Approved by the Board:
MINUTES OF THE BOARD OF COMMISSIONERS
REGULAR MEETING
_________________________
_________________________
The
Board of Commissioners met in the Boardroom of the Administrative Offices,
Present: Commissioners Joseph Graves, Semone
James, Peter Kramer, Julee Rodocker, Robin Smith and Sandra Zerkle.
Absent: Commissioner Robert Cochran.
(Note: 4th Ward vacancy exists.)
The
Secretary declared a quorum present.
Chairperson
James asked all to rise for the Pledge of Allegiance to the Flag.
Chairperson
James called the meeting to order at
APPROVAL OF MINUTES
By
motion of Commissioner Graves, seconded by Commissioner Smith the minutes of
the
PUBLIC COMMENT
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.
There
were no public comments.
COMMUNICATIONS
Letter
dated
Received
and placed on file.
COMMITTEE REPORTS
EXECUTIVE COMMITTEE
The
Executive Committee of the Board of Water and Light met at the Executive
Offices, Lansing beginning at Tuesday
Executive
Committee Chair, Santiago Rios called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Semone James, Santiago Rios, and Robin
Smith. Commissioner Graves was also
present.
Absent: None
Public Comments
There
were no public comments.
Discuss Pending Litigation
Moved
by Commissioner James, seconded by Commissioner Cochran to go into executive
session to discuss a pending litigation with outside counsel, Melissa Jackson
of Foster, Swift, Collins & Smith, P.C. protected by the Open Meetings Act
exemption MCL 15.268(h). (
Yeas: Commissioners Cochran,
Nays: None.
Absent: None
Carried
unanimously.
Moved
by Commissioner Graves, seconded by Commissioner Cochran that the Executive
Committee return to open session.
Carried
unanimously.
The
Executive Committee meeting reconvened in open session at
Commissioner
Rios advised that the Executive Committee received an update regarding pending
litigation.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Executive
Committee
The
report will be filed with the minutes of the
The Human Resource Committee of the Board
of Water and Light met at the Executive Offices, Lansing beginning at
Human Resource Committee Chair, Julee
Rodocker called the meeting to order and asked the secretary to call the
roll. The following committee members
were present: Commissioners Robert
Cochran, Julee Rodocker and Sandra Zerkle.
Absent:
Commissioner Joseph Graves.
Public Comment
There were no public comments.
Director of Internal Audit Six-month Review
Susan
Pifer, Director of Internal Audit and Board appointee requested a closed
session for the purpose of receiving her six-month performance review as
permitted by Open Meetings Act exemption MCL 15.268(a). (
Yeas: Commissioners Cochran, Rodocker, and Zerkle.
Nays: None.
Absent: Commissioner Graves.
Carried
unanimously.
Moved
by Commissioner Cochran, seconded by Commissioner Zerkle that the Human
Resource Committee return to open session.
Carried
unanimously.
The
Human Resource Committee meeting reconvened in open session at
On
motion by Commissioner Cochran, seconded by Commissioner Zerkle, the
Human Resource Committee recommended that the salary increase package for Susan
Pifer, Director of Internal Audit be forwarded to the full Board for
discussion.
Action:
Carried unanimously
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Julee
M. Rodocker, Chair
Human
Resource Committee
The
report will be filed with the minutes of the
AD HOC COMMITTEE
The
Ad Hoc Committee on Workforce Development met at the Executive Offices,
Lansing, beginning at
Ad
Hoc Committee Chair, Sandra Zerkle called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Santiago Rios, and Sandra Zerkle. Alternate committee member Joseph Graves was
also present.
Absent: Commissioner Julee Rodocker
Public Comments
There
were no public comments.
CSO Project
·
With
additional staffing and equipment, the BWL could perform any or all of the
water main work that the CSO contractors now perform.
·
Approximate
annual expenditures paid to the City of
·
Based
on historical comparisons there may not be any savings to BWL customers. However, it would allow the development of
new employees to replace those retiring within the next few years.
·
The
City would likely be concerned with two different construction forces working
in the same streets.
·
The
State Revolving Fund (SRF) advantage may be lost to the BWL if the BWL performs
the work.
·
CSO
related work stops in November and starts back in the spring. This may be a staffing concern as BWL Water
T&D Maintenance is essentially completing current staffing.
After
lengthy discussion, the Ad Hoc Committee directed staff to draft a letter to the
appropriate parties indicating the BWL’s interest in establishing dialogue to
discuss its ability to do some of the CSO work.
The City and the BWL share the same objective in wanting to serve its
customers in the most effective and efficient means possible. Therefore, the letter will reflect the BWL’s
proactive interest in possibly addressing the task at hand. It was also noted that the BWL might propose
working in one area as a demonstration of its ability to handle the task, which
might involve the creation of one water crew (4-5 persons) who could also be
utilized on other BWL projects as well.
In addition, staff will also develop a business plan to determine the
feasibility of either doing some, all or none of the CSO work in a cost
effective and competitive manner.
Master Plumbers
Dick
Peffley, Executive Director of Operations gave a verbal update regarding Master
Plumbers in relation to the Lead Service Replacement Program. When replacing a lead service, the BWL chops
off the service line on the customer’s side of the meter, installs a new
service line, and reconnects the service.
A plumber is then called to make the final termination to the customers
plumbing, as the BWL is not allowed to work on the customer’s side of the meter
because it is a violation of the City and State plumbing code. The former General Manager previously
approached the City to obtain a variance to work 2 or 3 feet down from the
meter to allow the BWL to reconnect the meter and provide one stop
shopping. However, the variance was
denied because the BWL is not licensed.
If the variance had been approved then the BWL would have hired a master
plumber as part of the licensing requirement.
Currently, there are two individuals in the bargaining unit willing to
take a license. In addition, the BWL
could decide to become a master plumber contractor by establishing a limited
liability corporation (LLC). The LLC
would allow the BWL to file for full permits, perform work on BWL facilities,
and have a master plumber on staff. Mr.
Peffley is in the process of researching additional information regarding the
above matter.
Commissioner
Rios noted that he viewed the topic from a broader perspective in that the
BWL’s creditability is paramount in terms of any work that it performs. It appears that the BWL should have the
highest possible certification available relative to its ability to do water
work. A master plumber on staff serves
the BWL in terms of creditability, general work, and contract negotiations,
i.e. CSO Project, Delta Township, etc.
