Approved by the Board: September 25, 2007
_________________________
Tuesday, July 24,
2007
_________________________
The Board of Commissioners met in the Boardroom of the
Administrative Offices,
Present: Commissioners Gary Calkins, Robert
Cochran, Semone James,
Absent: Commissioner Joseph Graves
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 Cochran, seconded by Commissioner Rodocker the minutes of the May 22, 2007 regular meeting were unanimously approved.
By motion of Commissioner Cochran, seconded by Commissioner James the minutes of the June 5, 2007 Special Board meeting were unanimously approved.
By motion of Commissioner Calkins, seconded by Commissioner Cochran the minutes of the June 15, 2007 Special Board meeting were unanimously approved.
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT AND ANYONE WISHING TO COMMENT ON ANY MATTER NOT ON THE AGENDA MAY DO SO IMMEDIATELY PRIOR TO ADJOURNMENT.
Jim Sturdevant with Land Use Specialists, Inc. is the
project planner for the Trans Development Group who is developing a piece of
property in
Commissioner Smith thanked Mr. Sturdevant for appearing before the Board and advised that she would refer the matter to the General Manager and staff for due diligence. At this time, the Board is not in a position to make a motion or ruling as it relates to the project because they do not have the information. Commissioner Smith thanked Mr. Studevant for providing information relative to the timetable for a fall project and acknowledged that the Board does have the ability to hold a Special Board meeting to make any rulings that might need to occur as it relates to this project or any other matter that comes before the Board.
Mr. Studevant clarified that he has submitted a set of engineering drawings and a cover letter for said project to Brandie Ekren Associate Attorney, Rhonda Jones Corporate Secretary and Mark Witalec Surveyor.
Commissioner Rios asked staff to respond quickly to the request and noted that he wants to ensure that the BWL has enough information to act. He advised Mr. Sturdevant that it would be up to him to ensure that the BWL has everything it needs, and went onto strongly suggest that Mr. Sturdevant communicate with whomever at the BWL is going to oversee the project.
None.
June 11, 2007
The Finance Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 11:30 a.m. on Monday, June 11, 2007.
Finance Committee Chair, Semone James called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Gary Calkins, Semone James, Robin Smith and Sandra Zerkle. Commissioner Robert Cochran was also present.
Absent: None.
There were no public comments.
Susan Pifer, Director of Internal Audit presented the Internal Audit Report that gave an update for activities pertaining to coal inventory control, capital assets, internal controls –SAP, cash management and other audit business. Ms. Pifer noted the following items:
·
The coal program is complete. Fieldwork has been scheduled with Bob
VanElls, Interim Director of Production and the audit will be done in
conjunction with year-end evaluation procedures. The Internal Audit Department (IAD) will also
participate in the fly over, four bore samples, and calculations for the
valuation of coal inventory as of June 30, 2007.
·
Charles Moore, Interim Internal Auditor will
work on the peer impaired asset review in conjunction with the year-end
valuation for Stores inventory. The
fieldwork will be conducted on the morning of June 13, 2007. At which time, tests will be conducted to
determine how Stores accounts for warehouse inventory. They have received a preliminary schedule of
adjustments from Plante & Moran for $440,000. However, they expect a smaller number than
what has been presented thus far.
·
Plante & Moran are bringing in new auditors
to assist with the fiscal year 2007 audit, as there are 9-months worth of
transactions in the legacy system and 3-months in SAP. The new auditor staff will partake in a plant
tour on June 13, 2007 hosted by
· A presentation to City Council’s Ways and Means Committee will take place June 19th for the fiscal year 2006 audit. The activity is perfunctory but was previously postponed because the Board of Water and Light (BWL) did not have an Internal Auditor.
· The Associate Internal Auditor position was posted in the Lansing State Journal on June 10th. An office space is reserved across from Customer Service and their preliminary assignment will involve the cash areas.
· IAD anticipates utilizing Mr. Moore’s services through September 2007 to address warehouse issues, as there is a new manager in the area and there was an adjustment made last year by the external auditors. This topic has been discussed with Mr. Moore and no further plans have been made for his services at this time.
· A draft copy of the request for proposal (RFP) for an internal control assessment for the Board’s SAP Enterprise Risk Planning (ERP) Financials implementation was included in the Finance Committee packet materials. It is believed that the BWL can consolidate the Defined Benefit (DB) and VEBA plan solicitations through a single RFP. The Finance Committee’s approval will allow the BWL to launch an open ended RFP for advisory services whose responses maybe educational in nature.
On motion by Commissioner Smith, seconded by Commissioner Zerkle, the Finance Committee agreed to the proposed committee action allowing the Internal Auditor to move forward with its solicitation and evaluation of proposals for the Internal Control Assessment for the Board’s SAP Enterprise Risk Planning (ERP) Financial implementation.
Discussion: IAD confirmed that the RFP is inline with American Public Power Association (APPA) recommendations recently received at an APPA conference.
Commissioner James advised the committee members that the materials were brought before the committee because Ms. Pifer was asked to bring forth a plan to the Board of Commissioners for review and discussion.
Action: Carried unanimously.
A draft copy of the RFP entitled, Pension and Benefit Plan
Advisor was included in the Finance Committee packet materials, along with a
copy of the sub-committee’s plan of action.
Ms. Pifer reviewed the plan of action compiled by the sub-committee,
which consists of Sue Flores, Charles Moore and Susan Pifer. It is feasible to combine the Defined Benefit
Contribution and VEBA 457 Plans and, as such the sub-committee
prepared a RFP to that effect. The RFP
findings will be reported to the Finance Committee on July 10th. Listed below is the sub-committee’s proposed
plan of action.
a. Act on one or more proposals, or
b. Extend the expiring purchase order for current advisory services related to the DB plan, pending further review of the investment solutions offered in the proposals.
On motion by Commissioner Calkins, seconded by Commissioner Smith, the Finance Committee agreed with the proposed committee action allowing the sub-committee to move forward with the solicitation of a request for proposal (RFP) for banking and investment services, and report said findings to the Finance Committee.
Discussion: Commissioner Smith asked Susan Pifer if there is a cost savings?
Ms. Pifer replied yes, as they are combining their dollars. She also noted that they do not have a monetary savings figure at this time.
Action: Carried unanimously.
Denise Mulder, Director of Human Resources advised that Mr.
Oxender met with union leadership to review the survey results. The results were contradictory to what was
originally indicated and in essence revealed that employees are generally happy
with the plan and are in need of additional education. Mr. Oxender is beginning to move in that
direction and will have the vendors visit additional BWL locations aside from
Charles Moore suggested that a copy of the survey be included with the Investment and Banking Services RFP for informational purposes only.
Commissioner Smith expressed concern that in light of the survey results, persons maybe happy with what they have because they do not know what else is available, which maybe a reason why there is some negative feedback. An employee may think that they are receiving a limited amount of information and would prefer more in order to have a better grasp of the subject.
Ms. Mulder noted that that it is part of the additional education that employees need. Compared to the private sector the pension plans are exceedingly robust and possess a broad base of offerings with high contribution levels. A part of the education piece is educating employees on what they have and what they can do with it.
After further discussion, the Commissioners advised that
there maybe complacency at the BWL in that it has had a certain plan for so
long that there is no longer the drive to seek better opportunities. It was also noted that union leadership was
surprised by the results and had perhaps misread the employees. The results are clear in that the BWL does
not have a problem. However, improvement
can be reached through additional education. Employee concerns may also arise
due to the transitional phase of going from a defined benefit to a defined
contribution program. The committee
commended staff on the survey and asked that
Mr. Moore advised that they could meet with the union leadership as a part of the education piece when they send out the RFP for the Investment and Banking Services.
Bill Cook, Senior Vice President of Operations noted that he and Mr. Peffley could speak with Ms. Mulder to determine how best to communicate the pension survey results to all employees. He also advised that they could respond to the union’s initial pension plan letter relative to the survey results and ask that any remaining issues be brought forward.
Staff also clarified that they cannot track the difference between bargaining and non-bargaining responses while continuing to maintain confidentiality.
Commissioner Smith asked 1) if lowering the pension age was something they could look into and 2) is additional planning that specifically directs employee’s investments going to be a challenge?
Sue Flores presented an overview of the fixed income investment manager search for asset allocation rebalancing, which included a review of the LCG Associates - Investment Manager Selection Report, Fixed Income Manager Search. As such, the following information regarding asset allocation rebalancing was presented to the committee for review.
