:20 p.m.
Respectfully submitted,
Ron C. Callen, Chair
Finance Committee
Motion by Commissioner Callen, seconded by Commissioner Graves, to receive the Finance Committee Report as presented.
Action: Carried unanimously.
GENERAL MANAGER’S RECOMMENDATONS
FAILED - REFERRED TO A SPECIAL MEETING SCHEDULED FOR MAY 30, 2006
|
A. |
FY 2007 Operating and Capital Budgets |
RESOLVED, that the annual Operating and Maintenance Budget covering Fiscal Year
2007 is hereby approved as presented;
RESOLVED, that the Capital Budget for Fiscal Year 2007 is hereby approved as presented;
RESOLVED, that the forecast for capital expenditures for the Fiscal Years 2007-2012 is hereby accepted as presented; and,
RESOLVED FURTHER, that the Corporate Secretary be directed to make the appropriate filings with the City of Lansing City Clerk’s office and the Mayor’s office in accordance with the Lansing City Charter regarding the above actions.
Staff Comments: General Manager Novick reported that staff recommends an operating and maintenance budget of $202.2 million and a capital program of $35.5 million for Fiscal Year 2007 to maintain ongoing services to customers and maintain and enhance facilities for continued future use. Capital expenditures for the Fiscal Years 2007-2012 are estimated to be $290 million.
Discussion: Commissioner Rios stated that he had planned to attend the May 11th Finance Committee meeting and apologized that he was unable to do so due to unexpected work commitments. He stated that after spending a great deal of time reviewing budget details, it prompted him to ask for additional information regarding the “Other” budget category. He compared a second set of “Other” details to the first detailed expense report requested earlier and was surprised to see significant discrepancies. He noted that although details, such as travel, are probably itemized somewhere in the budget and dollars are allocated for “Other” expenses, no one can tell him how much is spent for local vs. national travel for each of the responsibility areas. Commissioner Rios stated that he opposes the proposed recommendation to raise premium sharing for employees and asking retirees to share a portion of their health care premiums because he believes the cost will have a minimal impact on the budget. He noted that he continues to have concerns over the equivalent of a $1 million mistake that management reported to the Board at the March 28th meeting due to inadequate controls. He stated that at a time when the BWL is facing dire financial straits, management should consider cutting expenses. Among those suggested are:
Commissioner Rios further stated that management should have discussions with retirees before coming to the Board for a determination on premium sharing. For the reasons cited above, he stated there is not enough information from which to make an informed decision on the FY 2007 Budget. As an alternative to raising premium sharing at this time for employees and retirees and increasing electric rates, Commissioner Rios proposed that management be requested to return with a revised proposed budget that reduces the “Other” budget category by at least 10%.
Senior Vice President of Finance and Administration Dennis McFarland acknowledged that Commissioner Rios did request, subsequent to the Finance Committee meeting, further detail on the “Other” budget category by E-mail. Consequently, he did not have the opportunity to speak with Commissioner Rios directly. Mr. McFarland said that it was his understanding that Commissioner Rios wanted to understand the types of activities that were in the “Other” category and types of expenses and how they are spread by department. He noted that not having the advantage of a direct conversation with Commissioner Rios, staff provided Commissioner Rios a detail that accounted for 82% of what was in the “Other” category by business issue. A reconciliation by department by cost element was not provided to the total in the budget that staff sent to him. A full page summary was sent to Commissioner Rios, which provided for 82% to account for 100%. To actually reconcile those numbers, it would involve a 50-page report. Mr. McFarland stated that any kind of across-the-board cut in the “Other” category would effectively expose the BWL to greater operational risk in the near term. The bulk of the budget is to purchase power and fuel and the other bulk is for labor and benefits. A small fraction in the range of 20% to 25% of controllable expenses falls into this category. Mr. McFarland noted that it is not a catch all. Those are essential elements that are required to provide reliability and service.
General Manager Novick stated that Commissioner Rios has suggested some good ideas, and that staff considered many of those suggestions initially before bringing the budget to the Finance Committee. Mr. Novick said that if the BWL were in a scenario where it needed to get by for only one year, Commissioner Rios’ approach would work well. However, after thorough analysis, it was not determined that management’s proposed structural and comprehensive approach was better for the stability of the BWL for the longer term.
Commissioner Graves stated it was unfortunate that Commissioner Rios did not take the opportunity to avail himself to the offer that was made by Mr. McFarland after the Finance Committee meeting to review the budget in detail. He said the Finance Committee literally spent considerable amount of time going through various scenarios looking at what management’s recommendations were and the available options. Individual Commissioners had concerns with the rate increases and discussed options to “share the pain.” He reminded that the following BWL financial goals drove the committee’s discussions:
Commissioner Graves further stated that as the Commissioners proceeded in thoroughly debating the options available and evaluating management’s recommendation, the committee had the benefit of having staff in the room with a computer model that could take suggested changes to a percent, based on each utility, and then tell the committee in real time what the impact of “x” would be. Commissioner Graves said he also is particularly concerned about the impact on retirees. He added that following due diligence review, he was satisfied that the direction the committee was taking, related to retirees, was the right thing to do. After a difficult and challenging meeting, the Finance Committee settled on a proposal that was considered reasonable and would minimize the impact on ratepayers, employees and retirees as best as possible, considering the BWL’s long-term financial dilemma.