There is a significant amount of work done on BWL premises that is
classified as plumbers work but contracted out to vendors, which raises the
question of what can the BWL do more effectively and efficiently in house, if
it had its own master plumber. In
addition, the Ad Hoc Committee is seeking to develop the workforce and as such,
they have discussed planning and developing people
Susan
Pifer, Director of Internal Audit provided a handout entitled, “Vendor
Analysis” and gave a brief overview of its contents. A complete copy of the handout dated
Assumptions
·
Reported
payments to plumbing companies represent labor, tools and equipment (not
materials)
·
Plumbing
services provided by plumbing companies may be adequately performed or
supervised by Board employees
·
Reported
payments to (three) plumbing companies is representative of the work volume
that a licensed employee-plumber (or plumbers) will perform
·
Average
salaries do not include fringe benefits or tools and equipment required by a
licensed plumber (or plumbers)
Conclusions
·
2007
meter connect and reconnects approached $160,000 in payments to John E. Green
·
Average
salary for a master plumber in
·
Assuming
40% fringe benefit rate and a discount rate of 70% for billable hours, the
annual cost for a master plumber employed by the BWL is $96,000 or 60% of the
cost to contract meter connects and reconnects
·
Current
contracts for heating, plumbing, valve installation and boilermakers to perform
work on LBWL premises exceed $1 million
Limitations
·
Michigan
Compiled Law (MCL) 338.3525 provides that plumbing shall not be performed
unless a “plumbing contractor” who is responsible for the work has secured a
permit
·
MCL
338.3531 provides that only a sole proprietorship, partnership, corporate, or
limited liability company may apply for licensure as a “plumbing contractor”
·
Although,
MCL 338.3521 provides that licensure is not required for installation of pipe
from the water main to the services, a permit and inspections are still
required per MCL 338.3525(b)
·
MCL
338.3551 provides that where a business requires the regular employment of a
plumber, a licensed master plumber shall be authorized to secure permits for
installations of plumbing on the premises owned or occupied and used by the
business
Next
Steps
·
Even
if the Code is interpreted to prohibit meter connects and reconnects by an LBWL
master plumber-employee, current contracts for plumbing on LBWL premises exceed
$1 million
·
Special
filings may permit a master plumber employed by LBWL to pull the permits and
supervise on-premises work, e.g. City of
·
Refer
citations to general counsel for further interpretation regarding scope of work
legally permissible for a master plumber-employee
Ms.
Pifer noted that the vendor analysis was a cursory level review. Additional research relative to the specific
work conducted and the skill level of the employee conducting the work, i.e.
master plumber, journeyman plumber, etc. may be required.
Following
the presentation materials, Dick Peffley noted that prior to the report a
request to add two welders on staff was made for the purpose of succession
planning and reducing the amount of contract work awarded to outside
vendors. It was also clarified that a
BWL master plumber can perform work on BWL facilities. In addition, there was also discussion as to
what contractor work was performed by a master plumber and/or journeyman
plumber pipe fitter.
On
recommendation by Commissioner Rios, it was suggested that the BWL investigate
and move forward the hiring of a master plumber and journeyman in order to help
increase the BWL’s creditability in this area and build workforce
development.
In
addition, Jim Dravenstat-Morceri, Assistant Business Manager of IBEW Local 352
recommended that the BWL search for a master plumber with heating and air
conditioning credentials. The added
skill level would allow the BWL to avoid contracting heating and air
conditioning work. It was also noted
that revenue generated from BWL inspections is credited to the general fund but
should be reflected in Water Department revenue.
J.
Peter Lark, General Manager noted that there was a recent meeting in which he
met with Water Department management to discuss the departments concerns. It is his belief that they are beginning to
address those issues, which could include the addition of a master plumber. After further discussion, it was noted that
the various suggestions are all ideas that can be explored.
Updates
Denise
Mulder, Director of Human Resources provided updates on several topics that
include the items listed below.
Contract
Language Re-establishing Groundsmen. The groundsmen position was previously used
as a feeder role to the lineman helper.
Lineman helper duties essentially combined the responsibilities of a
truck driver and groundsmen. The lineman
helper position eliminated approximately 15 years ago provided employees
exposure to the work conducted by a lineman.
Therefore, if an employee were interested in that position then they
would traditionally begin as a groundsman, become a lineman helper, and then
apply for the lineman apprentice pool to become a lineman if they so
desired. Presently, the BWL posts
notices three times a year advertising all apprenticeships within the
organization. In its current capacity,
any employee is eligible to test and be considered for an apprenticeship
position. It was suggested that the BWL
consider re-establishing the groundsmen role to increase the number of
candidates who successfully transition from an apprentice to a lineman. In addition, the committee also discussed
utilizing a combined lineman helper program in which persons can either
attrition from a groundsmen to lineman apprentice to lineman, or apply for the
lineman apprenticeship regardless of their current work classification. As such, the combined program would allow the
BWL to pull from the entire employee resource pool and prevent the program from
becoming too limiting in nature. After
further discussion and upon recommendation by Commissioner Zerkle, it was
suggested that Denise Mulder and
Commissioner Graves
departed the meeting at
Erickson
Training Facilities. No update was provided.
High
School Partnership for Training Linemen in Schools.
The committee discussed the possibility of creating a high school
partnership; whereas, persons could apply for a linemen helper position and
possibly test to become a lineman apprentice.
A program of this nature would allow the BWL to draw from the local
population and expose the student body to a career in skilled trades. Concern was expressed relative to the concept
of allowing high school participants to receive the higher salaried
positions. As a result, it was suggested
that giving student participants consideration regarding entry level BWL
positions maybe more appropriate. The
committee also discussed the necessity of expanding its recruiting efforts to
build on the number of BWL lineman apprentices but to also increase the number
of existing lineman on staff. Although,
salaries are competitive it was noted that lineman have expressed concerns regarding
the contribution amount for the BWL’s defined contribution plan. Denise Mulder noted that the Human Resource
Department have begun discussions regarding the improvement of recruiting
efforts and the employment process, which may include advertising linemen
positions in the upper peninsula. After
further discussion and upon recommendation by Commissioner Zerkle, it was
suggested that Denise Mulder and
Diversity
Employee Recruitment. It was reported that former Diversity
Administrator/Ombudsperson, Shan Shaw accepted a new position with another
entity and is no longer with the BWL.
However, prior to his departure a diversity plan was submitted to the
General Manager per previous request.
The plan addressed the need for the General Manager to make known to
staff and management his interest in diversity.
Denise Mulder advised that diversity is not the responsibility of one
but is driven by the employment process.
Therefore, anyone who touches the employment process should understand
diversity and develop a methodology to expand the BWL’s recruiting efforts. Some of those efforts include periodic
diversity training sessions and concentrated outreach. It was further noted that Peter Lark is
scheduled to participate in an eight month CEO Program to enhance his knowledge
of diversity. In addition, it was also
suggested that the BWL attend Michigan Works Job Fairs and work with existing
programs such as the Hope Scholarship and Junior Achievement in an effort to
expand its recruiting efforts.
Contract
Work Back In-house. No update was provided.
JTTC
Survey. The Joint Technical Training Committee (JTTC)
developed a survey, which was sent to every department that contains bargaining
unit employees. The respective areas
formed departmental training committees overseen by the JTTC in order to
provide input. The JTTC will tabulate
the survey results and forward recommendations to Denise Mulder who will review
and evaluate the recommendations for submittal to senior management for further
review.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Sandra
Zerkle, Chair
Ad Hoc
Committee
The
report will be filed with the minutes of the
COMMITTEE OF THE WHOLE
The
Committee of the Whole of the Board of Water and Light met at the Executive Offices,
Lansing beginning at
Committee
of the Whole Chair, Semone James called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Semone James, Peter Kramer, Santiago Rios,
Julee Rodocker, Robin Smith, and Sandra Zerkle.
Absent: Commissioner Joseph Graves
Public Comments
Keith
Harrison, Ronald Shull, and Paul David Arnold of the Sons of Union Veterans of
the Civil War, Lansing/Sunfield Curtenius Guard Camp #17 presented a
certificate of appreciation to members of the Board of Water and Light (BWL),
Maintenance and
Background on Establishing a Foundation
Dennis
W. Fliehman, President of Capital Region Community Foundation (CRCF) in
Private
Foundation
·
Advantageous
for organizations who want to exercise a great deal of control over all aspects
of charitable giving; including the investment and supervision of money.