· With the approval of the LBWL investment policy in November, 2004, the LBWL began the process of moving away from holding individual securities in its Defined Benefit Pension fund and began utilizing investment managers or managed funds to meet its approved target asset allocation
· Since that time, six investment managers/manager funds have been recommended by staff in conjunction with our Investment Advisor LCG Associates, and approved by the Human Resources Committee
· The six previously selected managers are in the following categories of assets: Large Cap Growth, Large Cap Value, Small Cap Growth, Small Cap Value and International
· During the Defined Benefit Fund quarterly performance review held February 7, 2007 with Investment Advisor, LCG Associates, review of the portfolio revealed that rebalancing and other adjustments were needed including:
§ Fixed income holdings needed to be increased from 25.1% to the 30-40% target range
§ International holdings were slightly over target allocation at 20.3% compared to the 10-20%
§ The remaining large cap core individual equity holdings should be liquated due to underperformance to generate the cash for the needed fixed income statement
· LCG Associates proceeded with a search in accordance with policy guidelines for a Fixed Income Manager to supplement the current fixed income holdings and staff proceeded with the other fund adjustments with a goal of having the rebalancing complete by June 30, 2006
· The five candidates presented by LCG for consideration were reviewed by an internal group consisting of employees of Internal Audit, Finance, Human Resources and Operations on May 15, 2007
· The consensus of the group was Western Asset Core Plus due to its history of returns, strong performance against benchmarks and size
Following the presentation, the Finance Committee took the following action.
On motion by Commissioner Calkins, seconded by Commissioner Cochran, the Finance Committee agreed with the proposed committee action in which to recommend that Western Asset Core Plus be retained to manage a portion of the Defined Benefit Pension Fund in accordance with the Fund’s investment policy.
Discussion: Commissioner Cochran noted the current asset allocation rebalancing policy is in place for a reason and, as such he would like to see it left alone and in place.
Commissioner James asked Charles Moore if the Board should ask staff to conduct a feasibility study?
Mr. Moore responded that the BWL would probably receive one anyway and that it would be based on data and background information. He noted that although he was not a part of the asset allocation rebalance, he supports its position, and believes that the Board should wait until they receive the RFP recommendations before providing additional direction.
Action: Carried unanimously.
Copies of the LCG Associates - Investment Manager Selection Report, Fixed Income Manager Search dated April 2007 is on file in the Office of the Corporate Secretary.
Board Compensation
Q: Is compensation for the Board of Water and Light members legally permissible?
A: Yes. Unlike other boards, the Board of Water and Light, Board of Commissioners is an administrative board (as opposed to an advisory board). As such, there is no specific language in the Lansing City Charter, which is the operative legal document that prohibits compensation for administrative boards.
Q: Who decides whether the Board of Water and Light members will receive compensation, and in what amount?
A: City Council would decide if BWL board members would receive compensation and if so, for what amount. They would also have to pass an ordinance subject to a public hearing to authorize such a measure.
Commissioner Cochran asked whether or not a procedure regarding this matter currently exist? He also noted that the board compensation data is for informational purposes only, as there is no proposal before the Board at this time.
In response to Commissioner Cochran’s question, Ms. Cavanaugh advised that she was unable to locate a procedural document regarding the above matter.
Commissioner James noted that the board compensation inquiry was forwarded to the Finance Committee by the Committee of the Whole and as such, they are responding to the question. Commissioner James went on record stating that she had no opinion one way or the other and further noted that it was neither a good idea nor the appropriate time to ask such a question.
After further discussion, the Finance Committee took the following action:
On motion by Commissioner Cochran, seconded by Commissioner Smith, the Finance Committee unanimously agreed to table the board compensation item at the Finance Committee.
General Manager (GM) Employment Contract. Commissioner Smith advised committee members that a review of the GM’s employment contract is needed in preparation for hiring a new GM. She also clarified that it has traditionally been the role of the Executive Committee to address such matters.
After brief discussion, the Finance Committee agreed that
they would prefer to use a firm that they have dealt with in the past regarding
such matters. In absence of
There being no further business, the meeting adjourned at 12:45 p.m.
Respectfully submitted
Semone M. James, Chair
Finance Committee
Motion by Commissioner James, Commissioner Calkins, to receive the Finance Committee report as presented.
Action: Carried unanimously.
June 19, 2007
The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:00 P.M. on Tuesday, June 19, 2007.
Executive Committee 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, Robert Cochran, Santiago Rios and Robin Smith.
Absent: None.
There were no public comments.
Moved by Commissioner Calkins, seconded by Commissioner Rios, to go into closed session to discuss a privileged document received from Brandie Ekren, Associate Attorney protected by Open Meetings Act exemption MCL 15.268(h). (4:08 p.m.) The roll was called.
Yeas: Commissioners Calkins, Cochran, Rios, and Smith.
Nays: None
Absent: None
Carried unanimously.
Moved by Commissioner Cochran, seconded by Commissioner Rios, that the Executive Committee meeting return to open session.
Carried unanimously.
The Executive Committee meeting reconvened in open session
at 5:20 p.m.
Commissioner
Smith reported that the Executive Committee discussed parameters regarding the
General Manager’s contract.
There being no further business, the meeting adjourned at 5:21 p.m.
Respectfully submitted
Robin M. Smith, Chair
Executive Committee
Motion by Commissioner James, seconded by Commissioner Rodocker, to receive the Executive Committee report as presented.
Action: Carried unanimously.
COMMITTEE OF THE WHOLE
The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 5:30 p.m. on Tuesday, June 19, 2007.
Committee of the Whole Chair, Santiago Rios 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, Santiago Rios, Julee Rodocker, and Sandra Zerkle.
Absent: Commissioners Semone James and Robin Smith
There were no public comments.
Sue Flores, Manager of Finance and Planning gave a brief
overview of the State of
On motion by Commissioner Calkins, seconded by
Commissioner Graves, the Committee of the Whole recommended that the State of
Discussion: Commissioner Rios asked how extensive is the BWL’s use in the State’s program?
Staff replied that the BWL has purchased $27,000 worth of goods over the past 3 years, which typically consists of cold weather items. The BWL has not made a recent purchase. However, staff continues to regularly review the list of items available for sale. It was also noted that there is no monetary cost to the BWL to participate in said program.
Action: Carried unanimously.
Gennie Eva, Manager of Financial Services addressed several questions regarding the status of SAP and its future endeavors. Listed below is a synopsis of those responses.
Q: Why does the BWL need the mainframe for an additional 3½ years?
A: The Customer Information System (CIS) is still on the mainframe and it may take longer to changeover. The mainframe lease will end at approximately the same time and the maintenance agreement is going to increase. The BWL will attempt to extend the maintenance agreement, as the SAP project took longer than expected.
Q: If the Board gave direction to complete the work in 1½ year’s could it be done?
A: No
Q: What are the impairments that make it impossible?
A: Configuration. It took approximately 9-months for General Accounting and Materials Management to be configured with SAP. CIS is a much larger endeavor and the BWL does not have enough trained staff persons for the project. SAP can be configured in many different ways to tailor it to what is best for your business. It would be a large effort to get the system up and running for four (4) different utilities that are all billed differently with separate rate schedules.
Q: Is it a correct observation to say that things are going pretty well?
A: Yes. It is not perfect, as there are some enhancements and changes that staff would like to see implemented to increase efficiencies. Nevertheless, the work is getting done. There will be a dip in productivity because it is a new system and everyone will take longer to process the work. Hopefully, the employees have reached the bottom of the “dip” and are on their way up.
Q: Are the obstacles listed in the presentation past obstacles? The obstacles in the presentation include: weak consultant guidance from finance lead, original unrealistic timeline, delays in hiring Project Manager, and unexpected configuration issues.
A: The team consisted of three (3) parts that included Finance, Materials Management and Technical teams. The consultant for the finance lead was very knowledgeable about SAP but did not guide the BWL down the right path. As such, staff realized that some of the items had to be redone so that it would better suit the business needs of the BWL.
Q: Can it be assumed that SAP is better than the previous system?
A: Yes. Its been said that after the 1st year colleagues will love the system and it will take the rest of the organization a couple of years to realize its benefits.
Q: Are there things that the BWL should do now relative to staffing and training that would help the process? Would it help to have more resources in terms of staff training dollars?
A:
Q: From an infrastructure standpoint and based on the amount of this project, is the BWL doing what it should to implement the program in an efficient manner? Is the BWL doing the minimum or being aggressive?
A: Denise Mulder, Director of Human Resources (HR) commented that she had previous experience implementing a portion of the SAP system that involved HR and payroll. As such, bringing in new staff from outside is of no use because one must configure the system to the way you want it to operate. The only way to accomplish those goals is with current staff and modules. Three staff members have been identified who would be available and able to assist with the program. Therefore, adding additional staff in HR would be of no benefit. SAP has given a list of training courses that would be exceedingly beneficial for HR to take before they start the process versus afterwards.
Commissioner Cochran advised staff that if they would like to do something for the good of the company then the Board would be open to the idea. He also noted that the Board made a note to themselves to submit a modified budget to the city, which would include a contingency clause.
Corporate Sponsorship Policy
Mark Nixon, Communications Director reviewed the community sponsorship policy that essentially formalizes a currently existing practice. The policy and a request form (filled out by all organizations requesting a donation) would help define what is permissible relative to donations for nonprofit organizations in the community. Sponsorships may include acting as a program sponsor, providing in-kind services, or paying for a specific attribute of a program or event, such as advertising. Sponsorships and contributions shall be given to nonprofit organizations that benefit the greater Lansing area, but do not advance a religious or political viewpoint.
The Board noted that they understood the policy but the verbiage located in the third sentence of the proposed resolution needs grammatical correction. After brief discussion, the Board took the following action:
On motion by Commissioner Calkins, seconded by Commissioner Cochran, the Committee of the Whole agreed to move the proposed resolution for the Community Sponsorship Policy to the full Board for consideration subject to grammatical changes.