Commissioner Rios noted that his issue is not that he does not understand the budget. He understands it very well. The point is that he disagrees with it. He has made it clear at past meetings that he was dissatisfied with the budget process. He disagreed that the Board has performed its due diligence because if the BWL is in dire financial straits, no one has yet told him how much is spent on travel.
Chair Smith stated that it is imperative for Commissioners to perform their due diligence when they do not feel comfortable with things, whether or not the Commissioner was present at the meeting. Staff should make very effort provide information requested by Commissioners.
Commissioner Calkins stated that it is the Board’s responsibility to establish a budget. Management provided a proposed financial plan to move toward a structural change to address the financial challenges and revenue deficiencies. This target will be helpful when working with both the bargaining and non-bargaining employees. He noted that Commissioner Rios’ cost cutting suggestions are not necessarily out of line and should be explored when considering budget objectives. He said that it is his hope through creative options that a budget can be established on a timely basis.
General Manager Novick stated that Commissioner Rios’ ideas might need to be considered if targets that are embedded in the proposed budget cannot be met. He indicated that there are multiple ways to attempt to reach the targets. If they cannot be met, ultimately staff will have to deal with a short-term approach, or the end result may be a combination of a short and long- term blend.
Commissioner Callen stated that he is not in complete agreement with several items suggested by Commissioner Rios. He pointed out that a budget is needed before staff can actually establish a coal contract. There are uncertainties in the budget and a very large uncertainty in the estimate of wholesale sales, particularly, how much the coal will cost. With respect to travel, Commissioner Callen stated that he takes confidence in management making sure that travel is actually justified. He noted that he is not in favor of across-the-board cuts because they not only slice into the “blood vessels and the muscles,” of BWL operations, but also health care. Finally, filling the two positions in Communications and Customer Service should be the prerogative of management. He would not want to bind management into not filling those positions when in fact it might be exactly what is needed to bring certain problems under control.
Commissioner James stated that she is concerned with what she is observing at this meeting. She said that the “Other” budget category, which totals $25 million, is quite significant, as suggested by Commissioner Rios. She challenged management to go back and sharpen their pencils to see where cuts might be feasible. She suggested deferring any kind of increases in premium sharing for retirees and employees at this time, particularly when a 0% salary increase is being proposed. If it means calling a Special Meeting to review additional cuts, she would make herself available.
Commissioner Cochran stated that the electric portion of his BWL bill runs about $60 per month. A rate increase of 1.5% to his bill would be 90 cents while the health care premium sharing impact on employees and retirees would be much higher than the 90 cents. Commissioner Cochran said he is concerned when he tells employees that a 0% salary increase is proposed and their health care premium could increase from 5% to 10% for employees and 5% for retirees.
Following lengthy discussion, the question was called on the approval of the proposed Fiscal Year 2007 Operating and Capital Budget.
Motion by Commissioner Smith, seconded by Commissioner Rios on the approval of the proposed Fiscal Year 2007 Operating and Capital Budget. The Chair called for a roll call vote.
Action: The motion failed by the following vote:
|
Voting Aye: |
Calkins, Callen, Graves = 3 |
|
Voting Nay: |
Cochran, James, Rios, Smith = 4 |
|
Absent |
None (Note: 2nd Ward vacancy exists) |
Chair Smith announced that a Special Meeting of the Board would be called to
consider changes to a Revised Proposed Budget for FY07 for filing with the City
of Lansing by June 1st.
REFERRED TO A SPECIAL MEETING SCHEDULED FOR MAY 30, 2006
|
B. |
Setting of Public Hearing for Electric Rate Increase |
WHEREAS, over the past several months Board of Water and Light management has
been discussing rate strategies with the Commissioners to overcome projected
revenue deficiencies in the Electric Utility.
WHEREAS, staff has recommended a rate hearing process to adjust electric rates effective September 1, 2006. The rate adjustment is necessary in view of reduced loads and to recover costs from inflationary increases in operating expenses. The amount of the rate increase recommended is 1.5%. The implementation of any rate adjustment will be across-the-board effective September 1, 2006.
RESOLVED, that the request for the proposed electric rate increase be made the subject of a public hearing prior to further consideration by the Board of Commissioners.
RESOLVED FURTHER, that the Board of Commissioners set a date for a public hearing no later than August 1, 2006 to solicit public input on the proposed electric rate adjustment. The hearing will be held at the Board of Water and Light offices, 1232 Haco Drive, Lansing. The corporate Secretary is directed to file with the city Clerk at least 45 days prior to the public hearing, information regarding the proposed electric rate increase with an effective date of September 1, 2006.
Staff Comments: Based on the Operating and Maintenance Budgets of $202.2 million and Capital program of $35.5 million, management believes that a revenue requirement adjustment for the electric and steam systems is warranted and needed.
No Action: This item was referred to a Special Meeting scheduled for May 30, 2006.