·
Additional
staffing needs are typically necessary to manage the gifts, address
governmental regulations, and file appropriate tax forms.
Business
Advised Fund
·
Advantageous
for businesses who want the satisfaction of charitable giving without the
administrative burden.
·
Gifts
are made corporately or by individuals to a fund managed by CRCF.
·
The
advisory committee for the respective fund is not allowed to invade the
principle unless by extraordinary circumstance.
The donation becomes the asset of the community foundation with
direction from the BWL as to how it would like a portion of the net income
distributed. Maximum distribution amount
is 4% (or a total of 5% including the CRCF fee).
·
CRCF
Fee – 1.25% annual fee based on the value of the fund, which allows CRCF to
provide grants to numerous non-profit organizations in the community.
·
Investment
Management Fee – Approximately 62 basis points that are prorated across all
funds.
·
Fund
Managers – There are eleven fund managers and CRCF has a fee based consultant,
named Itech, Inc. that selects and monitors the managers on a quarterly
basis. Asset allocation is 70% equity
and 30% fixed.
·
Donations
are tax deductible and if eligible one may receive a 50% tax credit on State of
·
Minimum
investment amount is $10,000.
Following
the presentation, the Board of Commissioners discussed the merits of a private
foundation, a business advised fund, and a 501C3 relative to the needs and
goals of the BWL. It was suggested that
the Board consider leaving their existing community sponsorship mechanism as is
and raise additional funds to establish a private foundation. After further discussion, the Board directed
staff to provide the following information:
cost associated with establishing a private foundation, the amount of
funds currently spent for community sponsorships including administrative
costs, the amount spent on community sponsorships during the past 3-5 years,
and the parameters and cost associated with establishing a 501C3.
Update on the
Robert
Trezise, Jr., President of the Economic Development Corporation of the City of
The
Commissioners noted their excitement about the Phoenix Project and the positive
impact that it will have on the community.
The influx of new jobs and removal of expenses related to maintaining
the
J.
Peter Lark, General Manager noted that they are working on a business case for
the Phoenix Project. In addition, the
BWL will gain electric and water load and they are also seeking to gain steam
and chilled water for said location.
After
further discussion, the Board asked Mr. Trezise to provide them with a packet
of materials that contained an executive summary and term sheet, which would
speak to the specifics of the project.
The Board also directed staff to prepare a business case that speaks to
the additional utility load, financials, and intangible value that the project
will generate.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Committee of
the Whole
The
report will be filed with the minutes of the
AD HOC COMMITTEE
Commissioner
Zerkle called the Ad Hoc to order at
Public Comments
There
were no public comments.
Master Plumber/Outside Services
Sue
Pifer, Director of Internal Audit handed out a Vendor Analysis of Outside
Services listing nine outside contractors who have done work for the BWL and
who were paid over $25,000.00. Miller
Pipeline is currently being used for the lead service replacement and William
E. Walter for HVAC work. The Board of
Water and Light has been doing 50% of lead service replacement work. By the beginning of the next construction
season, the board will hire permanent employees and will be doing 75% of this
work. Also by the next construction
season, board forces will do 100% of the HVAC work; this work is currently
being done by outside forces. As this is
a new classification, a wage structure will be set up. There will be considerable savings to the BWL
by hiring its own labor. Both of these
projects will be evaluated in the future to make sure they are financially
prudent.
There
are currently two Board of Water and Light employees who have expressed an
interest in taking the test to become the Board’s Master Plumber. If one of these persons gets the master
plumber position, the job that was vacated will be replaced.
CSO Project
As
directed at the last Ad Hoc Committee Meeting, General Manager Lark drafted a
letter to Chad Gamble, Director of Public Service for the City of
Updates
Denise
Mulder stated that the results from the Joint Technical Training Committee
(JTTC) survey results are back from the departmental training committees and
are being analyzed. A list of
recommendations will be forwarded to senior management for review such as for
organizational priorities. General
Manager Lark spoke of a program in the
Denise
Mulder spoke on a program to partner with the local school system and the best
methodology is through LCC Technical education.
There are 8 positions that would be entry-level positions that we
currently hire from the outside. The BWL
and the union would be willing to set aside a certain number of those positions
for incoming high school students; this would have to be determined on an
annual basis because of manpower planning.
This program is not for linemen but for entry-level positions into the
BWL. Charles Moore reported on a canned
curriculum, which is available through
General
Manager Lark reported on the responsibilities of the newly established
Diversity Advisory Council. Members are
Sue Devon,
Commissioner
Zerkle made the recommendation to disperse the Ad Hoc Committee as the original
goals of the committee have been met.
Issues are in process.
Commissioner Zerkle will give a final report at the next Committee of
the Whole. The Ad-Hoc Committee would
like to receive an update at the end of 2008 from Internal Auditor Susan
Pifer. This report should show a
comparison as to whether or not there is a cost savings to the BWL by bringing
some of the contract work in-house.
Motion
for adjournment was made by Commissioner Rios, seconded by Commissioner
Cochran. There being no further
business, the meeting adjourned at
Respectfully
submitted,
Sandra
Zerkle, Chair
Ad Hoc
Committee
The
report will be filed with the minutes of the
FINANCE COMMITTEE MEETING
The
Finance Committee met at the Executive Offices,
Finance
Committee Chair, Robin Smith called the meeting to order and asked the acting
secretary to call the roll. The
following members were present:
Commissioners Semone James, Peter Kramer, and Robin Smith. Alternate committee members Robert Cochran
and Joseph Graves were also present.
Public Comments
There
were no public comments.
Utility Rate Adjustments
Sue
Devon introduced William Aldrich the new Manager of Finance and Planning area.
General
Manager Peter Lark presented an overview of the direction of the BWL regarding
a potential rate increase. The FY08
budget called for rate increases of 4% in electric, 6% in water and 6% in
steam. Instead, Mr. Lark is suggesting a
5% increase in the electric rates.
Based
on the FY08 budget, net income projections are not positive but the net income
for the 1st quarter of this year was very positive because of
excellent wholesale and retail electric sales.
The projected combined net income losses for FY08 of $5.8M, together
with the capital expenditures and debt service would result in a cash deficit
of $11M. Even though the first quarter
of operations boosted the projections for FY08 to a positive net operating
income for the year of $1.2 million, it is still significantly below the $20M
requirement to generate a 4% return on fixed assets.
A
5% increase will amount to $1.87 for a residential customer per month. The BWL rates will still be approximately 20%
below Consumers Energy. The $48M cash on
hand at the end of FY07 is very important to maintain as it affects our bond
rating and because there will be a lot of expenditures in the future, some of
which involve the new mercury Sox and Nox rulings. In addition to being considerate of our
customers, we need to be able to have the reserves and meet capital
expenditures.
Chief
Financial Officer Sue Devon spoke on the financial plan that was presented in
May of 2007, which contained the original rate increases for 2008. The financial goals of the BWL are to
maintain credit quality, ensure adequate liquidity, maintain rate
competitiveness, efficient and appropriate use of capital and to have
financially independent utilities.