Action: Carried unanimously.
Jan Nelson, Principle Engineer presented an overview of the BWL Steam Utility Plan. The presentation contained information pertinent to an action plan requested by the Board of Commissioners that would address rate issues, cost reductions, service improvements, plant retirements and other viable options. Listed below are highlighted exerts from the presentation materials.
Economic evaluation of “stay in business” options
|
Option |
|
Primary Steam |
Backup Steam |
% Change From Base w/o
Electric Sales Impact 20-Year Analysis |
% Change From Base
w/Electric Sales Impact 20-Year Analysis |
% Change From Base w/o
Electric Sales Impact 5-Year Analysis |
% Change From Base
w/Electric Sales Impact 5-Year Analysis |
|
1 |
Status Quo |
Moores Pk |
Moores Pk |
Base |
Base |
Base |
Base |
|
2 |
Retire
MP |
Eckert 1-3 |
Eckert 4-6* |
-10.4 |
-1.0 |
-2.3 |
3.9 |
|
3 |
Retire MP |
Eckert 1-3 |
Eckert 4-6** |
-11.0 |
-2.1 |
-4.4 |
1.9 |
|
4 |
Retire MP |
Eckert 1-3 |
Gas Boiler |
-1.5 |
6.0 |
3.0 |
9.3 |
|
5 |
Retire
MP |
Gas
Boiler |
Eckert 1-3 |
41.7 |
44.4 |
29.1 |
31.0 |
|
6 |
Lay-up one MP boiler |
Moores Pk |
Moores Park/Eckert 1-3 |
-2.4 |
-2.4 |
-3.4 |
-3.4 |
|
7 |
Lay-up two MP boilers |
Moores Pk |
Moores Park/Eckert 1-3 |
-2.8 |
-2.3 |
-3.7 |
-3.1 |
|
8 |
Out of the steam business
in 10 years |
Moores Pk |
Moores Park/Eckert 1-3 |
|
|
|
|
|
9 |
Partial steam system |
Moores Pk |
Moores Park/Eckert 1-3 |
|
|
|
|
*
Individual Present Value of Revenue **
Headered Present Value of Revenue
BWL Steam Utility Plan – Assumptions for a reduced
steam system:
· Assumed that 117 services cannot be converted to gas
· 35 other services are located along the steam mains that serve the non-convertible services
· Estimated cost to convert remaining 94 services is $3,100,000
· Total services reduced from 246 to 152
Economic evaluation to reduce steam system (20 year analysis):
|
Option |
|
% Change From Base w/o
Electric Sales Impact |
% Change From Base
w/Electric Sales Impact |
|
1 |
Status Quo |
Base |
Base |
|
6 |
Lay-up one MP boiler |
-2.4 |
-2.4 |
|
9 |
Reduced steam system |
-6.7 |
-6.2 |
MP –
Moores Park
Conclusions regarding a reduced steam system:
· Over the long term, this scenario is expected to have the lowest revenue requirements
· In the short run, it is slightly better than a breakeven with the status quo
· Based on the economic analysis, it is reasonable to move in the direction of a smaller steam system
Getting out of the steam business:
· Obligation to serve or convert customers
· Under contract with GM for 10 years
· Several buildings would be extremely difficult and costly to convert their heating source due to height, space limitations and lack of adequate gas supply
· Same customers identified in the reduced steam utility scenario
· Best scenario for an option to get out of the steam business would be to convert all but those that are impractical, build a gas boiler plant and seek a buyer
Assumption for getting out of the steam business:
· Convert customers to natural gas over next 5 years
· Build a gas fired steam boiler plant in downtown Lansing
· Serve non-convertible customers and existing customers on remaining steam lines until 2012
· Sell the downtown steam loop and boiler to a third party
· Continue to provide steam to GM from Moores Park and Eckert until contract completion (end of 2017)
Detailed evaluation to end the steam system (10 year analysis):
|
Option |
|
% Change From Base w/o
Electric Sales Impact |
% Change From Base
w/Electric Sales Impact |
Residual Capital, $
(1,000) |
|
1 |
Status Quo |
Base |
Base |
--- |
|
8 |
Curtail the steam business
in 10 years |
-17.4 |
-14.0 |
$ 15,265 |
Conclusions regarding getting out of the steam
business:
· Service ends to residential and commercial customers by 2012; industrial customers after 2017
· This option results in about $8,000,000 in savings ($800,000/yr) over the status quo (10 year analysis)
· However, this option also has $15,000,000 in remaining debt service that would be written off or recovered in a sale to a third party:
· This option may be feasible. However, it leaves steam customers in the most vulnerable state for future steam rates, reliability, and availability.
· GM would be on their own for a thermal source after 2017
O&M Cost reduction strategies:
· Continue to benchmark with other steam utilities
· Steam main construction costs have been evaluated and are consistent with industry practice
· Modify operating budget to lay-up one Moores Park boiler
· Evaluated alternative cost allocations and A&G expenses
· Reduced six year capital forecast for Moores Park by $5,000,000 from last year’s forecast
· Abandoned steam services and converted customers to another heating source in selected areas where it was not economic to provide continued steam service
What about growing the steam business?
· Steam Utility Market Plan indicates modest growth potential
· Challenges for steam utility growth:
o Limited service territory (Central District is approximately one square mile in size)
o High construction costs (construction costs approximately $1,000-1,2000 per linear foot)
o Price of steam compared to natural gas
o Age infrastructure (steam main dates back to 1906)
Rate increase strategy over the next 3-5 years
included in the 6-year forecast:
· Rate increase of 6.0% starting January 1, 2008
· Rate increase of 7.5% on January 1st in each year for 2009 through 2013
· Results in a cumulative net loss of $4,100,000 over the period but with a positive cumulative cash flow of $8,5000,000 due to anticipated GM contract termination fees
· BWL would work to achieve further cost savings throughout this period
Recommendations for a 3 to 5 Year Steam Utility Plan:
· Continue to maintain a steam utility
· Continue to rely on Moores Park as primary steam source
· Lay-up one Moores Park boiler initially
· Continue to abandon selective steam mains and services
· Reevaluate Moores Park options as environmental regulations materialize, electric wholesale market changes and upon results of converting customers to another heating source
· Continue to selectively market steam to new customers
· Implement steam rate increases in accordance with the FY08 Financial Plan currently anticipated at: 6.0% beginning January 1, 2008 and 7.5% beginning January 1, 2009
· Continue to seek cost reduction strategies
· Provides a more stable and dependable service for all steam customers
· Initial steam utility savings of over $900,000 per year
· Provides a flexible strategy to seek additional savings in the future
· Maintains steam supply flexibility
· Continues to take advantage of the electric wholesale market
· Provides risk mitigation for potential new environmental regulations
· Short-term steam pricing competitive to natural gas
Upon completion of the presentation, the Board discussed the steam utility plan and noted General Motors (GM) early contract termination fees have not been completely resolved. At present, GM has agreed with the plant 1 termination fee and the debt service balance on the steam line servicing plant 6. However, the rate of return guarantee for plant 6 is still in dispute. Payment for all three items is unlikely until fiscal year 2010 per contract. The Board also noted the lack of monetary calculations for savings on reduced maintenance costs associated with the options presented by staff. As such, the Board acknowledged that the steam utility plan is a work in progress and represents one of many scenarios that that the BWL is currently reviewing.
Staff noted that they did not calculate the savings associated with reduced maintenance costs at this time. However, it was advised that changes in steam and chilled water allocation methods and reductions in operating costs allowed the BWL to develop a lower rate strategy that included laying up one boiler at Moores Park. Staff expects a savings of $135,000 over fiscal year 2007, identified an additional savings of $400,000 in administrative and general costs, and $265,000 in other cost allocations based on reduced sales. As a result of the changes, the 6-year capital forecast for Moores Park was reduced by $5,000,000. Staff reported that they are not asking the Board to take action at this time. Instead, they have brought forth scenarios to use as a comparison in deciding how best to address the steam utility. Other observations noted by staff include the following:
· It would cost approximately $3,100,000 to remove 94 customers from the steam system, which is significantly higher than the cost to maintenance those same lines (costs estimates were not available at the time of the meeting).
· The steam system will become smaller over time as major capital projects develop
· Incremental maintenance on the steam system is on a per pound basis, prorated over the load amount
· Lead way for the steam utility was made by reducing plant cost thereby, generating plant savings
· The BWL does not anticipate major steam maintenance issues over the next 10 year period
· The BWL expects the price of natural gas to decrease based on data published by the Department of Energy
· Consumers Energy does not have a well-structured gas distribution system in the downtown Lansing area
·
Phoenix project –
After further discussion, the Board expressed pleasure with the substantial progress made with the steam utility plan and noted support for a reformatted recommendation for the 3-5 year plan to be presented at a future date. The Board also advised of the need to discuss the issue of cross subsidization relative to the utilities and customer base (residential and commercial) from a policy standpoint. They further noted adjustments to the presentation were needed that would include a financial analysis of the costs incurred to maintain the steam system, information relative to cross subsidization, and specific staff recommendations.