REFERRED TO A SPECIAL MEETING SCHEDULED FOR MAY 30, 2006
|
C. |
Setting of Public Hearing for Steam Rate Increase |
WHEREAS, over the past several months Board of Water and Light management has
been discussing rate strategies with the Commissioners to overcome projected
revenue deficiencies in the Steam Utility.
WHEREAS, staff has recommended a rate hearing process to adjust steam rates effective September 1, 2006. The rate adjustment is necessary in view of reduced loads due to GM plant closings and to recover costs from inflationary increases in operating expenses. The rate case recommendation for steam is a 60 percent increase allocated across rate schedules and customer classes effective September 1, 2006.
RESOLVED, that the request for proposed steam rate increase be made the subject of a public hearing prior to further consideration by the Board of Commissioners.
RESOLVED FURTHER, that the Board of Commissioners set a date for a public hearing no later than August 1, 2006 to solicit public input on the proposed steam rate adjustment. The hearing will be held at the Board of Water and Light offices, 1232 Haco Drive, Lansing. The Corporate Secretary is directed to file with the city clerk at least 45 days prior to the public hearing, information regarding the proposed steam rate increase with an effective date of September 1, 2006.
Staff Comments: Based on the Operating and Maintenance Budgets of $202.2 million and Capital program of $35.5 million, management believes that a revenue requirement adjustment for the electric and steam systems is warranted and needed.
No Action: This item was referred to a Special Meeting scheduled for May 30, 2006.
Resolution 2006-5-6__
|
D. |
Statement of Financial Accounting Standards (SFAS) #71 Establishing Regulatory Assets for Comfort Street Remediation |
RESOLVED, that the Board of Commissioners, as the regulatory body of the Board
of Water and Light (BWL), approve that the estimated liability related to the
BWL’s environmental remediation of the Comfort Street site be recorded and a
corresponding Statement of Financial Accounting Standards (SFAS) No. 71
regulatory asset be recognized.
Staff Comments: Generally accepted accounting principles (GAAP) require the BWL to record a liability for the estimated future costs of remediation and monitoring of environmental sites that no longer have a useful life. GAAP would also require the BWL to charge current expenses with the estimated amount of the future cost of remediation. As a regulated utility and by using FAS71, the BWL’s rate making authority has the ability to defer the recognition of these expenses until they are incurred and future revenues are approved to recover these costs. It is management’s recommendation that the Board approve FAS71 treatment for the environmental remediation costs associated with this site. Each future year BWL will review the estimate and record appropriate adjustments. SFAS #71 allows for the BWL to record the estimated liability and a “deferred expense.” This deferral permits the BWL to charge operating expense as actual costs are paid.
The Comfort Street site is a 60-acre tract of land in the vicinity of Comfort and Sunset Streets in Lansing owned by the BWL. A portion of the site was used by the BWL for fly ash and boiler slag disposal from the late 1950s through the 1970s. The property has not been used since 1978. Recently, soils and groundwater in the vicinity of the Comfort Street site were determined to contain elevated levels of boron. The elevated boron levels are most likely due to the buried coal ash and slag. An engineering feasibility study was recently been completed to evaluate options for addressing the boron impacts in groundwater. The cost for implementation and long-term operation of the strategy is estimated at $8,400,000.
Motion by Commissioner Callen, seconded by Commissioner Graves, to adopt Resolution 2006-5-6 regarding SFAS #71.
Action: Carried unanimously.
Resolution 2006-5-7
|
E. |
Amend Rules and Regulations for Electric, Water, Steam, and Chilled Water Utility Services |
RESOLVED, that the amendments to the Rules and Regulations for Electric, Water,
Steam and Chilled Water Utility Services be approved as presented, effective
July 1, 2006
Motion by Commissioner Calkins, seconded by Commissioner Callen, to adopt Resolution 2006-5-7 regarding the amended Rules and Regulations for Electric, Water, Steam and Chilled Water.
Action: Carried unanimously.
Resolution 2006-5-8
|
F. |
FY ’07 Skill Family Salary Range Adjustments - Non-Bargaining Unit Employees |
The Board of Commissioners is responsible for setting salary ranges for the
Board of Water and Light non-bargaining unit employees.
The Human Resources Director, with the concurrence of the General Manager, has recommended to the Human Resources Committee that the Board of Commissioners approve an adjustment to the skill family salary ranges.
The Board of Commissioners has been advised as to the necessity of such an adjustment, and has had an opportunity to discuss its merits.
RESOLVED, that the Board of Commissioners shall adopt the adjustment to the non-bargaining unit skill family salary ranges.
FURTHER RESOLVED, that the General Manager is authorized to develop all procedures necessary for its implementation.
Staff Comments: Annually, the BWL reviews its skill family ranges for non-bargaining employees in an effort to keep salary ranges in line with comparable positions in the labor marketplace. There are eight skill families in use by the BWL, and range adjustments for each skill family are made in accordance with annual labor market salary surveys.
Motion by Commissioner Rios, seconded by Commissioner Calkins, to adopt Resolution 2006-5-8 regarding FY07 Skill Family Salary Range adjustments for Non-Bargaining Employees..
Action: Carried unanimously.