According to Fitch, the recommendation for utilities of our size is to
have 104 days of cash on hand; to have 104 days of cash the BWL needs to have a
cash balance of $82M. BWL rates and
charges should be sufficient to cover all Operations & Maintenance O&M
expenses, contributions to the city, depreciation expense, and a reasonable
return on the BWL’s capital investment.
The return on the BWL’s capital investment should be sufficient to
provide cash flow for debt service, bond coverage, and capital
improvements. Rates and charges should
be adequate to cover all annual operating costs and deprecation charges for the
utility and to provide as determined by the Commissioners, a rate of return for
each utility’s operations. Resolution
#99-3-2 established the financial goals at 4%.
A 4% return over a six-year period would be $11M in electric, $8M for
water, $1M for steam and $1M for chilled water or $20M for all utilities
combined.
The
4% on net assets is needed to reinvest in the business. With the rate increases projected in May
2007, the projected net income for all utilities for the six-year period would
be $21.5M. To reach that 4% return goal
over the six-year period we should generate approximately $118M. Cash comes from net income, depreciation, and
bond proceeds. The cash pays for our
debt service, and capital expenditures.
Recurring rates at a lower level are easier for customers to
accept. Rating agencies appreciate it if
a utility is consistent of having rate increases of 3%, 4% or 5% every
year. The average increases per customer
with a rate increase of 5% on electric would be $1.87 per month. With a 6% rate increase on water and steam,
the increases would be $.82 for water and $58 for steam. Currently the BWL rates are approximately
17.5% less than Consumers. In order to
schedule a rate hearing on
Commissioner
Kramer expressed a concern that 5% is not enough of a rate increase. There was extensive discussion on various
scenarios as the question was raised as to why the BWL is not asking for rate
increases in the area of 9%. In the
past, capital improvements have been paid for by operating cash. BWL rates could be raised 10% and still be
very competitive with Consumers Energy and Detroit Edison. It was suggested that the rates be raised
7.5%. Historically the BWL has only
raised rates 3% at one time. A
responsible business plan would be to look at some period of time with a
gradual and consistent rate increases over a longer period of time that gets
the BWL back to the 4% rate of return on assets. A motion was made to forward the following
2008 rates increases for the public hearing 7% for electric, 7% for water and
6% for steam – moved by Commissioner Cochran, seconded by Commissioner
Kramer. Motion carried unanimously.
RFP Recommendations: SAP Controls
The
RFP for SAP controls assessment to evaluate out implementation on SAP that went
live on April 2. There were four
responders, one a national firm Deloitte and Touche, two regional firms Plante
& Moran and Virchow Krause and a local group Rehmann. Deloitte & Touche was able to outscore
the others. However, their price was
approximately 10% higher. On-site
interviews were scheduled to compare the firms and understand the value in the
price premium for the national firm.
The
regional firms brought in the consultants that the BWL will be working with to
do their presentations. Not only did
Deloitte & Touche fail to bring in the consultants for the engagement, they
were unwilling to commit to staffing and were not willing to cap their fees for
possible overruns. Plante & Moran
and Virchow Krause did cap their fees.
Director of Internal Audit Sue Pifer recommends Plante & Moran to be
the selected vendor for the Board’s SAP Enterprise Risk Planning Financials
implementation because of the clarity of their presentation and
deliverables. Commissioner Graves made
the motion to accept the RFP for Plante & Moran, seconded by Commissioner
Cochran. Motion carried unanimously.
Motion
for adjournment by Commissioner Cochran, seconded by Commissioner Kramer.
Meeting
adjourned at
Respectfully
submitted,
Robin M.
Smith, Chair
Finance
Committee
The
report will be filed with the minutes of the
EXECUTIVE COMMITTEE
The
Executive Committee of the Board of Water and Light met at the Executive
Offices, Lansing beginning at
Executive
Committee Chair, Semone James called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Robert Cochran, Semone James and Robin Smith. Commissioner Graves was also present.
Absent: None
Public Comments
There
were no public comments.
Board of Commissioners Budget Update
The
Executive Committee reviewed the Board of Commissioners budget update for
fiscal year 2008 to date (
Board Appointees Budget Update
The
Executive Committee reviewed the budget updates for each respective Board
appointee that included the General Manager, Director of Internal Audit and
Corporate Secretary. Susan Pifer noted
that the Department of Metrics and Audits would be over budget by approximately
$20,000 for the SAP Controls Assessment due to a previously low initial
estimate. It was also reported that each
Board of Water and Light (BWL) department has provided
Discuss Board Retreat
Commissioner
James noted her conversation with Bryan Singletary, President of Practical
Energies regarding the Board of Commissioners upcoming retreat. As such, Mr. Singletary was advised of the
current state of affairs at the BWL and was asked to provide the Commissioners
with a proposal and fee schedule regarding the facilitation of said
retreat.
J.
Peter Lark, General Manager noted that he is awaiting Sargent Lundy’s analysis
of Erickson Station, which is expected by mid-December 2007. As such, a copy of Executive Director of
Strategic Planning and Development, George Stojic’s strategic plan would be
made available to the Board of Commissioners by the end of January 2008. The plan will be a broad overview of the BWL
and its potential direction for the next twenty years. The plan would also include a resolution for
the BWL to move forward in the process.
Upon
further discussion, the Commissioners suggested that a short outline with
paragraphs that speak to specific topics be provided during the retreat to aid
in the discussion process. In addition,
it was noted that the facilitator could sign a nondisclosure statement should
he receive a draft copy of the strategic plan prior to its official release
date. It was also advised that there is
no need to wait for the strategic plan in scheduling the retreat. An outline with specific paragraphs and/or
bulletin points would be sufficient in allowing for thorough discussion. In moving forward the Executive Committee
agreed that the two-day retreat would consist of the following:
Day
One: Board Development with Facilitator
Guidance – AM
Strategic Planning with Facilitator Guidance – PM
Day
Two: Strategic Planning with BWL Staff
Participation – Full Day
Discuss Parliamentary Training
The
Executive Committee reviewed information pertaining to parliamentary training
for the Board of Commissioners. After
brief discussion, the committee agreed that it is necessary to provide the
training to board members to enhance their experience in this area. In doing so, they directed Secretary Jones to
obtain additional proposals from other consultants and/or parliamentarians
including references to provide to the Executive Committee for further review.
There
being no further discussion, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Executive
Committee
The report will be filed with the minutes of
the
Resolution
2007-11-1
SUMMARY REPORT FOR THE BOARD OF
COMMISSIONERS
PENSION FUND TRUSTEES REPORT
The
Pension Fund Trustees held their annual meeting on
Representatives
from LCG Associates reviewed the Defined Benefit Pension Plan Performance
Report and staff presented the Defined Contribution Pension and Retiree Benefit
Plan and Trust Performance Reports.
Staff
did not propose any changes to the existing policies that include the Defined
Benefit Pension Plan Investment Policy, Defined Contribution Pension Plan
Investment Policy and the VEBA Trust Investment Policy.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Semone M.
James, Chair
Pension Fund
Trustees
MINUTES
BOARD OF WATER AND LIGHT
PENSION FUND TRUSTEES’ ANNUAL MEETING
Present: Trustees Joseph E. Graves, Semone M.
James, Peter W. Kramer, Robin M. Smith and Sandra Zerkle (arrived
at
Absent: Trustees Robert W. Cochran and Julee M.
Rodocker
(Note: 4th Ward vacancy exists.)