Copies of the BWL Steam Utility Plan dated June 19, 2007
are available in the Office of the Corporate Secretary.
Commissioner Graves acknowledged the information pertaining to the news articles but also noted that negative information can also be received from other sources. As such, Commissioner Graves asked how does the BWL monitor the tree-trimming program?
Bill Cook, Senior Vice President of Operations noted that the BWL tracks every tree trimming complaint that it receives, which totals approximately 100 calls per fiscal year. An estimated eighty percent (80%) of the calls pertain to clean up. However, the BWL will send people to remove the debris and attempts to make every customer happy. The BWL monitors the contractor, Wright Tree Service (WTS) and has an employee that specifically follows the work and addresses issues as they arise. It was further noted that WTS is not paid if the BWL is not happy with the work performed (e.g. picking up brush and the number of tree trims). The BWL also formed a Citizen’s Focus Group to discuss the issues and make recommendations.
Commissioner Graves noted that he has been traveling the past few weeks and have heard comments regarding WTS from other states. He went onto ask staff if the BWL is comfortable with its existing contractor?
Mr. Peffley advised that WTS could have done a better job minimizing the complaints. The BWL have received some legitimate concerns regarding WTS but it is not enough to warrant terminating the contract at this time. It was noted that the contract was competitively bid and it ends December 2008. The BWL has met with WTS regarding various issues, which have been addressed, but their actions have not been preventative in nature. WTS should be self-motivated, as they are paid by the trim and not hourly. It was confirmed that WTS is currently working under its second three-year agreement.
Commissioner Graves asked if the BWL has considered having more than one (1) contractor for said project. Typically, when there are two (2) contractors doing the same work then one can establish a baseline comparison against the other, which can be helpful leading up to the next contractual period.
Mr. Peffley agreed with the sentiment and noted that the BWL will complete the aggressive tree trimming cycle by the expiration date of the contract. Once the contract expires the BWL will review all options, as they will not need as many tree trimming crews presently in place. For the first time ever, the BWL will work with the City of Lansing in completing a small aspect of the trim work. The project can also be used as a comparison to see how the City performs relative to WTS. The work with the City of Lansing will foster a better relationship with the BWL and as the WTS contract ends it is Mr. Peffley’s recommendation that the BWL take a hard look at their options. It was confirmed that the contract is not exclusive. Therefore, the BWL could hire other contractors if they choose to do so, which is how the BWL obtained the city contract. It was also clarified that the contractor guarantee means that WTS is guaranteeing the service and that the trim meets specifications. If it does not then WTS has to go back and re-trim. In 2006, two thousand (2,000) trims were performed and forty-five (44) trees were removed, which represents a typical year for the BWL.
The Board noted the sensitivity and highly visible nature of the topic and recommended sending a strong message to WTS indicating their level of displeasure. At this time, the attention is on the complaints that were received but does not address those who did not complain. As such, it was recommended that the BWL determine what the internal workforce could do and to also develop a proactive leadership position with accountability and very specific and direct consequences for not following established guidelines. It was further noted that the BWL faces image issues when contracting out work because may appear that the BWL does not care.
Mark Nixon, Communications Director advised that the Citizens Advisory Group was formed out of complaints received regarding the Fairview area. As such, a variety of persons were asked to sit on the advisory group and provide input regarding the tree-trimming program.
On motion by Commissioner Graves, seconded by Commissioner Rodocker, the Committee of the Whole agreed to direct staff to develop a comprehensive plan that incorporates the concerns raised by the Committee of the Whole and the focus group to present to the Board of Commissioners for consideration.
Action: Carried unanimously.
Commissioner Rios announced that each Commissioner indicated their officer and committee preferences. As such, Chair Smith established the Nominations Committee, which contains the following members: Gary Calkins – Committee Chair, Joseph Graves, Julee Rodocker and Robin Smith. The alternates are Robert Cochran and Sandra Zerkle.
Granger Contract.
BWL Staffing. Commissioner
Zerkle reported that she met with
General Manager Objectives. Commissioner Rios noted that the Executive Committee would like a recap of Mr. Peffley’s major objectives that are incomplete so that they can begin to develop objectives for the new General Manager. The committee would also like Mr. Peffley’s input as to the status of those projects and any suggestions that he may have in terms of priority items for the upcoming year. It will be extremely important for the Board to continue the good work that it has since begun.
There being no further business, the meeting adjourned at 7:07 p.m.
Respectfully submitted,
Santiago Rios, Chair
Committee of the Whole
Motion by Commissioner Zerkle, seconded by Commissioner Cochran to receive the Committee of the Whole report as presented.
Action: Carried unanimously.
EXECUTIVE COMMITTEE
July 2, 2007
The Executive Committee of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 12:10 p.m. on Monday, July 2, 2007.
Executive Committee Chair, Robin Smith called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Gary Calkins, Robert Cochran, Santiago Rios and Robin Smith. Commissioner Semone James was also present.
Absent: None
There were no public comments.
Moved by Commissioner Rios, seconded by Commissioner Cochran to go into closed session to discuss a privileged document received from Brandie Ekren, Associate Attorney and Melissa Jackson, Outside Counsel with Foster, Swift, Collins & Smith, P.C. protected by Open Meetings Act exemption MCL 15.268(h). (12:13 p.m.) The roll was called.
Yeas: Commissioners Calkins, Cochran, James, Rios,
and Smith.
Nays: None.
Absent: None.
Carried unanimously.
Moved by Commissioner
Rios, seconded by Commissioner Cochran that the Executive Committee returns to
open session.
Carried unanimously.
The Executive Committee
meeting reconvened in open session at 12:42 p.m.
On motion by Commissioner Cochran, seconded by Commissioner Calkins, to increase the salary amount offered to J. Peter Lark by $5,000 totaling $190,000 with clarification in regards pension benefits.
Discussion: Commissioner Rios introduced a friendly amendment in response to three (3) items that Mr. Lark requested the Board consider relative to the General Manager’s employment contract:
1) As a matter of policy, the Board of Commissioners will not consider a modification to the current benefit plan as the rates are based on employment start date, 2) based on Board discussion they would not extend a severance agreement, and 3) with respect to salary, the Executive Committee was authorized by the Board of Commissioners to negotiate a contract within the parameters of the salary range. He went onto note that he would support an offer of up to $190,000.
Commissioner Cochran accepted the friendly amendment and after brief discussion the Executive Committee voted on the motion.
Action: Carried unanimously.
On motion by Commissioner Rios, seconded by Commissioner Calkins, that Commissioner Smith be authorized by the Executive Committee to contact J. Peter Lark as soon as possible to communicate the response to Mr. Lark’s counteroffer.
Discussion: The Executive Committee directed Associate Attorney Ekren to draft a letter regarding the committee’s response to Mr. Lark’s considerations.
Commissioner Calkins noted that he would like to see if the Human Resource Department could revise the total rewards report to reflect current changes.
Denise Mulder, Director of Human Resources advised that she
would talk to
Commissioner Cochran introduced a friendly amendment to allow Commissioner Rios to attend the meeting with Commissioner Smith and Mr. Lark.
Commissioner Rios accepted the friendly amendment and the Executive Committee voted on the motion.
Action: Carried unanimously.
There being no further business, the meeting adjourned at 12:53 p.m.
Respectfully submitted,
Robin M. Smith, Chair
Executive Committee
Motion by Commissioner Rios, seconded by Commissioner James, to receive the Executive Committee report as presented.
Action: Carried unanimously.
July 12, 2007
The Human Resource Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 4:10 p.m. on Tuesday, July 12, 2007.
Human Resource Committee Chair, Robert Cochran called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Robert Cochran, Joseph Graves, and Julee Rodocker (arrived at 4:23 p.m.).
Absent: Commissioner Santiago Rios.
There were no public comments.
Brandie Ekren, Associate Attorney gave a brief overview of the updates for the Health Insurance Portability Accountability Act of 1996 (HIPPA) provisions and certification. As such, she noted that the Lansing Board of Water and Light (BWL) converted to a completely self-funded benefit plan, and as a result of that conversion the BWL’s responsibilities under HIPPA increased. It required the BWL to update its certification, plan previsions and policy documents, as it relates to HIPPA obligations for privacy and security. The resolution represents the Board of Commissioners adoption of the following:
· HIPAA Privacy Policy
· HIPAA Security Policy
· HIPAA Privacy and Security Provisions and Certification
Commissioner Cochran suggested staff note the word, “original” on the first revision to clarify whether or not it is an original, draft or a revision.
On motion by Commissioner Cochran, seconded by Commissioner Graves, the Human Resource Committee agreed to forward the proposed resolution to the full Board for consideration at the next regular Board meeting scheduled for July 24, 2007.
Action: Carried unanimously.
Susan Pifer, Director of Internal Audit advised that the Finance Committee approved the priorities for the Internal Audit Department (IAD) on May 8, 2007. The item was subsequently moved to the full Board for approval on May 22, 2007 as resolution number 2007-5-13. As such, the Chairs of the Board of Commissioners and Finance Committee asked that the priorities be presented to the Human Resource Committee in the form of performance factors. With that in mind, a high-level work plan was created for each priority with deliverables and an estimated timeline.