Staff
Present: General Manager J. Peter Lark,
Executive Director and Chief Financial Officer
Consultant
Present: Senior Vice President of
LCG Associates Richard Babcock, Consultant of LCG Associates David Emerson, and
C.L. Moore & Associates Charles Moore
Chairperson
James called the meeting to order at
Public Comments
There
were no public comments.
Audited Financial Statements
Executive
Director and Chief Financial Officer
Moved
by Trustee Graves, seconded by Trustee Smith and carried, to approve the
following resolution:
RESOLUTION
ACCEPTANCE OF 2007 AUDITED FINANCIAL STATEMENTS FOR DEFINED
BENEFIT PENSION PLAN, DEFINED CONTRIBUTION PENSION PLAN, AND RETIREE BENEFIT
PLAN (VEBA)
Resolved,
that the Corporate Secretary receive and place on file the Defined Benefit,
Defined Contribution and Retiree Benefit Pension reports presented during the
Pension Trustee Meeting.
--------------------
Defined Benefit Pension Plan Performance
Report
David
Emerson, Consultant of LCG Associates presented the third quarter market
returns for the Defined Benefit (DB) Pension plan for the period ending
Richard
Babcock, Senior Vice President of LCG Associates gave an overview of the total
fund allocation and discussed the following associated charts and reports for
the quarter ending
·
Total
Fund Allocation
The
departure from domestic equity to international equity was intentional. Domestic equity is 4-5% below target and
international equity is 4-5% above target.
It was intentional as they felt that international markets have more
intrinsic value than the domestic markets and the performance indicates that it
was profitable.
·
Distribution
of Assets
As of late,
growth funds are doing better than value funds after lagging behind for the
past 6-7 years. There is slight
overweight in large growth versus large value funds, which also rings true for
small cap funds. As a result, the asset
allocation has improved slightly to the BWL’s benefit.
·
Performance
Summary for the current quarter and historical performance
Domestic
equity composite is slightly underperforming.
LCG believes that they have a great selection of managers. However, their management style is simply not
in favor right now. The performance is
lagging and LCG will look at the managers that caused the
underperformance. International equity
has had substantial top performance in every time period. Asset allocation is approximately 90% of the
return that accrues to any institutional investor. Institutions have problems in that they hire
managers with great 1 to 5 year track records.
However, one must fight against the mentality of buying high and selling
low when one should buy low and sell high.
In response
to Trustee questions regarding changing strategies, asset allocation study’s,
and the international market, Mr. Babcock noted the following: LCG reviewed several strategies and conducted
an in-depth asset allocation analysis, which was presented to the BWL when they
were initially hired. LCG can initiate
an asset allocation study in any quarter and the last one performed on behalf
of the BWL approximately three years ago.
Mr. Babcock expressed great interest in performing the study and noted
that they would like to explore this option in trying to implement strategies
with lower risk and high return. The
managers have made $5 to 7 million extra in the international market with
substantially less risk by simply changing the BWL’s allocation strategy held
many years ago.
In response
to a question regarding the success of the international market and its
potential longevity, Mr. Babcock noted that international markets have done
well in part due to the United States (US) dollar decline against other world
currencies. The US dollar is currently
in parody with the Canadian dollar for the first time in history. LCG still intrinsically likes international
versus domestic not withstanding the dollar, which may continue to be slightly
over weighted in the international market.
Forty percent of the world’s gross domestic product (GDP) is the
·
Comparative
Performance. The results are net of fees
and it is estimated that LCG’s current fees are approximately 75 basis points
including custodian fees.
·
Total
Fund Performance
·
Total
Fund Five-Year Return vs. Risk. If a
fund is above the blue line drawn from T-Bills to the S&P 500 then that
suggests excess alpha, which is additional rate of return above and beyond the
risk level that one initially took.
·
Equity
Sector Allocation. The pie chart
indicates the change in diversification from September 2006 to September 2007.
·
Equity
Allocation for all of the funds
·
Equity
Performance for individual managers for the current quarter and historical
performance
The Wachovia
Equity Account has been removed, which is good because the funds performance
had deteriorated over time. A Small Cap
Value search for new funds was difficult as half of the funds are closed. As a result, American Beacon Small Cap Value
was chosen by default. There is a
concern that there are a lot of dollars in this combined portfolio. Therefore, in going forward, LCG will begin
to look for a replacement.
·
Fixed
Income Sector Allocation
·
Fixed
Income Allocation
·
Fixed
Income and Cash & Equivalents (C&E) Performance for the current quarter
and historical performance
SmithBarney
is a corporate bond manager whose long-term record has been excellent. Western
Asset is relatively new but they are generally considered to be one of the top
three fixed income managers in the country.
Trustee
Smith noted that she would like to see another asset allocation study, as it
has been three years since the last one was performed. Although, the funds are performing well it
would be good to see if there is anything else that maybe performing better.
Mr.
Babcock agreed with the suggestion and noted that typically they try to perform
an asset allocation study every one to three years for all of their clients.
Trustee
James advised attendees that the BWL has issued a request for proposal (RFP)
for banking and investment services.
Once they have selected a manager and the RFP is awarded then the BWL
would look to commission that organization to conduct an asset allocation
study.
Trustee
Mr.
Babcock responded by noting that LCG conducted a search for a fixed income
manager since they last meet with the Trustees.
In conjunction with that they also did a diversity search. Mr. Babcock noted that they are color blind
to start with as they are happy to do business with anyone who can do the work
and has all the requisites in place.
During the search a couple of candidates surfaced. However, for that particular asset class and
at that particular point in time there simply was not a candidate that came to
the forefront. In the final analysis,
others came forth and as a result the committee selected another
candidate. Mr. Babcock also advised that
they have no problem with looking for diversity and continue to do so, as they
have diversity managers for many of their clients.
The
complete report on An Investment Management Analysis of Comparative Risk and
Return presented by LCG Associates for the quarter ending
Defined Contribution Pension Plan
·
Plan
assets by class total $133,165,000
·
Historical
performance of funds
·
Historical
performance benchmarks
Plan
participants exercise control over the assets in their account and the BWL
establishes various accounts that employees are able to invest in. The BWL looks for funds that provide options
for security and long-term stability and growth for employee funds. The options that they provide are designed to
allow employees to diversify their portfolios with various funds providing
different risk and return characteristics.
The options include equity, income and cash opportunities. Employees also have access to a Goalmaker
program as an alternative way for employees to select their model
portfolio. Goalmaker will automatically
rebalance the portfolios funds to keep it on track with the model that the employee
has selected. Approximately 18% of
employees are participating in the Goalmaker program compared to 15% last
year. Prudential reported the following
information relative to BWL employee interaction and use of their respective
services:
·
Prudential
received 1,400 calls from BWL employees to their voice response service
·
Prudential
Customer Service Representatives received 190 calls from BWL employees
·
There
were over 5,000 hits from BWL employees on Prudential’s participation website
·
Representatives
came in and held 12 meetings to answer employee questions
·
Two
special meetings were held to discuss the self-directed brokerage account
options. Prudential also held a
pre-retirement informational meeting to address questions for those employees
considering retirement.
In
response to Trustee questions regarding employee fund management and increased
employee education, Ms. Devon noted that the BWL does not know how employees
who are managing their owns funds are doing at this time because that is
private information. In addition, Ms.