Denise Mulder, Director of Human Resources commented that Board appointees were not on the same performance review cycle as the rest of the organization due to their respective hire dates. It was suggested that it might be beneficial on a go forward basis to review the Board’s appointees on the same cycle, as the BWL, which is July 1st. It would allow the appointees to be in the performance review system so that they fall inline with the rest of the organization in a timely manner.
Commissioner Cochran noted that in speaking to the Finance Committee Chair it was suggested that Ms. Pifer develop a gant chart (or something similar) to represent the IAD’s activities, beginning and end date, description of the task, and its completion status. The chart system would be a helpful tool for the Board of Commissioners to use as a benchmark and to also follow the progress of each respective project.
Commissioner Cochran asked Ms. Pifer if the services of C.L. Moore & Associates have been retained through October 2007 in the IAD’s budget?
Ms. Pifer noted that Mr. Moore has been retained through the year-end process, which ends August 2007. It was clarified that the financial statements will be published October 2007, and she will be involved with that process. It was also noted that Ms. Pifer would complete her juris doctorate in August 2007, which would be a benefit at no cost to the Board.
Commissioner Cochran noted that he did not see a need to report every two (2) weeks but he was unsure of what has since been completed and what is presently in the works. He asked for a report as to what items have been completed thus far.
As a result, Ms. Pifer gave an update on the coal inventory, which is going very well. There was six (6) days of fieldwork with an intention to complete 6 more days within the next 2 weeks. The initial document request was made and has since been satisfied. The results of the coal inventory yearend evaluation were not complete but they should be received within a week. Ms. Pifer is currently working on fuel burn metrics that are used to ascertain the coal that came in the door and the kilowatt-hours generated as a result. The process is extremely complicated and she is working to further develop her understanding. It also advised that the internal control issues for coal have been addressed. Shipping documents are now being forwarded to the Accounting Department and the receivers sign off on the receiving documents, which was not previously occurring. Ms. Pifer noted that she is now comfortable with the internal controls in place for the coal inventory. In addition, a significant amount of time was spent at the purchasing warehouse with the new Purchasing Manager to complete a physical count, as the cycle counts were incomplete. At the completion of the physical count, they determined that there was $13,000 in shrink on $9,500,000 worth of inventory, which equals approximately .13%. Plant & Moran was very satisfied with the results and the manager would like to implement the process on a quarterly or biannual basis.
The Human Resource Committee expressed a desire to ensure that the IAD’s objectives were broader in view so that they would encompass the organization as a whole in addition to financial matters. For example, internal controls should pertain to the internal control environment of the entire organization and not simply that of SAP.
After further discussion, Susan Pifer noted that she would work with Denise Mulder in an attempt to shorten each objective, note the expected outcome, and proposed dates. The Board would receive monthly updates via a gant chart denoting the progress of each respective project. It was also advised that the audit plan would be comprehended in performance factors, which would reflect a broader view of the BWL as whole. The Human Resource Committee concurred with the direction and as such Ms. Pifer will proceed with the above.
After lengthy discussion, the Human Resource Committee expressed concern with the position that the City Attorney has taken regarding the BWL’s amended Rules of Procedure. It was suggested that the Board of Commissioners write a letter to the Mayor and City Council expressing their opinion and desire to resolve said issues in light of the City Attorney’s position and the length of time taken to approve said amendments.
There being no further business, the meeting adjourned at 4:51 p.m.
Respectfully submitted,
Robert Cochran, Chair
Human Resource Committee
Motion by Commissioner Rodocker, seconded by Commissioner Zerkle, to receive the Human Resource Committee report as presented.
Action: Carried unanimously.
NOMINATING COMMITTEE
July 17, 2007
The Nominating Committee of the Board of Water and Light met at the Executive Offices, Lansing beginning at 5:15 p.m. on Tuesday, July 17, 2007.
Nominating Committee Chair, Gary Calkins called the meeting to order and asked the secretary to call the roll. The following committee members were present: Commissioners Gary Calkins, Joseph Graves, and Julee Rodocker. Commissioner Robert Cochran was also present as an alternate.
Absent: Commissioner Robin Smith.
There were no public comments.
The Nominating Committee met to review Commissioner survey responses for consideration of Board officer nominations for fiscal year 2008. As such, Commissioner Calkins confirmed with the committee members that they knew of no other interested parties aside from the ones noted on the survey response forms.
On motion by Commissioner Calkins, seconded by Commissioner Cochran, the Nominating Committee recommends the following slate of officer candidates for Fiscal Year 2007-08:
Chair: Santiago Rios
Vice Chair: Semone James
Action: Carried unanimously.
There being no further business, the meeting adjourned at 5:16 p.m.
Respectfully submitted,
Gary Calkins, Chair
Nominating Committee
Motion by Commissioner Calkins, seconded by Commissioner Cochran, to receive the Nominating Committee report as presented, which includes the slate of officers.
Discussion: It was verified by Commissioner Smith that there were no nominations from the floor for the office of Chair and Vice Chair respectively.
Action: Carried unanimously.
Resolution 2007-7-7
COMMITTEE OF THE WHOLE
The Committee of the Whole of the Board of Water and Light met at the Executive Offices, Lansing, beginning at 5:30 p.m. on Tuesday, July 17, 2007.
Committee of the Whole Chair, Santiago Rios called the meeting to order and asked the secretary to call the roll. The following members were present: Commissioners Gary Calkins, Robert Cochran, Semone James, Julee Rodocker, Santiago Rios and Sandra Zerkle.
Absent: Commissioners Joseph Graves and Robin Smith.
Joseph Davis, Business Manager of IBEW Local 352, welcomed new General Manager (GM), J. Peter Lark to the Board of Water and Light (BWL). He found the July 17th staff meeting and the new GM very interesting. Mr. Davis advised that in the past, he has gone on record saying that he hopes the BWL can make some changes throughout the organization. He also commented that the bargaining unit would play a very important role as the BWL moves forward. It was noted that the bargaining unit and management will not always see eye to eye but it is important to keep an eye on the prize, which is making the BWL a good place to work, do business, and serve the community. Mr. Davis notified the Board of the bargaining units new slate of officers that include the following: President Dolores Appling, Vice President Leslie Granell, Financial Secretary Lisa Ryan, and Executive Board Member, Dwayne Williams.
Commissioner Rios formally welcomed J. Peter Lark to the BWL. It was noted that the Board looks forward to a long-standing relationship that will positively impact the community and allow them to reach higher levels of outstanding performance. The BWL has broken several records and has been nationally recognized as one of the premier public utilities in the country. The reason behind its success is the outstanding employees and people that are dedicated to their jobs, the organization, and fellow co-workers. It was further advised that the Board is here to provide advice and counsel as Mr. Lark sees fit and to also ensure that adequate resources are provided to both he and staff.
Sue Warren, Marketing Specialist noted that the Energy Policy Act of 2005 – Amendments to PURPA have been brought before the Board on several occasions. In part, the act requires non-regulated electric utilities to consider smart metering and interconnection standards. As such, a public hearing was held and recommendations to the Board regarding said items were made.
Commissioner Cochran advised that a lot of attention was paid to industrial and commercial customers. However, he went onto ask if consideration has been given regarding the installation of smart metering on residential homes?
Ms. Warren noted that there are utility's that have successfully implemented a smart metering pay as a go system for residential customers. The BWL has not looked at the technology but it continues to rapidly change. As a result, staff would like to report back to the Board on this topic in approximately one year, as 85% of the BWL’s customer base is residential.
Commissioner Cochran also reported that he attended a seminar on rates hosted by the American Public Power Association (APPA). At said time, he received information regarding smart metering systems and offered to share it with Ms. Warren.
On motion by Commissioner Cochran, seconded by Commissioner James, the Committee of the Whole agreed to move both proposed resolutions for the Determination of Smart Metering Standard and the Determination of Interconnection Standard to the full Board for consideration at the next Board meeting scheduled for July 24, 2007.
Action: Carried unanimously.
Brandie Ekren, Associate Attorney noted that the BWL has an existing easement and would like to release said easement with A Winning Pointe, LLC (grantor) in exchange for a new easement located on the same parcel (111 E. Saginaw Street, East Lansing, Michigan). The BWL is requesting that the grantor grant its easement prior to preceding any further with said project. The proposed resolution included in the Committee of the Whole meeting materials authorizes the General Manager to proceed accordingly.
On motion by Commissioner Calkins, seconded by Commissioner Cochran, the Committee of the Whole agreed to forward the Easement Exchange with A Winning Pointe, LLC resolution to the full Board for consideration at the next regular Board meeting scheduled for July 24, 2007.
Action: Carried unanimously.
Sue Flores, Manager of Finance and Planning reported that for the last three years the BWL has used a performance management measurement program known as the Corporate Balanced Scorecard (CBS). The CBS allow employees to focus their attention on eight measures in four different categories that include financial performance, customer service, operational excellence, and people excellence. Staff benchmarks measures and targets every other year by reviewing other organizations, BWL historical performance, and industry standards.
Team leader Steve Brennan, Manager of Production Support noted the minimal changes for 2007-08, which includes the following:
· All measures remained the same
· Added $/Ton-hrs to commodity costing
· Updated Targets:
o Increased Target – Speed of Answer, SIR, CAIDI
o Stayed the same – Meters Read, New Services Installed, Breaker Actions, Fly Ash Sold, Variances, Training
o
Lowered – Availability (Erickson Outage)
J. Peter Lark, General Manager, has not had opportunity to review and comment on said measures. Therefore, it was deemed appropriate to allow him time to review the Corporate Balanced Scorecard and bring the item forth at a later date.
The BWL previously received four sponsorship options from The Sparrow Foundation in exploring the possibility of giving a legacy gift to the new Sparrow Hospital wing. Mark Nixon, Communications Director advised that he received two additional sponsorship options on July 16, 2007. As a result, copies of the additional information were handed out during the meeting and Mr. Nixon advised that clarification regarding the medical oncology center option is needed to help further assess the options.
Commissioner Rios noted that during a previous meeting everyone seemed to be positively inclined to enter into a relationship with The Sparrow Foundation, which included a review of the various options and the development of a plan to proceed accordingly. However, there are issues that need to be addressed, which include the following: 1) obtain the General Manager’s viewpoint, 2) determine adequate project funding, and 3) decide how the project should be legally constructed to prevent future problems. These are questions/issues that the BWL needs to address prior to reviewing a specific recommendation.
After further discussion, it was noted that there is flexibility in what the BWL decides to do, as The Sparrow Foundation is amendable to working with the BWL. Developing a partnership with Sparrow also allows the BWL positive exposure and opportunity to market the community. It was further noted that Mr. Nixon would continue to work with The Sparrow Foundation and General Counsel to determine what options are still available to the BWL and in addressing the above questions. Mr. Lark will review the project and provide an opinion regarding said options including that of the monetary contribution. Mr. Nixon will arrange a tour of the new Sparrow hospital wing for both Mr. Lark and Commissioner Cochran. In addition, it was suggested that the information including responses to the above questions be returned to the Commissioners prior to the next regular Board meeting scheduled for July 24, 2007.
The Board acknowledged that they had received information
from Brigham Smith, City Attorney and former General Counsel,
Commissioner Cochran noted that it is cumbersome for him to review the changes to the procedures due to the notations printed on the side of the document. As a result, Commissioner Rios suggested that staff provide a mark up and a clean copy to enhance the understanding of what changes were made the materials.
The Commissioners agreed that
Mr. Peffley advised that it was a tough road but he hopes that the company is better now than before. He looks forward to working with Mr. Lark and continuing to provide support in whatever manner is needed. Mr. Peffley went onto thank the employees, executive staff, and the Board of Commissioners for their support.
Mr. Lark noted that Mr. Peffley took him on a tour of the plants during the interview process for the General Manager position. It was impressive that everyone liked Mr. Peffley, which is a dynamic that he himself would also like to bring to the BWL. Mr. Lark went onto note that he visited the site of a water main break in Lansing. It was interesting to see the process but it more interesting to note Mr. Peffley’s presence and to still see him onsite later the same evening. The employees respect Mr. Peffley, and Mr. Lark trusts and agrees with the Commissioners in that he has a great job.
APPA National Conference. Commissioner Rios advised that the Commissioners recently attended the national convention for the American Public Power Association (APPA) in San Antonio, Texas. As such, several Commissioners picked up various presentations in written form and also took notes pertaining to different topics. He asked that all of the Commissioners submit their presentation materials to Corporate Secretary Jones so that a catalog of those items can be developed as a resource book. Two – three copies of said information would be available to staff for review if needed or so desired. The Commissioners also advised that the conference presentation materials can be downloaded to disk from APPA’s website once available.
General Manager’s Contract. Brandie Ekren noted that while Mr. Lark
was reviewing his benefit package, he noted that the defined contribution
account would not begin until a 6-month probationary period had ended. In developing the total rewards package, a
probationary period had not been considered, as that would have significantly changed
the total rewards amount. In speaking to
Commissioners Rios and Smith, it was determined that it would be feasible to
clarify that Mr. Lark does not have a probationary period due to the nature of
his contract and the employment offer previously presented. Ms. Ekren met with Denise Mulder, Human
Resource Director and
On motion by Commissioner Calkins, seconded by Commissioner Cochran, that the Board of Commissioners did not intend a probationary period for the General Manager.
Action: Carried unanimously.
There being no further business, the meeting adjourned at 6:20 p.m.
Respectfully submitted,
Santiago Rios, Chair
Committee of the Whole
Motion by Commissioner Rios, seconded by Commissioner Calkins, to receive the Committee of the Whole report as presented.
Action: Carried unanimously.
Commissioner Rios assumed the role of Chair, as Commissioner Smith departed the meeting at 5:52 p.m. due to another obligation.
Resolution 2007-7-8
|
A. |
State of
Michigan – Federal Surplus Assistance Program |
WHEREAS, the Board of Water and Light, from time to time desires to purchase items through the State of Michigan Federal Surplus Assistance Program; and,
WHEREAS, the State of Michigan requires a resolution to be adopted by the governing body of a participating entity, designating a coordinator as Surplus Property Donee and Custodian, to be responsible for the acceptance and accountability and authorized to sign for surplus property, and,
WHEREAS, in the past the individual designated as the Donee and Custodian has been the Manager of Material Services Management; and,
WHEREAS, Bruce Cook currently holds the position of Manager of Material Services Management.
RESOLVED, that the Board Chair and Corporate Secretary are hereby authorized to sign the State of Michigan Federal Surplus Assistance Program Form, designating Bruce Cook as the Surplus Property Donee and Custodian.
--------------------
Staff Comments: From time to time the Board of Water and Light desires to purchase items through the State of Michigan’s Federal Surplus program for certain items at a substantial savings. Staff is requesting the Board’s approval for authorization of signature on the forms required by the State to continue participating in this program. Forms are attached for review.
--------------------
Motion by Commissioner Calkins, seconded by Commissioner Cochran, to adopt Resolution 2007-7-8 for the State of Michigan – Federal Surplus Assistance Program.
Action: Carried unanimously.
Resolution 2007-7-9
|
B. |
Community
Sponsorship Policy |
The Board of Commissioners believes it is vital for the Lansing Board of Water & Light to be an active partner with the community it serves by sponsoring events, programs, and activities that contribute to t his community’s quality of life. Sponsorships may include acting as a program sponsor, providing in-kind services, or paying for a specific attribute of a program or event, such as advertising. Sponsorships and contributions are meant to support nonprofit organizations that benefit the greater Lansing area. Sponsorships and contributions shall be limited to events, programs, and activities that do not advance a religious or political viewpoint. The General Manager shall have the authority to establish and direct a community donations committee to carry out this policy.
RESOLVED, that the Lansing Board of Water & Light’s Board of Commissioners adopt this Community Sponsorship Policy in recognition that part of this public utility’s mission is to serve the mid-Michigan community through various sponsorships, as described.
--------------------
Staff Comments: The
Board of Water & Light has a sustained, proud history of making donations –
monetary, materials, and in-kind services – to area non-profit organizations.
--------------------
Motion by Commissioner Cochran, seconded by Commissioner Rodocker, to adopt Resolution 2007-7-9 for the Community Sponsorship Policy.
Discussion: Commissioner Rios verified that the resolution was the revised version previously requested. He then proceeded to comment that it was gratifying to see that they are affecting many lives in the community and that the BWL takes an interest in other organizations work. The organizations work is important to the BWL as a community, and most of the individuals are BWL customers. Commissioner Rios also advised Mark Nixon that he realizes the community efforts are time consuming. As a result, they may need to determine how to continue their efforts so that it does not take as much of Mr. Nixon’s time so that he may delve into other efforts that are also important to the BWL. Commissioner Rios further complimented Mr. Nixon and staff for a job well done.
Commissioner Cochran noted that he was equally impressed regarding the breadth of the list, and apparently they have been busier than he realized. He also advised that Mr. Nixon should ensure that this kind of information gets out, as he had no idea of the level of activity prior to receiving the report.
Action: Carried unanimously.
Resolution 2007-7-10
|
C. |
HIPAA Privacy
and Security Provisions and Certification |
RESOLVED, that the Board of Commissioners hereby adopt the Health Insurance Portability Accountability Act (HIPAA) Privacy and Security Provisions and Certification for the Lansing Board of Water and Light Group Health Plan, as attached hereto.
FURTHER RESOLVED, the Board of Commissioners hereby adopts the Lansing Board of Water and Light HIPAA Privacy Policy, as attached hereto.
FURTHER RESOLVED, the Board of Commissioners hereby adopts the Lansing Board of Water and Light HIPAA Security Policy, as attached hereto.
--------------------
Staff Comments: In July of 2006, the BWL converted from a fully insured to self-funded arrangement for the group health plan (which includes Health, Dental, Prescription Drug, and Medical Reimbursement.) As a result, the BWL’s privacy and security obligations for HIPAA required the adoption of specific provisions and certification for the group health plan. For your consideration and eventual adoption are three documents:
1. Lansing Board of
Water and Light HIPAA Privacy Policy
2. Lansing Board of Water and Light
HIPAA Security Policy
3. Lansing Board of Water and Light
Group Health Plan HIPAA Privacy and Security Provisions and Certification
--------------------
Motion by Commissioner Rodocker, seconded by Commissioner Cochran, to adopt Resolution 2007-7-10 for the HIPAA Privacy and Security Provisions and Certification.