Devon advised that the number of employee education meetings has been
consistent. In the September annual
update from Prudential they have an education plan that provides more of what
the Trustees maybe looking for. However,
staff has not implemented it as of yet because they are going out for a RFP for
the Defined Contribution Pension plan.
The
Trustees also asked if they were continuing to hear that employees need more
information because the concern was raised a few months ago relative to the
amount of information made available.
Trustee Smith also asked what additionally might the BWL do to satisfy
that issue because it was an employee request and it appears that the BWL is
essentially doing the same educational piece as before?
Ms.
Devon noted that representatives are available anytime an employee wants to get
in touch with Prudential and they can also arrange one-on-one meetings. She advised that she was aware of the
concern, which is why Prudential came in with the additional educational
piece. However, the BWL has not acted on
it as of yet because of the pending RFP previously mentioned.
Bulk
Power Analyst Sue Flores reported that Prudential started visiting some of the
plants at different times during the day, which is very valuable for some of
the 24/7 shift employees.
Retiree Benefit Plan & Trust (VEBA)
Other
Susan
Pifer, Director of Internal Audits advised that the subcommittee comprised of
Charles
Moore of C.L. Moore & Associates further expounded and advised that the
essential overall concern is that the advisor would recommend their own funds
and perhaps receive back door fees. BWL
management currently ensures that this does not happen by keeping an
independent advisor by way of LCG Associates.
It was noted that perhaps other organizations could give the
subcommittee some transparency in how the funds are being handled so that they
may gain a better understanding of the process.
There
being no further business, the Pension Fund Trustees meeting adjourned at
Submitted
by:
Corporate
Secretary
The
report will be filed with the minutes of the
COMMITTEE OF THE WHOLE
The
Committee of the Whole of the Board of Water and Light met at the Executive
Offices, Lansing beginning at
Committee
of the Whole Chair, Robin Smith called the meeting to order and asked the
secretary to call the roll. The
following members were present:
Commissioners Joseph Graves, Semone James, Peter Kramer, Robin Smith,
and Sandra Zerkle.
Absent: Commissioners Robert Cochran and Julee
Rodocker
(Note: At Large Vacancy exists).
Public Comments
There
were no public comments.
PA 141 (Customer Choice)
George
Stojic, Executive Director of Strategic Planning and Development provided an
overview of Public Act (PA) 141 and the Board of Water and Light’s (BWL)
position regarding customer choice.
Public Act 141 of 2000 allowed electric utility customers the
opportunity to receive electric generation service from alternate electric
suppliers. The act effective
1) Granting customers the option to switch
to an alternate electric supplier would require the BWL to develop an
appropriate customer choice program, which requires the need for substantial
investment in time, money and resources.
2) Traditionally, alternative electric
suppliers selectively market to those customers with a low cost to serve and
avoid customers with high costs to serve.
3) The cost to serve all BWL customers would
increase due to marketing efforts by alternative electric suppliers and the
cost associated with creating a BWL customer choice program.
It
was further noted that if the BWL opted out of customer choice then those same
customers would have the opportunity to change to another utility company for
distribution service only. Although,
this option would be available, staff noted that BWL vulnerability is
relatively small and highly improbable due to the following reasons:
1) Any other utility desiring to serve an
existing BWL customer must obtain a certificate of convenience and need from
the Michigan Public Service Commission (MPSC), as required by 1929 Public Act
69. If utility companies were to apply
for the certificate, the BWL would have opportunity to intercede in the process
and contest the need for said certificate.
2) Act 141 provides the BWL with the option
to operate under MPSC Rule 460.3411. The
Rule governs which utility is allowed to serve a customer when two or more
utilities operate in the same area, with one of the provisions prohibiting
existing customers from switching utility companies.
3) Consumers Energy is the only adjacent
utility company who could provide distribution service to existing BWL
customers. However, Consumers Energy’s
significantly higher rates, reduces the customers incentive to switch utility
company’s and makes this scenario unlikely.
In
response to a Commissioner question, Mr. Stojic confirmed that it would be cost
prohibitive if a customer choose another utility company for distribution
service due to the potential cost associated from the BWL to the utility
company.
J.
Peter Lark, General Manager also advised that he is working with Chairs of the
Technology and Energy Committees in both the House and Senate to introduce “no
switching” language into the rewrite of PA 141.
The “no switch” language would provide the BWL some protection and would
essentially state that BWL customers cannot be taken away by other utilities,
the same way as the BWL cannot presently take customers from other utility
companies. Mr. Lark further noted that
he has agreement from both Chairs of the House and Senate that there is no
problem with adding the “no switch” language in the rewrite of PA 141. It was also confirmed that if the City of
In
response to a Commissioner question regarding distribution service and
vulnerability, Mr. Stojic clarified that a full service regulated utility
company would have to establish itself in order to compete with the BWL. The most likely utility company would be
Consumers Energy and he is unaware of how any other utility company would form
in this particular area. Although, it is
highly unlikely, staff verified that an example of such an act would be the
purchase of an existing utility system; such as, the one located on the campus
of
The
question was asked as to whether or not there is anything in the law that would
prevent another company from buying BWL “lines” in order to provide service to
customers; similar to what occurred in the communications industry? In response to the question, staff noted that
another utility company could offer to buy the BWL from the City of
On
motion by Commissioner Graves, seconded by Commissioner James, the
Committee of the Whole agreed to receive the resolution concerning Public Act
141 – Customer Choice. The resolution
will be forwarded to the full board for consideration.
Action:
Carried unanimously.
Commissioner James
departed the meeting at
Public Relations (Advertising) Update
·
The
BWL partnered with Meijer Stores for the CFL exchange program entitled, “A
Bright Idea”. The event took place on
·
BWL
is the “Presenting Sponsor” of Silver Bells.
The BWL logo is on banners throughout
·
A
new label design for BWL bottled water is complete. In response to a Commissioner question
regarding redesigning the bottle itself, George Stojic noted that Quality Dairy
currently bottles and packages the water.
Therefore, the bottle design is Quality Dairy’s standard product. The BWL is currently reviewing the bottles
design and the cost to change it. Once
that information is received then staff would make an assessment of its
potential options.
·
The
demographics in the
·
Capital
Area United Way (CAUW) thermometer signs registering the monies raised thus far
contain the BWL logo located at the bottom.
It was noted that the BWL donated an estimated $7,500 to CAUW for their
advertising campaign. In response to a
Commissioner’s question regarding the BWL’s participation in the CAUW campaign,
Cheval Breggins, Communications & Public Relations Representative noted the
following information.
·
BWL’s
2007 CAUW campaign goal is $90,000 and thus far the BWL has raised
approximately $88,000.
·
BWL
is currently 5% over its 2006 goal.
·
BWL
secured 95 raffle prizes that cost the BWL significantly less than last years
expenditures, of which
·
For
the first time in history the BWL ran a pacesetter program in which the second
floor of
·
The
kickoff consisted of in kind catered food and a live radio broa
·
The
BWL had thirty-sixty second spots that began at
Commissioner
Smith thanked
BWL Charitable Foundation
Commissioner
Smith noted that she was glad to receive the discussion because it was good to
determine if the BWL should change its current structure and whether or not the
BWL could form a foundation.