Action: Carried unanimously.
Resolution 2007-7-11
|
D. |
Determination of
Smart Metering Standard |
WHEREAS, the Energy Policy Act of 2005 (EPAct 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards; and
WHEREAS, the EPAct 2005 amendments to PURPA require covered utilities to begin consideration of the first two standards, Smart Metering and Interconnection, by August 8, 2006, with a public hearing and a determination made by August 8, 2007; and
WHEREAS, the Board of Water and Light of the City of Lansing, Michigan (BWL), with electric retail sales in excess of 500 million kWh meets the definition of a non-regulated covered utility; and
WHEREAS, the governing boards of non-regulated covered utilities are required to consider implementing the standards; and
WHEREAS, the governing board of the Board of Water and Light has conducted a public hearing to obtain comments on Smart Metering and Interconnection on March 27, 2007.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Commissioners for the Board of Water and Light of the City of Lansing, Michigan, determines that a Smart Metering Standard beyond that already in use for Time-of-Use Pricing is not in the best interest of its customers at this time. However, the General Manager is directed to:
--------------------
Motion by Commissioner Cochran, seconded by Commissioner James, to adopt Resolution 2007-7-11 for the Determination of Smart Metering Standard.
Action: Carried unanimously.
Resolution 2007-7-12
|
E. |
Determination of
Interconnection Standard |
WHEREAS, the Energy Policy Act of 2005 (EPAct 2005) amended the Public Utility Regulatory Policies Act of 1978 (PURPA) requiring covered utilities to consider adopting five new standards; and
WHEREAS, the EPAct 2005 amendments to PURPA require covered utilities to begin consideration of the first two standards, Smart Metering and Interconnection, by August 8, 2006, with a public hearing and a determination made by August 8, 2007; and
WHEREAS, the Board of Water and Light of the City of Lansing, Michigan (BWL), with electric retail sales in excess of 500 million kWh meets the definition of a non-regulated covered utility; and
WHEREAS, the governing boards of non-regulated covered utilities are required to consider implementing the standards; and
WHEREAS, the governing board of the Board of Water and Light has conducted a public hearing to obtain comments on Smart Metering and Interconnection on March 27, 2007.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Commissioners for the Board of Water and Light of the City of Lansing, Michigan, determines that the current BWL Interconnection Standard shall be modified to ensure that:
--------------------
Motion by Commissioner Cochran, seconded by Calkins, to adopt Resolution 2007-7-12 for the Determination of Interconnection Standard.
Action: Carried unanimously.
Resolution 2007-7-13
|
F. |
Consideration of
Net Metering, Fuel Diversity and Fossil Fuel Generation Efficiency Standards
as Required by the Energy Policy Act of 2005 |
RESOLVED, that the Lansing Board of Water and Light will commence consideration of the Net Metering, Fuel Diversity and Fossil Fuel Generation Efficiency standards referenced in the Energy Policy Act of 2005 before August 8, 2007; and
FURTHER RESOLVED, that the Lansing Board of Water and Light shall hold a public hearing to accept public comment on the Net Metering, Fuel Diversity and Fossil Fuel Generation Efficiency standards, to be scheduled in March 2008.
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Staff Comments: The Energy Policy Act of 2005 (EPAct05) amended Title I of the Public Utility Regulatory Policies Act of 1978 to require state regulatory agencies and covered non-regulated electric utilities (including municipal utilities with annual retail sales of 500 million kWh or more, including the LBWL) to formally consider whether to adopt five new federal standards. The five new federal standards are: net metering, fuel diversity, fossil fuel efficiency, smart metering, and interconnection. EPAct05 specifies that a decision whether to adopt net metering, fuel diversity, fossil fuel generation efficiency standards must be made by August 8, 2008. The Resource and System Planning department of the LBWL will begin evaluating these standards before August 8, 2007, and will gain further insight from the public hearing to be held in March 2008. After the public hearing, but before August 8, 2008, Staff will bring a recommendation to the Board regarding whether to adopt the federal standards for net metering, fuel diversity, fossil fuel generation efficiency.
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Motion by Commissioner James, seconded by Commissioner Rodocker, to adopt Resolution 2007-7-13 for the Consideration of Net Metering, Fuel Diversity and Fossil Fuel Generation Efficiency Standards as Required by the Energy Policy Act of 2005.
Action: Carried unanimously.
Resolution 2007-7-14
|
G. |
Easement
Exchange with A Winning Pointe, LLC |
RESOLVED, that the Board of Commissioners hereby authorizes the General Manager to release its Existing Easement (Attachment A) with A Winning Pointe, LLC in exchange for a new easement (Attachment B) granted by A Winning Pointe, LLC, which shall be located on the same parcel.
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Staff Comments: The Lansing Board of Water & Light (BWL) has an easement (Liber 1203, Page 663 [BWL #3302 07 3006]) for its utility operations located at 111 E. Saginaw Street, East Lansing, Michigan, hereinafter referred to as “Existing Easement”. The fee owner and successor grantor is A Winning Pointe, LLC, hereinafter referred to as “Grantor”.
Currently, the BWL does not utilize the Existing Easement and would like to relocate its facilities to another location on Grantor’s property. Additionally, the Grantor would like to construct its own building within the Existing Easement area. The BWL and the Grantor would like to resolve their needs by exchanging easement interest.
Therefore, it is requested that the Board of Commissioners authorize the release of its Existing Easement in exchange for a new easement of the same square footage on the same property that will meet the operational needs. The release would only occur after full execution and recording of the new easement document.
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Motion by Commissioner Zerkle, seconded by Commissioner Calkins, to adopt Resolution 2007-7-15 for the Easement Exchange with A Winning Pointe, LLC.
Action: Carried unanimously.
None.
Sparrow Foundation Update. Commissioner Rios announced that during the last Committee of the Whole meeting, the committee had lengthy discussion regarding the Sparrow Foundation proposal. The foundation proposed that the BWL enter into a relationship with Sparrow Foundation for the purpose of supporting their efforts. The partnership would give the BWL significant exposure in terms of a naming opportunity at Sparrow Hospital. BWL General Manager, J. Peter Lark was asked to arrange a visit with Sparrow leadership at the facility, and subsequent to the Committee of the Whole meeting, Mark Nixon completed extensive work with the foundation in developing several different options.
Mr. Lark noted that he and Mr. Nixon toured the facility on July 23, 2007. As such, Mr. Lark was very impressed with the hospital and its efforts. The BWL and Sparrow Hospital are two great non-profit entities both serving the public good, which is in some ways the very fabric of the community. Therefore, anything they can do to help and assist is very positive and provides favorable exposure for the BWL. The project is favorable to the extent that the BWL can be a part of what is clearly a great effort for people of the entire area, more particularly City of Lansing residents. Mr. Lark also clarified that he did not have a specific recommendation at this time. The hospital outlined some good options; however, they are not ready to decide what part of the facility they should contribute to or have exposure at. There were some suggestions that the BWL give a significant sum upwards of $500,000. However, in review it would seem appropriate that the BWL should be at some level less than that amount. The naming rights and exposure value appears equally as great at $250,000 as it would be at $500,000. Therefore, Mr. Lark noted that they should look at the lesser of the two amounts and perhaps consider spreading it out over a number of years. It is also recommended that the contribution come from somewhere other than BWL revenues generated from the sale of electricity, water, chilled water and steam. There are fundraising efforts that they might be able to consider in the future and some that they have employed in the past. It is Mr. Lark’s suggestion that they determine whether or not the BWL is able to generate enough charitable contributions to donate to the Sparrow Foundation.
Commissioner Rios advised that he and Mr. Nixon had initial conversations with Lupe Izzo who is very much committed to the process. If the BWL enters into an agreement, Tom and Lupe Izzo have committed to assisting the BWL with additional to help meet or exceed the commitment. Commissioner Rios also confirmed that minimum naming rights would involve a $250,000 commitment.
On motion by Commissioner Rios, seconded by Commissioner James, that the Board of Commissioners direct the General Manager to pursue an opportunity as presented by Sparrow Foundation to make a significant contribution that would give the BWL naming rights at that facility; and at the same time incorporate into that an understanding with Sparrow that this would be a commitment over a period of years; and that Sparrow would commit to assisting the BWL in engaging in fundraising efforts for the BWL to meet this commitment. In addition, the motion also includes that this be reviewed annually by the Board of Commissioners to determine where they are and make any adjustments necessary on a yearly basis depending on the timeframe staff recommends.
Discussion: Commissioner Calkins advised that it would be beneficial if there were ways to involve the community in the donation process by way of a matching program or something of that nature.
Mr. Lark noted that he failed to mention community involvement but there are ways in which the BWL can successfully do it. Right now they are optimistically cautious but he thinks that this is something that could be done and would help improve the entire City of Lansing. In addition, it could be done favorably so that the BWL can contribute what appears to be a large amount from contributions engendered from others and not revenues.