Commissioner Smith thanked staff for its research efforts and went onto
ask the following questions: 1) how
would a 501(c)3 change the guidelines for those who come forth for charitable
dollars and 2) is City Council’s process similar to what was done with the
BWL’s Rules of Procedure?
Mr.
Jones noted that the governing body of the BWL’s foundation would probably
determine how the funds should be managed and/or allocated. In addition, it was further advised that the
governing body would probably want membership on the foundation board. In response to the second question, Mr. Jones
advised that he was unsure of Lansing City Council’s exact process. However, City Council is a political process
that could go a number of different directions.
One of which might include input by City Council as to how the funds are
expended, who would sit on the board, how many board members would there be,
would Council sit on the board, etc. As
a result, there could be a number of rules imposed on the process if a
foundation were created, which is significantly different than what is
currently being done at the BWL.
The
Committee of the Whole agreed with staff’s recommendation and noted no need to
change the existing process, as it appears to be working well for the BWL.
There
being no further business, the meeting adjourned at 6:
Respectfully
submitted,
Robin M.
Smith, Chair
Committee of
the Whole
The
report will be filed with the minutes of the
HUMAN RESOURCE COMMITTEE
The
Human Resource Committee of the Board of Water and Light met at the Executive
Offices, Lansing beginning at
Human
Resource Committee Chair, Julee Rodocker called the meeting to order and asked
the secretary to call the roll. The
following committee members were present:
Commissioners Robert Cochran, Joseph Graves, Julee Rodocker and Sandra
Zerkle.
Absent: None
Public Comment
There
were no public comments.
Director of Internal Audit Six Month Performance Review
The
Human Resource Committee conducted Susan Pifer, Director of Internal Audits
six-month performance review at its previously held meeting on
In
response to Commissioner Graves’ question, Director of Human Resources Denise
Mulder noted that Board of Water and Light’s (BWL) existing practice is that
employees are given salary increases up to the market rate and anything over
and above is given in a lump sum amount.
It was clarified that the lump sum amount is a part of the pension
calculation but it is not compounded.
The Human Resource Department is currently reviewing this practice board
wide for all employees.
On
motion by Commissioner Zerkle, seconded by Commissioner Cochran, the
Human Resource Committee recommended that Susan Pifer, Director of Internal
Audits receive a base pay salary increase.
Discussion: After brief discussion, Commissioner Zerkle
introduced a friendly amendment to note that Susan Pifer’s base pay salary
increase is 3.04% retroactive to
In
addition, the Commissioners also asked if the BWL is looking at changing the
policy for the rest of the organization?
Ms.
Mulder noted that the BWL is reviewing its entire salary administration program
and how it will be administered in a going forward basis. In response to an additional question, Ms.
Mulder noted that they would take into consideration the actions taken at
today’s meeting relative to existing salary practices and the remaining
organization.
Action:
Carried unanimously.
There
being no further business, the meeting adjourned at
Respectfully
submitted,
Julee
M. Rodocker, Chair
Human
Resource Committee
The
report will be filed with the minutes of the
MANAGER’S RECOMMENDATIONS
Resolution 2007-11-2
|
A. |
Public Hearing for
2008 Rate Increases |
WHEREAS,
the Corporate Financial Targets for each of the Lansing Board of Water and
Light’s strategic business units is 4% return on net fixed assets; and
WHEREAS,
the fiscal Year 2008 budget filed with the City of Lansing included the
following proposed rate increases:
Electric Utility Customers 4%, Water Utility Customers 6% and Steam
Utility Customers 6%, to become effective January 1, 2008; and
WHEREAS,
the proposed Fiscal Year 2008 budget with the proposed rate increases as filed
would result in a combined net loss for the year of $5.6 million; and
WHEREAS,
based on the information presented at the November 6, 2007, Finance Committee
meeting, an additional 3% rate increase for the electric utility customers, and
an additional 1% rate increase for the water utility customers is necessary in
order to begin addressing future infrastructure concerns, in particular with
respect to generation plant replacement and lead service replacement and
environmental requirements; and
WHEREAS,
the proposed rate increases for the Fiscal Year 2008 budget would take effect
no earlier than
RESOLVED,
the proposed rate increase of 7% for electric, 7% for water and 6% for steam
will be subject to further consideration after a public hearing is held.
FURTHER
RESOLVED, that the Board of Commissioners hereby sets the date of Thursday
Monday, January 21, 2008 at 5:30 p.m. for a public hearing to solicit public
input on the proposed 7% electric, 7% water and 6% steam rate adjustments. The hearing will be held in the Board of
Water and Light offices,
--------------------
Staff Comment: The Finance Committee agreed with this
proposed resolution at its
--------------------
Motion
by Commissioner Kramer,
seconded by Commissioner Graves to adopt the resolution to approve the Public
Hearing Date of
Discussion: Commissioner Smith noted that during the rate
discussion there was change in the proposed rates that would place the BWL
inline with the 10-year forecast and where the organization desires to be at
such time.
Action:
Carried unanimously.
A
copy of the Financial Plan Update FY 2008 – 20013, 6 Year Forecast dated
Resolution 2007-11-3
|
B. |
Public Act 141 –
Customer Choice |
WHEREAS,
Public Act 141 of 2000 was enacted by the Michigan Legislature and became
effective on June 5, 2000, and was intended to permit customers of electric
utilities in Michigan the opportunity to receive electric generation service
from an alternate electric supplier; and
WHEREAS,
Section 10y of Public Act 141 of 2000 applies to
WHEREAS,
Section 10y of Public Act 141 of 2000 requires the governing board of a
municipal electric utility to determine whether it will permit all customers
located outside the boundary of the municipality that owns the utility and
receiving electric delivery service from the municipal utility the opportunity
to receive electric generation service from an alternate electric supplier; and
WHEREAS,
the Lansing Board of Water and Light has customers located outside of Lansing’s
boundaries who take electric delivery service from the Lansing Board of Water
and Light and would be eligible to take electric generation service from an
alternate electric supplier, if the Board made such a determination; and
WHEREAS,
no customer has indicated an interest in purchasing power from an alternate
electric supplier, and the cost of developing and implementing a customer
choice program for Lansing Board of Water and Light customers located outside
of Lansing’s boundary would be substantial, would allow for selective marketing
to some customers but not provide an opportunity to choose an alternative
electric supplier to all customers, and would raise rates for all Lansing Board
of Water and Light customers.
NOW
THEREFORE, BE IT RESOLVED, the Board of Commissioners at this time declines to
permit electric customers located outside
--------------------
Staff
Comments: Public Act 141 of 2000 allowed customers of
electric utilities the option of taking electric generation service from an
alternate, or competitive, electric supplier.
An alternate electric supplier is a non-utility, non-regulated, firm
that is licensed by the Michigan Public Service Commission to sell electricity
(electric generation service) to customers of an electric utility.
Section
10y of the Act applies to municipally-owned electric utilities but delayed any
impact until after
Section
10y identifies two distinct groups of municipal electric customers: those located within the municipal’s legal
boundary and those located outside that boundary. The Act also identifies two distinct electric
services: electricity delivery
(distribution service) and electric generation service. Section 10y, and therefore Act 141, applies
only to those customers of the LBWL that are located outside of the City’s
boundaries. The Act does not
specifically mention 425 agreements, but it seems likely that these areas would
be considered within the municipal’s boundary.
The
Commissioners must decide whether to allow LBWL customers located outside of
A
decision by the Commissioners to allow customers located outside of Lansing’s
boundary the opportunity to switch electric generation service to an alternate
electric supplier would require the LBWL staff to invest substantial time and
resources in developing appropriate tariffs, terms and conditions of service,
dispute resolution procedures, billing changes, and make additional metering
investment. Allowing customers to choose
another electric generation supplier would also permit an alternate electric
supplier to selectively market to some customers, those that have a low cost to
serve, and avoid customers who may cost more to serve. The selective marketing by alternative
electric suppliers and costs associated with offering a customer choice program
would increase the cost of serving all of LBWL’s customers. For these reasons, LBWL staff recommends that
the Commissioners not allow customers located outside of
Act
141 permits the Commissioners to deny alternative electric suppliers from
providing electric generation service to LBWL customers located outside of
Second,
Act 141 provides the LBWL with the option to operate under R 460.3411 (Rule
411) of the Michigan Public Service Commission’s rules. Rule 411 governs which utility is allowed to
serve a customer when two or more utilities operate in the same area. One provision of Rule 411 prohibits existing
customers from switching from one utility to another.
Third,
the only utility adjacent to the LBWL and which could provide electric delivery
service to an existing LBWL customer is Consumers Energy. Since Consumers Energy’s rates are
significantly higher than LBWL rates, there would appear to be no incentive for
LBWL customers to switch to Consumers Energy electric delivery service.
Based
upon the protections offered by Act 69, Rule 411, and the rate differential
between LBWL and Consumers Energy, we recommend that the Commissioners not
permit customers located outside of Lansing’s boundaries the opportunity to
take service from an alternate electric supplier.
--------------------
Motion
by Commissioner
Rodocker, seconded by Commissioner Graves to adopt the resolution to accept the
manager’s recommendation regarding Public Act 141, Section 10y, as it pertains
to customer choice.
Discussion: Commissioner Smith noted that she believes
staffs recommendation regarding Public Act 141, Section 10y is in the best
interest of the BWL.
Action:
Carried unanimously.
UNFINISHED BUSINESS
Commissioner
Smith advised that when the Board received their internal audit report they
then asked for more diversity. It was
noted that there are minority owned companies who can fulfill those needs but
the Board has not seen it in the Retiree Benefit Plan and Trust (VEBA). In response to a clarification regarding the
passing of Proposal 2 and the BWL’s inability to hire based on minority status;
Commissioner Smith agreed that one could not hire based on minority
status. However, one can seek out
persons who meet the qualifications and are also minority owned.
J.
Peter Lark, General Manager advised that he was not completely familiar with
the Board’s discussion. However, the BWL
Diversity Council was created to aggressively address those issues. In addition, Mr. Lark also reported that he
is currently enrolled in an eight month CEO diversity training program
scheduled to begin in 2008.
NEW BUSINESS
None.
Resolution
2007-11-4
A. SIX-MONTH
PERFORMANCE INCREASE FOR DIRECTOR OF INTERNAL AUDITS
WHEREAS, the Human Resource Committee
conducted the six-month performance review for Director of Internal Audits
Susan M. Pifer on October 9, 2007 and thereby recommended a performance increase;
and
WHEREAS, the percentage increase of 3.04%
is representative of a compiled average of the recommended salary adjustment
from the Board of Commissioners.
RESOLVED, That the Board approve a 3.04%
salary base pay performance increase effective September 26, 2007 for Director
of Internal Audits Susan M. Pifer as permitted by the employment agreement
entered into between the Board of Commissioners and Ms. Pifer at the time of
her employment.
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Motion by
Commissioner Smith, seconded by Commissioner Rodocker to adopt the
resolution regarding the Six-month
Performance Increase for the Director of Internal Audits.
Discussion: Commissioner Smith noted that the Director of
Internal Audits has a great attention to detail and she believes that Ms. Pifer
will serve the Board well.
Action: Carried unanimously.
Resolution 2007-11-5
B. Resolution by the Board of
Commissioners
BOARD MEETING SCHEDULE
In
accordance with the Board’s Rules of Administrative Procedure, a schedule of
dates, places, and times for each regular meeting of the Board of Commissioners
for the calendar year shall be adopted in November.
RESOLVED,
That regular meetings of the Board of Commissioners are hereby set for calendar
year 2008 as follows, unless otherwise notified or as a result of date
conflicts with rescheduled City Council meetings:
2008
Tuesday January 22
Tuesday March 25
Tuesday May 27
Tuesday July 22
Tuesday September 23
Tuesday November 25
Meetings
will be held in the Board Room located in the Board of Water and
RESOLVED
FURTHER, That a notice of the meeting schedule be published in the Lansing
State Journal the week of
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Motion
by Commissioner Graves,
seconded by Commissioner Zerkle to adopt the resolution to approve the Board
Meeting Dates for Calendar Year 2008.
Action:
Carried unanimously.
Resolution 2007-11-6
|
C. |
Acceptance of Plante
& Moran as Vendor for Internal Control Assessment for SAP |
WHEREAS,
the Commissioners of the Lansing Board of Water and Light adopted Resolution
2007-5-13 on May 22, 2007, which recommended that the Internal Auditor solicit
a Request for Proposal (RFP) for an internal control assessment for the Board’s
SAP Enterprise Risk Planning (ERA) Financials implementation, and
WHEREAS,
the Internal Auditor, in conjunction with General Accounting, conducted
research and completed an RFP for SAP Controls Assessment for ERP Financials,
and
WHEREAS,
the Finance Committee reviewed such RFP and determined that the Internal
Auditor may move forward with its solicitation and the evaluation of proposals,
it is
RECOMMENDED,
that the Finance Committee accept Plante & Moran as the selected vendor for
the engagement and that the Internal Auditor move forward to schedule and
manage the engagement with the selected vendor.
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Staff
Comments: The Finance Committee agreed with this
recommendation at its meeting on
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Motion
by Commissioner Kramer,
seconded by Commissioner Graves, to adopt the resolution to accept Plante &
Moran as the vendor for Internal Control Assessment for SAP Enterprise Risk
Planning Financials Implementation.
Action:
Carried unanimously.
MANAGER’S REMARKS
Peter Lark announced that the BWL
was a proud sponsor of Silver Bells in the City and will also be a sponsor of
the Toys for Tots program. In keeping
with the holiday spirit, the BWL will host a holiday party on
COMMISSIONERS’
REMARKS
Commissioner James extended
gratitude to Commissioner Smith for her service and leadership on the Board of
Commissioners. It was noted that
Commissioner Smith’s tenure on the Board would soon end due to new Commissioner
appointments. As such, Tony DeLuca and
Frank Lain were recognized and asked to stand in acknowledgement of their pending
appointment to the Board of Commissioners.
Commissioner Graves advised that it
had been a pleasure working with Commissioner Smith. He further noted his appreciation for the
leadership that she had brought to the Board and wished her well in future
endeavors.
EXCUSED
ABSENCES
On motion by Commissioner
Graves, seconded by Commissioner Smith, to excuse the absence of Commissioner
Robert Cochran.
Action: Carried unanimously.
PUBLIC
COMMENTS
There were no public comments.
ADJOURNMENT
On motion by Commissioner Smith,
seconded by Commissioner Graves, the meeting adjourned at
/s/
Filed with