Commissioner James advised that if they are looking at other possible contribution amounts then she is so inclined to look at the $500,000 contribution level at perhaps over a longer period of time.
After further discussion, it was determined that Mr. Lark and Mr. Nixon would develop a specific plan that helps to ensure that the BWL could achieve its contribution goals. In addition, it was noted that the plan may need to contain language that speaks to binding future boards, and it should also be reviewed on an annual basis.
Action: Carried unanimously.
Resolution 2007-7-15
WHEREAS, the Board of Commissioners have appointed J. Peter Lark as Director and General Manager of the Lansing Board of Water and Light.
WHEREAS, the Board of Commissioners have entered into a one year employment agreement, dated July 16, 2007, with J. Peter Lark for his services as Director and General manager of the Lansing Board of Water and Light.
RESOLVED, as a point of clarity, the employment agreement between the Board of Commissioners and J. Peter Lark does not include a “probationary period”.
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Motion by Commissioner Calkins, seconded by Commissioner Cochran, to adopt Resolution 2007-7-15 for the General Manager Contract Clarity.
Action: Carried unanimously.
J. Peter Lark commented on the strength of the BWL and the positive spirit and deep abiding allegiance that employees display regarding their work. He has been very impressed with the workforce, and now thinks they have a workforce in place that can move forward and accomplish some goals. In addition, two persons have been hired. One is Susan Devan, Chief Financial Officer and the other is George Stojic, Director of Strategic Planning and Development. Ms. Devan is scheduled to begin work at the BWL on August 6, 2007. She was the Chief Regulator with the Michigan Public Service Commission (MPSC) for all utilities in Michigan (except municipalities). She is a certified public account and has done this type of work with large utility companies for approximately 28 years. Very versed in accounting and utility accounting, Ms. Devan is also a member of the National Research Regulatory Institute and has presented her work to the Michigan Municipal Electric Association. In addition to national speaking engagements, she is very well known by utility persons in the State of Michigan and has a favorable reputation. Ms. Devan is also extraordinarily nice, which is one of the qualities Mr. Lark seeks when hiring people.
The second newly hired individual is George Stojic, Director of Strategic Planning and Development. Mr. Stojic was instrumental in the development of the State of Michigan 21st Century Energy Plan. He is a highly respected individual and was indispensable to Mr. Lark while at the MPSC. It is good to have someone that is conversant with energy efficiency (i.e. renewable portfolio standards) and mercury rules. Mr. Lark has setup a meeting with the Department of Environmental Quality, BWL staff, and himself to discuss some of the issues surrounding the mercury rules. He went onto note that he believes they would need someone who can look at these issues and decide where to go and Mr. Stojic will bring that knowledge to the BWL. In addition, Mr. Lark will have Mr. Stojic look at water development for potential expansion. He is also very nice individual and has a gift for being extremely credible, which in going forward will be a tremendous asset to the BWL.
Commissioner Calkins made remarks, as he anticipates that the July Board meeting will be the last that he attends in a Commissioner capacity. He went onto to note that he has enjoyed being a Commissioner. He has learned a lot and it was very enjoyable. The BWL is blessed with a lot of very nice people, and all that he has run into he has enjoyed. In addition, he enjoyed challenging some of the board members on different issues and he will continue to watch and see how they perform.
The Commissioners noted that they have also enjoyed working with Commissioner Calkins as well and he will be missed.
Commissioner Rios added that he would reserve his comments
until Commissioner Calkins is really going away, as he maybe with the Board
longer than he thinks. He further
advised that Commissioner Smith is an incredibly busy person with a loud voice
in the community and she had to leave for something else that is very
important. Commissioner Rios also noted
for the record that he has enjoyed serving on the Board under Commissioner
Smith’s leadership. He thinks much has
been accomplished and he is humbled by the election to the Chair position
because he knows that it is not an easy job.
There is a lot of responsibility associated with it and it is not always
easy to respond to things when this is not one’s full time job. There are a lot of other distractions and
sometimes it becomes an almost impossible task to keep up with everything that
is going on while also providing leadership.
However, he promised that he would work very hard to do just that and
hopes that he can meet the high standard that Commissioner Smith has
established for the Board. He knows that
she hopes to continue to serve on the Board of Commissioners and he hopes that
she does because she has done a tremendous job.
He went onto advise that he hopes they have the opportunity to publicly
thank both Commissioners Calkins and Smith.
Commissioner Rios expressed heartfelt thanks to
Commissioner Cochran agreed with the sentiment and noted that Mr. Peffley brought calmness, serenity, and a feeling that the BWL was back together as a family. Mr. Peffley created an environment that brought a respect for the truth. Commissioner Cochran thanked Mr. Peffley for his service and advised Mr. Lark that he has big shoes to fill of which he is sure can be done. However, Commissioner Cochran noted that it is wonderful to have a changed atmosphere.
On motion by Commissioner James, seconded by Commissioner Cochran that the absence of Commissioner Graves be excused.
Action: Carried unanimously.
PUBLIC COMMENTS
Joe Wolfe, former Assistant General Manager with BWL for approximately 25 years commented that he has been away for nearly 10 years. He noted his surprise to read that certain high-level employees were no longer at the BWL. His first reaction was total shock, then anger and disappointment. Mr. Wolfe advised that he has never recalled a time in which something like this has happened to high-level employees at the BWL. He went onto note that he worked very closely with Bill Cook whom he helped to recruit and train. Mr. Cook was a good employee and he was unsure how Mr. Lark formed an opinion of him because his actions took place on his first day at the BWL. Mr. Cook was not yet eligible for retirement and he made a good salary. However, now he is gone at an age when it is difficult to find an equivalent position. Mr. Wolfe commented that he thought what happened was cruel and noted Mr. Cook’s good performance ratings. He also advised that the BWL is enjoying things today that he and Mr. Cook worked to create. Mr. Wolfe went onto note that the Board has not commented on the events that took place and as such, have let the employees down.
Roger Jeffers, BWL retiree with over 30 years of service
noted that in October 2006, a proposal to adjust the retiree’s defined benefit
plan was submitted. Although, they did
not receive exactly what they had hoped for, he thanked the Commissioners and
Joseph Davis, Business Manager of IBEW Local 352 introduced new President of IBEW Local 352, Dolores Appling. He thanked her for accepting the nomination and going through the run off process to become President. Mr. Davis also extended thanks to Commissioner Smith for her years of service as Chair. It has been difficult over the last couple of years but Mr. Peffley brought calm to the area and they supported him in the past and continue to do so. In addition, Mr. Davis reiterated the bargaining units support of the endeavors that the BWL would like to undertake regarding the Sparrow Foundation. A letter written by Mr. Davis was given to the Board of Commissioners and Mr. Nixon, which advises employees and the general public of his stance on the changing of the guard. Mr. Davis proceeded to read the letter in its entirety, a copy of which will be entered under communications for record purposes at the September 25, 2007 Board meeting.
Dolores Appling, President of IBEW Local 352 commented that she had opportunity to spend a few moments with Mr. Lark and she was very impressed. The attitude and feeling of the employees is amazing. It is similar to the sentiment that occurred when Mr. Peffley became Interim General Manager but only better. They will continue to make the BWL exactly what it has always been, which is a premier utility. Ms. Appling considers herself fortunate to work with so many amazing, loving, compassionate, and outstanding people. She wishes that everyone would stop using the word “fence” because they are as one. They have to face the future as one or they will truly fail. She is appreciative of the many doors that have been opened and she is the block that is going to hold them open. Ms. Appling appreciates everyone’s assistance and they are going to continue to work as a team to progress forward with the Board’s guidance and leadership.
Ron Byrnes, BWL retiree noted that there is a lot of love in the room, which has not always been the case. As Chairman of one of the retirees committees, Mr. Byrnes officially welcomed J. Peter Lark as the new General Manager and noted that they are available for dialogue at anytime whether it be official or not. Mr. Byrnes advised that the retirees are there to help and wished Mr. Lark great success in the future. He also congratulated Commissioners James and Rios on their officer appointments.
Commissioner Rios thanked everyone who spoke during public comments and noted how impressed he is with attendance at Board and committee meetings. It is an indication that people really care about happens at the BWL and goes back to the love that people have for the community and the BWL. There are a lot of challenges and they are not always going to agree but it is good to know that everyone is on the same page relative to where they are going right now. There are persons coming to the BWL from the outside and Mr. Lark is making some difficult decisions and moving forward with those things in pursuit of making the BWL bigger, better and greater. Commissioner Rios noted that Mr. Lark deserves the Board’s support and they are going to give it to him. He also thanked the IBEW for standing up and supporting their efforts in that regard but there is much work to do and the challenges are even greater. Change is always difficult to accept at first but time will tell that they are all working towards the same goals and objectives. Commissioner Rios thanked Mr. Davis for the presentation, as he takes his trust and statement of support from the IBEW very seriously.
On motion by Commissioner Calkins, seconded by Commissioner Zerkle, the meeting adjourned at 6:49 p.m.
/s/ Rhonda Jones, Corporate Secretary
Filed with Lansing City Clerk
August 2, 2007